What to Do When a Customer Will Not Pay

The short version

• Find out whether it is cannot pay, will not pay, or a dispute about the work.
• Each of the three has a different correct response.
• Payment plans collect more than demands do.
• At some balance, pursuing it costs more than writing it off.

Eventually a balance goes past every reminder you have and stays there. At that point the instinct is to escalate, but escalation only works when you know what you are escalating against.

There are three completely different situations hiding behind an unpaid invoice, and treating them the same way is why collections drags on for months.

First, find out which situation you are in

A customer who cannot pay right now is a cash flow problem and it is solvable. A customer who will not pay is a decision, and it needs a consequence. A customer who is unhappy with the work is neither, and pushing harder will make it worse.

You learn which one you are in by talking to them, not by sending another notice. One phone call will usually tell you within two minutes.

Cannot pay: make a plan and put it in writing

If the money genuinely is not there this month, a payment plan collects far more than a demand. Split the balance into specific amounts on specific dates, write it down, and send it back to them as a confirmation.

A written plan changes the dynamic. There is now a schedule that either gets met or does not, which is much clearer than an open ended promise to pay when things improve.

Will not pay: apply the consequence you already stated

If the customer can pay and has decided not to, further reminders are noise. Do the thing you said you would do at day thirty, on the day you said it.

Depending on the size and your jurisdiction, that might mean small claims, a lien where the work qualifies, or a collections agency. Each has a cost and a time commitment, so compare them against the balance before you pick one.

• Small claims: cheap and self service, but it costs you a day
• Mechanics lien: powerful where it applies, with strict deadlines
• Collections agency: keeps a share, and you stop spending your own time
• Write off: sometimes the cheapest option once you value your hours honestly

Unhappy with the work: fix it or settle it fast

If the customer is withholding because of the work, you have a quality dispute wearing a payment costume. Go look at it. Photos, notes, the original scope, and a decision about whether the complaint is fair.

If it is fair, fix it and bill the rest. If it is not fair, show the approved scope and offer one specific resolution. Either way, resolve it quickly. A quality dispute that drags turns into a review that costs more than the invoice.

Three situations, three responses

| Situation | Signal | Response | | --- | --- | --- | | Cannot pay | Apologetic, avoids specifics about timing | Written payment plan with dates | | Will not pay | Silence, or disputes nothing but pays nothing | The consequence you already stated | | Unhappy with the work | Specific complaints about the job | Inspect, then fix or show the scope |

Decide your write off threshold in advance

Below some amount, pursuing a balance costs more in your time than the balance is worth. Deciding that threshold when you are angry produces a bad number. Decide it on a calm day and apply it consistently.

Then close the file and stop carrying it around. The customer does not get more work, and you get your attention back for jobs that pay.

Do this before your next job

Make one phone call before you escalate anything.

1. Call and find out whether this is cannot pay, will not pay, or a complaint about the work.
2. For cannot pay, send a written plan with specific amounts on specific dates.
3. For will not pay, do the thing you said you would do, on the day you said it.
4. For a quality complaint, go look at the work before you send another invoice.
5. Decide your write off threshold on a calm day and apply it without renegotiating with yourself.

Common questions

Is it worth going to small claims?

It depends on the balance and the value of a day of your time. Filing is inexpensive in most places, but the day you spend is not free, and a judgment still has to be collected.

Can I put a lien on the property?

Sometimes, depending on the work, the jurisdiction and strict notice deadlines that often start before the job does. Learn the rules where you operate in advance, not after a balance goes bad.

Should I post about it publicly?

No. It will not collect the money and it will follow you longer than the balance would have.

How do I avoid this next time?

Deposits on material heavy work, a written approved scope, payment due on completion, and a card on file for recurring customers. Most bad balances were preventable at booking.

Keep reading

• A Follow Up Sequence for Late Invoices
• The Short Contract Every Service Job Should Have
• Invoicerus for handyman businesses
• Invoicerus for roofers

Try it on your next job

Open the free invoice generator and run one real job through it. No account, no card, nothing to install. If it saves you time, the job price calculator is the next one to try.

Invoicerus does the same work on autopilot once your services and prices are set up. Start free and bring one week of jobs with you.