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What`s the best way to collect from clients who won`t pay?

  • February 9, 2008 9:33 AM EST

    small claims court is an option

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    Anthony LeGree

    President of Basset Communications
    Host of the Business with Cents Show

    • 3 posts
    July 23, 2008 2:51 PM EDT
    I chose to outsource my back-office management to a company called MBO Partners, which handles contracts, invoicing and collections, so I`m fortunate that they collect from non-paying clients on my behalf!
    • 59 posts
    February 11, 2008 5:28 AM EST
    A couple of more ideas:
    1. Pick your customers carefully. If you have a bad feeling about a potential customer, walk away. Better to spend the time finding better clients than trying to get blood out of a beet.
    2. If your customer`s payment is late, always assume the best and give them a nice call asking when you can expect payment.
    3. If the nice approach doesn`t work, then start applying pressure. Often a letter from an attorney will open the money spigot.
    4. Finally, don`t be afraid to go to small claims court. But remember, if someone is really determined not to pay you, it may not be worth your while to try to enforce the court ruling (see point #1).
    Good luck!

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    • 59 posts
    February 11, 2008 9:22 AM EST
    Here`s a couple more ideas, how well they work will obviously vary:
    • Hire a collection agency
    • Ask them if they`d like to go on a payment plan
    • Ask if they`d like to barter the bill

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    Gina L. Gwozdz, CPA
    http://GLGcpa.com
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    • 93 posts
    February 10, 2008 2:26 AM EST
    Contracts aren`t worth a cracker; as Melanie proves here in this post.
    I tell all the members in my Mentor Program to charge your clients up-front.
    1. It gets them focused on doing what has to be done
    2. Never have the uncomfortable situation of asking for late payments
    3. Keeps your cash-flow very healthy
    Rgds,
    Ric
     
    RicWillmot2/10/2008 8:29 AM

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    Mr. Ric Willmot
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    • 76 posts
    February 9, 2008 3:59 AM EST
    Even if you have a sound, signed legal contract in place, what are your thoughts on obtaining fees from clients who will not pay their bills?

    Have any of you used the Better Business Bureau to collect funds? I`m doing research on this topic and would love to hear your suggestions.
     
    Thanks!
    Melanie

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    Melanie Rembrandt
    CEO, Rembrandt Communications®, LLC
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    • 76 posts
    February 10, 2008 1:45 PM EST
    Thanks for all of your input. It sounds like there really needs to be a better way to collect funds for small business owners (if you don`t collect upfront)!
     
    Melanie

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    Melanie Rembrandt
    CEO, Rembrandt Communications®, LLC
    Visit www.rembrandtwrites.com for valuable PR tips and SEO copywriting help!
    Twitter: @RembrandtWrites

    • 76 posts
    February 11, 2008 9:31 AM EST
    Thanks for the good ideas! Anyone else?
    Melanie

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    Melanie Rembrandt
    CEO, Rembrandt Communications®, LLC
    Visit www.rembrandtwrites.com for valuable PR tips and SEO copywriting help!
    Twitter: @RembrandtWrites

    • 76 posts
    May 11, 2008 12:13 PM EDT
    Thanks for your suggestions!
    Melanie

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    Melanie Rembrandt
    CEO, Rembrandt Communications®, LLC
    Visit www.rembrandtwrites.com for valuable PR tips and SEO copywriting help!
    Twitter: @RembrandtWrites

    • 12 posts
    May 21, 2008 4:40 AM EDT
    Hire a collection agency that reports to the credit bureau`s. They`ll keep a portion of the money collected, but at least other vendor`s will know they don`t pay their bills.

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    Rebecka Melson | Virtual Business Services | www.vbsofok.com

    • 434 posts
    February 10, 2008 6:27 AM EST
    How does someone enter a name into these credit reporting organizations? With so many people thinking about credit scores, wouldn`t it be useful if a small business could submit a no-pay customer into such a database?


    You have to be a member merchant.  The last time I checked into this it was not cheap by any means.

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    Steve Mann
    Internet Videographer
    MannMade Digital Video
    My Email


    • 621 posts
    February 9, 2008 4:16 PM EST
    Hi Melanie.
    My clients have paid 99% of the time, my problem is doing business with vendors that don`t give us the deliverables promised. We are then promised to be refunded and it never happens. I currently have 2 vendors who owe us several thousand dollars. I sent letters, final demands etc. I then contacted the better busines bureau for one of them, and the vendor did not respond. I contacted their local clerk of court and set in motion a fraud case. The second, after hounding her for a year....and utilizing alot of time and energy she has paid 4 payments and one bounced. It can be very frustrating. The second was a board on the local chamber of commerce and I asked that she be removed and she was voted out. I would not normally do so but she lied over and over again and cost of alot of money and time and frustration and didn`t seem to give a hoot and even opened a new business, so i know she had the money. Anyway.,the BBB can`t do much but small cliams or general district (which is usually faster) can.
     
    Erin :)

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    • 33 posts
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