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What to do when your client won’t pay

On Behalf of | Jan 28, 2024 | Business Litigation |

As a small business owner, you may encounter clients who refuse to pay for your services after you’ve completed the job. If a customer fails to pay for services rendered and you have attempted to contact them and sent several past-due reminders, you may need to take legal action.

Pursuing a customer for past-due invoices can be costly and time-consuming. Small business owners who wish to take legal action against customers for unpaid services must first determine whether recouping the amount owed is worth their effort before proceeding to file a lawsuit and represent their case in court.

Taking necessary steps

The first thing to do is stop working if the project is ongoing. Then, notify the customer that you’re stopping work. This may be enough to prompt them to pay their bill. However, if they still won’t pay, it’s time to send a final payment notice.

A final payment notice should be a formal letter stating that the client has been contacted multiple times in an attempt to collect the debt. The total amount due should be restated, and the client should be given a due date for the payment. They should also be warned that failure to pay their bill may lead to legal action being taken against them.

If your client does not pay you after receiving a final notice, you need to make a decision. If the amount owed is not very significant, you may choose to avoid spending your time or money on taking additional steps. However, if the payment represents a significant portion of your annual revenue, it’s time to play hardball. Gather copies of your contract, correspondence, receipts for materials and any other records you have that pertain to this client. Then, seek assistance with filing your claim.