Dealing with customers who don’t pay in your business

dealing with customers who don't payPayment collection is a prominent issue for all businesses. It is difficult because by law, we expect customers to just pay their debts without having to chase them up or enlist the help of a debt collector to do so for us. However, this is not always the case, and when dealing with customers who don’t pay, it is important that you do something about it very quickly, rather than simply ignore it (because it will never go away). After all, if you are too soft, you won’t get your payment, but if you are too aggressive, you will lose your relationship with your client which is especially a tricky situation for any business to be in if this happens with a long-term client.

Here are a few tips on dealing with customers who don’t pay

How to conduct yourself

Refine your approach (click to expand)

When dealing with customers who don’t pay, try to kill them with kindness. Easier said than done, I know.

This is one of the most important, yet difficult rules to uphold. When you are dealing with customers who don’t pay, it is easy, and very understandable, that you will be angry, frustrated and these emotions will be reflected in your tone or body language when talking to your client. Derek Halpern, expert marketer, entrepreneur and founder of Social Triggers, warns that clients who refuse to pay and then become difficult  will ruin your chances of getting your payment. Instead, when it comes to dealing with customers who don’t pay, kill them with kindness. Open, honest and kind communication is key (oh and patience! Lots and lots of patience!)

What to do

Now that you know how to conduct yourself, here are some steps to follow when dealing with customers who don’t pay.
Why. That is the question. Why is your client not paying you? Most of the time, when you figure out why, you are one step closer to solving the problem and getting your owed debts. From Halpern’s experience, he stated that there are usually 3 reasons why customers refuse to pay:

#1 Client doesn’t have any money – Go to step one.
#2 Client isn’t happy with the service – Go to step two.
#3 Client is dishonest. – Got to step three.

One. When a client doesn’t have money

Stuck in a financial rut? (click to read more)

This is really annoying sometimes because why would someone want a service and product that they know they cannot afford? Or maybe something happened in the meantime that has disabled their ability to pay you? In any case, it is important to remember that “just because they can’t pay now, doesn’t mean they won’t be able to pay you in the future and handling the scenario the right way is key.”

When a customer or client explains to you that they do not have the appropriate funds to pay you, remember the most important rule: Kill them with kindness! You can do that in this situation by empathising with them, and working with the customer, and not against him or her. Try and come up with options that result in a mutually beneficial solution for both parties, such as, giving them an extension for their payment. You help your client out by giving them a reasonable amount of extra time, and you will also get paid in due time. While a late payment is not ideal, remember, it is better to get paid eventually than not at all.

Other options include making a payment plan where your customer can pay you in instalments. Can they make small payments each week or month over a period of time? This way you still get your fees (albeit not in the most convenient way), and your customer has less pressure to come up with the money in a short amount of time. When dealing with customers who don’t pay, empathising with them and offering alternative solutions will leave them with gratitude and may actually give you a customer for life. They will trust you and see that you have their best interests at heart, and who knows, they may even refer you to someone else because they are so happy with your work!

Two. The client isn’t happy with the service/product

Even though you gave them the best service/product ever (click to read more)

As Halpern states, “these people suck and sometimes these people can’t be reasoned with.” But don’t despair because sometimes if you handle the situation right, you can win them over.

When dealing with customers who don’t pay because they are not happy with the service, shift your mentality from service provider to customer. By putting yourself in the mindset of your client, you may be able to further understand what exactly it is that they are unhappy with. This means temporarily putting aside your own thoughts and feelings, even if you believe that you gave them the best service/product possible, or think that they are giving you unfair criticism. This is important when dealing with customers who don’t play because it enables you to give 100% focus to the current situation and customer at hand because all that matters right now is that your customer is not happy.

This comes back to the first point – Why. Why are they not happy with your service/product?

Communicate. Communicate. Communicate.

Remember what Halpern stated, “open, honest and kind communication is key”. Here is another point, “listen actively.” If making a small change to your service/product after being enlightened to what made them unhappy in the first place means that the customer is happy and you still get paid, then it will be worth it. If they are still not happy, then patiently explain to them that they were made fully aware of the company/business policies beforehand when they first signed up and are legally obligated to settle their debt.

Three. Client is dishonest/downright unreasonable

Arghh… (click to read more)

When dealing with customers who don’t pay, sometimes you will come across clients that are just dishonest and unfair. It is an unfortunate part of business, but is one that sometimes is unavoidable. If nothing else is getting to them, as a LAST RESORT you could consider turning to a collection service when all other efforts have been exhausted. However, keep in mind that by enlisting the help from external sources that you may end up not getting as much as you are owed. Collectors usually take a sum of what is collected, and they may even collect less than what was owed. With all the trouble, time and effort wasted to get a payment that is not too big, not to mention having to actually deal with these dishonest people, receiving the payment may not even be worth it if it is not a significant sum. Chalk it up as a business lesson learnt and add them to a blocked/banned list so you don’t have to deal with them again, something that I am sure you will make you happy and relieved.

Now that you know what to do when dealing with customers who don’t pay, never have to deal with them again! Well, I mean you could if you wanted to give yourself more time and stress, or you could keep reading and enlist some precautionary measures…

How to prevent having to deal with customers who don’t pay

Prevention is key. Take some of these precautionary measures. (click to read more)

Enlist the help of a direct debit company

A direct debit company like Ezypay automatically debits your payment from your client’s account and transfers it into yours at a set interval date of your choosing. This means that you don’t have to worry about collecting payments or chasing people up because we do it for you. With a 99.5% collection rate, that’s about as close to a guaranteed payment as you are ever going to get!

Set clear policies and payment dates

This is where your contract comes in. In your Terms and Conditions, have your terms clearly written including what service/product you are giving, how often you intend to get paid and the payment dates, how you should get paid, and of course, late payment fees.

Late payment fees

Further developing from the first point, including late payment fees is a great way to prevent late payments and dealing with customers who don’t pay.

Send invoices promptly

Send invoices to your customers and clients promptly in order to get your payment on time. If you are still not getting paid, regularly re-invoice payments. Make sure that with each invoice, you include the late fee that was outlined in the original contract. Customers seeing the payment increase every time will be sure to pay you sooner rather than later!

Dealing with customers who don’t pay is a frustrating, time wasting process. However, there are still some ways that you can still receive your payment in the most painless way possible. Whether it is enlisting the assistance of a successful direct debit company like Ezypay or killing your customer with kindness.

If you would like more information on Ezypay, then please contact us and one of our friendly team members will be happy to help.

If you would like more information on dealing with customers who don’t pay, then watch this informative video from Derek Halpern, the man himself:


Looking for some tips on how to increase cash flow? Look no further. Ezypay presents to you a FREE downloadable eBook on how to improve your business cash flow in just 31 days with 31 tips. 

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