How to Spot a Client That Won’t Pay Their Bills

How-to-Spot-a-Client-That-Won’t-Pay-Their-Bills

Is there anything more frustrating than a client who won’t pay their bills? Unfortunately, this is something every business has to deal with from time to time. But wouldn’t it be great to avoid this type of situation?

Here’s a few tips for identifying clients or customers who might pose a risk of non-payment. Follow this advice, and protect yourself from clients who won’t pay their bills.

Contracts

While a contract alone does not guarantee payment, it helps to weed out those clients who are not confident of their ability to pay.

If your customer is unwilling to enter into a legally binding agreement to pay for your services, this is a major warning sign that you might have trouble collecting money from them.

Up Front Charge

Collecting a portion of your fee before delivering products or services is another precaution which can identify the wrong type of client. A good customer should have no problem with such a charge, but if they show hesitation, they may be the type of client who doesn’t pay.

Anonymity

How well do you know your client? Are they from a reputable organisation, and do you have a physical address for them? If your customer only provides their name and an email address, make sure you verify their existence before moving forward.

Vague about What They Want

You should always have a clear understanding with your client about their needs, and the services they require from you.

If your client provides only vague direction, this could be a sign that they are not committed to the project, and therefore not committed to payment. Make sure you have a solid agreement in place as to which services you are providing.

Why You?

Did your customer specifically seek you out because of the quality of your work? Or did they seemingly select you at random? A customer who chose you because of your expertise is much more likely to care about your services, and pay without problems.

Payment Assurances

What payment assurances has the client given you? Are they vague or non-existent, or have they specified an exact timeframe for payment? Make sure your client has given you some assurance that payment will be forthcoming before starting work on any project.

Payment with Future Earnings

Customers who promise to pay with future earnings may be great clients, but they can also be risky. Make sure there are concrete terms in place regarding any agreement which offers you a proportion of future earnings.

You should also try to evaluate the likelihood of the client’s success, and determine whether there is a chance that they may not be able to fulfil their agreement. Finally, you should evaluate whether it is worth taking the risk in return for the potential reward.

Avoiding Clients Who Won’t Pay

Remember, even if you take all of the right precautions, there is no guarantee that you’ll never have difficulties collecting payment.

Do what you can to avoid the wrong clients, but always be prepared to deal with clients who won’t pay – even if that means turning to a debt collection agency such as PJCDS.

Scott Bryan is a financial blogger who enjoys explaining the arcane world of finance in everyday terms. Formerly a high street bank manager for over thirty years, he knows that everyone has unique requirements and so is dedicated to helping you find the right solution for you. He now works as an freelance financial writer when not consulting.