Most of the time, getting paid is just another part of doing business and everything happens as it should. But what do you, as a business owner, do when payment is the one part of the transaction that doesn’t go smoothly?
1. Communication Is Key
Both parties need to know what is expected of them. The customer should know when and how payment is expected, and you should know — if there is a delay — why that delay has occurred. Open communication helps to resolve many payment issues early on.
2. Be Clear on Expectations
Customers should be clear about what they are ordering, and businesses should be clear about what they are providing — whether that’s a product or a service. Even if you think it’s self-explanatory, spell it out. It doesn’t hurt, and everyone knows where they stand.
3. Set Clear Payment Terms
Your business should be equally clear about what is expected from the customer in return. If you expect to be paid in a certain manner or by a certain date, say so. Clearly drafted terms and conditions should be provided to the customer so that everyone understands their obligations.
4. Understand Why Customers Don’t Pay
When payment is withheld, there is usually a reason. The courts typically classify non-paying customers as either those who can’t pay or those who won’t pay. With a little foresight, you can protect yourself in both situations. The bigger the contract, the more diligent you should be in checking out your customer’s background.
5. Customers Who “Can’t Pay”
These are customers who simply do not have the funds. They may have a poor track record of paying their bills — something that can often be discovered through simple background or credit checks before agreeing to do business.
If you find that this is the case and still wish to proceed, consider adjusting your normal terms and conditions for this customer — perhaps requesting payment upfront or partial deposits. Or, you may decide the risk isn’t worth it.
6. Customers Who “Won’t Pay”
These customers have the means to pay but choose not to, often due to a perceived problem with your product or service. Dealing effectively with them comes back to the first point — communication.
If a customer’s reason for non-payment is dissatisfaction, you need to find that out — they may not volunteer it. By opening the lines of communication, you can often identify and fix the issue. It might be something simple and easily remedied, or it might reveal deeper feedback that helps you improve your business approach.
7. Keep Detailed Records
If you’re finding it difficult to collect payment, keep a full account of all your efforts to get paid. Record every conversation, email, and attempt to resolve the issue. If you’ve made efforts to fix a problem identified by the customer, document those too.
Should legal proceedings become necessary, this record will help demonstrate your professionalism and the steps you took to resolve the matter before going to court.
8. Don’t Keep Working for Non-Paying Customers
This might sound obvious, but many well-run businesses still allow debts to build up. It can be tempting to continue supplying a customer with a large order in the hope of payment later, but if the customer has a history of paying late or not at all, stop work until the account is settled.
Otherwise, you risk spending significant time and money pursuing payment that may never come.
Getting Expert Help
If things do go wrong and you need help recovering payment, we can provide the expertise and support to achieve the best and most efficient outcome for your business.
Maria O’Donovan & Co. Solicitors — practical, professional legal support for businesses across Ireland.
