What to do when a client doesn't pay...

[Geoff Myers]

I have a client who gave me a bad check (due to non-sufficient funds) on October 10. I have emailed and called him several times, kindly asking for a new, good check. On November 4, he said that the payment was sent, but 20 days later, I have not received anything (it was supposed to be mailed from Minneapolis to Saint Paul). I have attempted to contact him since, but have received no responses. I have said I will contact the Better Business Bureau so far, but I don't know what else to do. Threaten with small claims court? Suggestions are greatly appreciated. Thank you!

My company is SimDex LLC (simdex.org), a technology/computer consulting and website design business.

[Clint.Davis]

The best way to address these kind of situations is to not get into them.

I know this does not help you now.
But alter your systems where you take 30% of the sale before delivery of the service.
(Installment payments)

Or if the customer does not pay, suspend the service / solution your providing until they do.

If its a product that has not been paid in full, and you have already delivered it, send a notice saying the product will need to be returned unless paid in full.

Letters of demand work better then email, and phone calls.
However do make sure you keep following up with emails.

Oh, and record all emails / phone calls (and let them know your doing that)
This is so that in court you have a better chance of winning.

If the amount is acceptable loss, then you write it off as an expense in your books (bad debtors)

Another way of dealing with that is to use a credit company, where you sell the goods and they have a contract with the credit company. (means you receive your money up front)

[armenh]

Definately first threaten to take him to court that should usually be your first step if his check bounced. If he still doesnt comply then go ahead and sign the claim with the small courts. But like Clint.Davis said charge a deposit before you start the job, up to 70 percent even. But the minimum to cover the costs of your products. Good Luck

[Geoff Myers]

Definately first threaten to take him to court that should usually be your first step if his check bounced. If he still doesnt comply then go ahead and sign the claim with the small courts. But like Clint.Davis said charge a deposit before you start the job, up to 70 percent even. But the minimum to cover the costs of your products. Good Luck

Thanks for the advice, but I provide service by the hour ($25/hour), so it doesn't make much sense to charge a portion of that before doing the work. Plus, if they give me a check before I do the work, I won't know if it bounces until after I've finished working...

[kimbeckers]

Thanks for the advice, but I provide service by the hour ($25/hour), so it doesn't make much sense to charge a portion of that before doing the work. Plus, if they give me a check before I do the work, I won't know if it bounces until after I've finished working...

This can be a tricky situation, if you are going to accept checks then you can either wait for them to clear or take your chances. You can also try and accept PayPal and use e-checks, wait for them to clear, they clear a bit faster then regular checks. You could try money orders or something like that.

[BusinessAdviser]

Attorneys work by the hour often and require fees up front. Then, you only work up to the amount that's been paid. This is typically done with risky clients.

[Clint.Davis]

Geoff, you just have to stand by your policies, and customers will appreciate that.
Help the customers as much as possible (but with in the rules of the policy)

You could stand as the enterprise/business vs as a person in the business.
If you were the business what action would you take?

If you have a policy that hourly work gets changed at 50% up front before the work even starts (Based on the estimate of work), then thats what customers need to follow to use your service.

Repeat customers you could have a different method like 25% as they are already known and trusted.

and have the policy that the work does not start until the first payment is received(check clears). and that if the customer wants to start faster, they use a faster payment method.

[ideamaned]

How much does he owe you?

My method is to gradually increase pressure. Not to go from nice to all-out-war. You take it in steps.

It appears that you have made a number of polite attempts to get your money. I would just show up unannounced and say that it is time to pay the bill.

If he refuses at that point, then I guess you have to take it to the next step. This could be sending him a copy of your legal papers to sue him (before filing it.) With this, you give him an ultimatum which allows him enough time - maybe 15 days - to send you the money.

Whatever you do, don't give up. Fight for it.

You may have the possibility of criminal prosecution since he bounced a check? Check your state laws on that.

With my customers, I always get the money through persistance and never have had to go legal. The furthest it has gone is me knocking on their door saying "it's time to pay."