how to manage offline clients who don't pay?

by yianni
18 replies
hey

i do some offline consulting work

i recently took on a client
where did initial seo and then ongoing work

usual is to pay upfront fee then ongoing monthly
(with 50% of upfront paid on signing agreement)

they are now 30days behind

and i am interested in how you guys manage non-payers

do you do any of the following....

1) set up direct debit into bank accounts

2) set up paypal auto payments

(if they cancel these how do you manage then?)

3) send invoice out each month, i have done this, and other clients pay regularly

4) do you ask for payment by such and such otherwise pay more?

5) what do you put in terms of agreement?

6) any other thoughts

i appreciate your comments on this

as i believe that this is an issue that will affect many of us at some point when we have offline clients

thanks in advance
#clients #manage #offline #pay
  • Profile picture of the author Quentin
    If they don't pay we cancel their hosting. If you don't control their hosting then you should get full payment up front.

    Once they have done this for a few months we will extend credit. Pretty basic Business 101.

    Quentin
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    • Profile picture of the author marciayudkin
      Yianni,

      Normally I have clients with some sort of ongoing monthly fee on an automatic credit card charge program, through my shopping cart.

      This actually doesn't eliminate all the problems, because sometimes a recurring charge gets refused by the bank, especially if it's a large amount.

      However, it keeps the problems to the minimum.

      These days most businesses have a business credit card they can use for this purpose.

      Governmental organizations are an exception. They need to be invoiced, but they always pay the invoices.

      Hope that's helpful!

      Marcia Yudkin
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      • Profile picture of the author John Callaghan
        I always require a credit card from my clients and charge the card using paypal virtual terminal.

        If the card fails for any reason I notify the client and give them a few days to resolve the problem. If the card still fails I begin shutting down the technology (e.g., website, redirect links, youtube channel etc.)

        The key is to design your technical solution in a way that keeps you in control. If they don't pay...start shutting things down and you'll be surprised how quickly they call you with a new credit card number to use.

        But make sure your service agreement or contract says that you have the right to do this otherwise you may end up ruining the relationship.
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        • Profile picture of the author Adrian John
          Request money upfront.Do a trial if you need so but you won't start working until you get paid.
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          • Profile picture of the author Defunct
            Have you contacted the client to ask when they will be paying? Do you send reminders every 3 - 4 days saying account is now overdue? Maybe they are having cashflow problems, otherwise you should be sending constant reminders to whoever deals with payments.
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    • Profile picture of the author ColdFire123
      Originally Posted by Quentin View Post

      If they don't pay we cancel their hosting. If you don't control their hosting then you should get full payment up front.

      Once they have done this for a few months we will extend credit. Pretty basic Business 101.

      Quentin
      yeah.. thats a good idea.. Cancel it so that they will learn a lesson if they wont pay..
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  • Profile picture of the author psynaut
    Being able to either bill their credit cards monthly or setting up Paypal auto payments is really the way to go if you can. It saves a lot of time. I've found that people ussally don't pay because they simply forget. Take payment upfront whenever you can ... it saves everyone a lot of trouble down the road.

    Regularly contact people that are behind on payments, first by email and if that doesn't work, call them ... its harder to ignore phone calls. Of coarse, stop any services you are providing.
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  • Profile picture of the author russells
    Hi,

    With my clients, I setup direct debits and send out an invoice each month. I'm lucky enough that I haven't had any non-payers; YET.

    I think what i'd do is call them up and let them know how far behind they are...give them the option to bring their account up to date if not tell them that all work is stopping until the account is brought back up to date.

    Don't take this the wrong way, but most business owners don't understand SEO so tell them that any work you've done you will undo and their website will slip down the rankings meaning they've spent money for nothing.

    Hope that helps,

    ~Russ
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  • Profile picture of the author Debt Rx
    If there anyway you can take back your services ie. hosting, domain, etc?
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  • Profile picture of the author JesseT
    The first question I would ask myself is are they getting results from your service? If they are not seeing the value, then they have probably decided to stop using your service. That happens quite often. If you have control over your services you could temporarily turn off their site or whatever you are using to generate business for them and once they see that you are making them money they will immediately send that check or at least try to come to an agreement.
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    • Profile picture of the author TimCastleman
      Originally Posted by JesseT View Post

      The first question I would ask myself is are they getting results from your service? If they are not seeing the value, then they have probably decided to stop using your service. That happens quite often. If you have control over your services you could temporarily turn off their site or whatever you are using to generate business for them and once they see that you are making them money they will immediately send that check or at least try to come to an agreement.
      JesseT -

      It doesn't matter if they are getting value. If they agreed to pay him for services performed then they are on the hook.

      I stopped getting ''value" out of my ex-wife years ago but I still have to pay her monthly - because of a contract ;-)

      Be good.

      Tim
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  • Profile picture of the author TimCastleman
    Great responses here so far.

    Next time don't do anything without a check.

    Once they pay - they get scheduled for work on the calendar.

    The longer they wait, the longer it is until they see results.

    If they don't pay you stop working and take back all the current work you've done.

    Now in your case call them and ask them what's up?

    Maybe they forgot?
    Maybe they don't have the cash?

    Whatever the problem - find out about it and go from there.

    Worst case - if you can - barter for some goods and consider it is lesson learned.

    Tim
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  • Profile picture of the author JMSD
    Originally Posted by yianni View Post

    hey

    i do some offline consulting work ... i am interested in how you guys manage non-payers


    3) send invoice out each month, i have done this, and other clients pay regularly

    5) what do you put in terms of agreement?
    I have a couple of decades' experience of working off-line in consulting services.

    If you are invoicing them on a monthly basis, then that's good but late payers should also get a Statement of the outstanding amount if their monthly payment is late (seven days from due date to statement date). The Statement should also remind them of your terms (I'll come to this in a moment).

    If they ignore the statement, too, then follow up promptly with a call and make a polite enquiry. Ask if there's a problem for the delay in payment. As already mentioned in another post, above, the company may have cashflow problems and a little understanding on your part will be appreciated and may even get your account pushed up the list of creditors to be paid more promptly.

    However, even before you get to this stage, your Terms of Service or Terms and Conditions of business should be as water-tight as possible and, what is more important, get them to sign the contract stating that they accept your terms and conditions of service or have something in writing that states that they accept your terms.

    Your TOS should be crystal clear. For example: On acceptance of your services, 50% upfront payment on signing of the contract. 50% of the fees on the completion of the service and a monthly retainer payable on the xth day of each month commencing ...

    You should have a heading in your terms like "Late or Non-payments"

    If payment is received after more than seven days from the due date, we reserve the right to apply interest charges at x% per day/month above the bank's base rate on the sum outstanding.

    If late payments persist, we reserve the right to suspend all work on the account and take such steps as may be necessary to recover monies owed to us. Or words to that effect.

    If you want to know what other consultancies in your field do, just act as a prospective customer and ask a few of the more established ones to send you their terms and conditions of business (or TOS) if this info is not available on their site. Then adapt the terms to suit your particular style of conducting business. A reasonable but formal terms of service or agreement will impress your clients and get them sit up and take notice.

    Whatever you do, though, don't feel intimidated about demanding your fee for work done. It's your right. You're running a business not a charity. Unless you show that you mean business, your clients will not take you seriously or respect you for that matter.

    In nearly three decades of bricks and mortar consultancy business, I had need to issue only two winding up orders (very extreme but highly effective) on a couple of medium to large companies who dragged their feet and wanted to pay in 90 days (when I enquired about the delay) when my terms to which they had agreed clearly stated seven days from date of invoice. I got paid in full within 24 hours of them receiving my one para letter warning them of the proposed winding up order. What was more remarkable was that those same clients were eager to continue to do business with my company for many years thereafter. They were never late paying my invoices after that!

    Good luck!
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  • Profile picture of the author yianni
    hi everyone

    thank you for the depth of experience coming out in replies

    for this particular client

    they are hosting on their own server

    as they had an already existing website

    so shutting down site is not an option

    i can stop their services and watch their rankings take a tumble

    though it does not necessarily mean i get paid for work i have done

    some of you have suggested payment upfront
    but these guys like other clients i have are on multiyear contracts payable monthly

    if i say pay the monthly fee upfront for several years
    they will not agree to become clients

    any further thoughts?

    thanks again for your help so far
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    • Profile picture of the author JMSD
      Originally Posted by yianni View Post

      hi everyone

      thank you for the depth of experience coming out in replies

      for this particular client

      they are hosting on their own server

      as they had an already existing website

      so shutting down site is not an option

      i can stop their services and watch their rankings take a tumble

      though it does not necessarily mean i get paid for work i have done

      some of you have suggested payment upfront
      but these guys like other clients i have are on multiyear contracts payable monthly

      if i say pay the monthly fee upfront for several years
      they will not agree to become clients

      any further thoughts?

      thanks again for your help so far
      Monthly fees payable in advance is in common business practice for most consultancies. If I'm not mistaken, it's called a "retainer". Given the nature of your consultancy work, you are in a strong position to make that a condition of business. Walk away from any client who wants to treat you as a trader (e.g stationery supplies - no offence for those who are in that trade) to whom they pay 30 - 90 days in arrears.

      Assuming you have done all the things advised, already - such as statements, calling them and a brief letter, etc, and there is still no result, then call them and say that you will be in their vicinity on (date and time) and that you'd be grateful if they would prepare a cheque for the outstanding balance for your collection.

      No company likes a creditor (you) arriving at reception and, perhaps, announcing to the world and its aunt that a cheque for monies owed is to be collected.

      My credit controller did that (with one of the largest firm of solicitors in the country) and, hey presto, several thousand pounds (sterling) was paid by cheque and collected in person within hours of her call.

      If you are not local, then you have 3-5 options:

      1 - wait indefinitely for an unresponsive client who may not respect you because you may be a soft touch
      2 - issue a polite reminder and add (in a one paragraph letter to the effect that unless the payment is resumed, you'd be forced to cease to work on their account which would result in adverse impact on their site rank with resulting loss of traffic)
      3 - issue a formal warning (unless outstanding amount settled in full within x days, account would be passed onto debt collection agency) - no company would want that.

      You would have to be prepared, however, to accept the risk that the client given ultimatum 2, 3 and 4, would never want to work with you again but then who needs clients like that, anyway.

      If the above produces nothing, then you have one more shot left:

      4 - pull the plug on their SEO and see their site tumble in rank, then take out action in a small claims court or, if the sum is in excess of the current limit, issue a county court summons (or the equivalent in your country) which need not cost you very much more than the fee to take out the summons. Clients often pay well before the date of the court hearing so no further costs need be incurred by you although you can't charge the client for the court fees paid for the issue of the summons.

      If you are reluctant to take decisive action of the kind describe here and in other posts, then cut your losses and walk away. But then, tighten up your terms so that new clients will know exactly what the consequences of their poor business practice (late paying) will have on their account.

      When right is on your side, as in your case, you are the one who can call the shots.

      Disclaimer: I'm not a lawyer



      Good luck!

      James
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  • Profile picture of the author freudianslip27
    I collect money before the month's work is done. If they have been a client for a while and payment is late, I just call to see what's going on.

    If they aren't paying you and expect to get work for nothing, that's a great way to run your business into the ground!

    Clients not paying you is sending the message in business that they aren't respecting you. How would a restaurant owner react if you just ate a meal and didn't want to pay?

    Don't let clients walk over you, if they stop paying, services need to stop. It's an uncomfortable thing to confront, but you've got to do it if you want to run a successful business.

    Matt
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  • Profile picture of the author Dr Dan
    You got tons of great advice here so far.

    Have you called them yet? If not, call them and ask them how everything is going? Ask them if they have any questions. Tell them you are just giving them a quick heads up that you didnt receive the check due yet. Make it sound more like a question like did it get lost in the mail or did someone forget.

    If they are local, tell them you want to stop by and get some additional info from them to help serve them, then ask them for a check while you are there. You might also want to just set them up on paypals recurring billing. That is the only way I take payments right now.
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