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What should business owners do if a customer won’t pay

On Behalf of | Dec 5, 2023 | business litigation

It should be simple: you provide a service, and your customer pays you for that service. Unfortunately, it is not always so simple.

Not getting paid for your work can be one of the most frustrating issues, especially for small businesses. It also does not take much for money matters to lead to larger disputes. So, what should small business owners do in these cases?

1. Start with a reminder notice

Most sources, including the U.S. Chamber of Commerce, agree that business owners should not begin by escalating the situation. Take time to review and fully understand the circumstances of this individual case. Then, begin with resending the invoice or sending reminders to pay.

2. Be open to negotiations

After sending any reminders – and depending on the response you receive – you should then consider scheduling time for negotiations. As much as obtaining that income is important, you do not want to lose a customer or have this issue impact your business’s reputation. Moving forward with a negotiation can show you are serious about obtaining proper payment, but also understanding a customer’s situation.

For example, you can arrange a meeting or a call with the customer to discuss the payment. It is not uncommon for customers and other businesses to face financial troubles, especially in today’s market. If this is the case, you could establish a payment plan that will work for both parties.

3. Obtain help

If there is no response to any reminders or offers to negotiate, then you can and should explore the other options to obtain payment. This could involve working with a collections agency to recover the debt owed. However, it is also critical to speak with a knowledgeable California attorney to ensure you understand your rights, as well as the customer’s rights.

4. Review your procedures

Small businesses new and old work hard to gain customers. You may want to protect the relationships you build with them. However, you must also protect your business.

It will often help to take another look at your payment policies. Perhaps you make them stricter, to prevent the risk of non-payment issues. A business attorney can also help craft policies to secure finances and the business’s future.