How to Deal With Clients Who Refuse To Pay

by Derek Halpern | Follow Him on Twitter Here

When I heard the phrase, “A Lannister always pays their debts” in Game of Thrones, I thought “Who doesn’t?”

…Until I started to run a business.

The sad reality is that there are people – a lot of people – who will happily take advantage of every benefit you have to offer them, but when it comes time to pay up, they’ll refuse to do so. It hurts. It’s frustrating. They’ll have an excuse, of course, but the bottom line is, you’re not getting paid.

What’s strange is, these same people will grab a pitchfork for a purse snatcher in NYC, but in the comfort of their own home, they’ll happily ignore your phone calls, delete your emails, and spend the money they owe you on something else. The hypocrisy will make your head spin.

I know this sounds ridiculous, but it happens. That’s why when I overheard some guy screaming on the phone, “I didn’t do this work for free mother $*#)@U$” it got me thinking…

That’s exactly what you DON’T do when someone refuses to pay you. Our first reaction to getting stiffed is usually anger, and we often display that anger out of impulse…

…But if you want your client to settle their debt, you need a little more finesse. And in my latest video, I show you exactly what to do.

How to Persuade Clients Who Won’t Pay to Settle Their Debts

When you’re done watching this video, I’ve got a question for you…

Have you ever dealt with a client who just wouldn’t pay you for your work? How did you handle it? Did you successfully get them to pay you? What did you do?

Share your best practices in the comments below. I may take the best ones and feature it in a blog post at a later date ;-).

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{ 132 comments… read them below or add one }

Borja

Interesting approach! I would simply “make them an offer they couldn’t refuse”…or not haha.

But really, thanks for this insightful solutions.

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Jude Binang | Business, Online Biz & Tech Blogger

Make them an offer they can’t refuse.

I agree with you, Borja. But I have successfully applied this principle using 2 approaches;

Persuasion and perception

If your clients refuse to pay his/her bills, you have to ask yourself a question: Did you clients value your services? Can he do without you? Do you thrill him with your services?

If yes, then you should have no problem. Anytime you foresee him behaving funny, then you have to consult your bag of tricks.

How?

If he is a long standing client, with long term relationship, one that brings you regular jobs, then you simple need to delay his work. Intentionally delay his work, and he will see the need to fund your account.

What I found out about stubborn clients is that, there are not necessarily difficult. It is all about your approach and the perception that you give them. If you don’t give them the right perception with the right persuasive language, then you are in big soup.

Because, everyone pays his/her debt from time to time, but it all depends how the person rank you in his radar. Even if he refuses to pay you, keep in mind that he pays others persons that work for him.

In contrast, if your client is one without an agreed contract with you, an average client, then there is no need for all this to happen. It is pay as you go.

He has to pay, before you accommodate his services. Remember, we are partner in progress. He should treat you well.

So the key is to delay the project or get paid up-front. We have passed the era when you have to use threat in remitting your debt.

With good persuasive skills, and the right perception about how you operate from the beginning, you’ll see yourself avoiding these inconveniences.

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Becky Blanton

I retain all copy rights to any work I do (included in the contract) until I am paid in full. That gives me legal standing to sue them in small claims court.

You can also set up a payment system through e-Junkie or Jotforms that downloads the final project upon payment. Clients who drag their feet or refuse to pay are sent to e-junkie hell if they want their project. This doesn’t work for all jobs, but if you structure your payments right you can ensure only the last 25% or so is all they have to pay to get the final project.

You can also join Elance and use their escrow service. The 3% cost of it is well worth the effort. The client funds an escrow account which Elance controls and once the job is released so is the money. If the client refuses to release it, Elance does automatically after 30 days.

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Benny

I’ve been stiffed on work before… So last year I set a rule for myself that all clients will pay up front. I do no work until the payment is in my account.

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Shaleen Sharma

That is a good approach, provided your reputation in the market preceededs you. Cause just like you’re scared of a default, the client is scared of poor performance. But of course, if this policy is working well for you, then you should be a reputed name in your business.

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Lee

You also need to not be afraid to file a law suit for what’s owed, even if you may not collect it. I got stiffed by a client, we filed a suit and he was served in front of his friends and family. I got a call the next day saying he would pay me… and he did.

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Becky Blanton

When you do file in small claims court and win, which you will if you are good with filing paper work and have a contract, there is a record of the JUDGMENT against them, which hurts their credit for seven years. They’re better off paying. You’ll get your fees and any extra money on top of that if you file and show up with a good argument.

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Erin @ Strawberry Mommycakes

I’m a graphic designer, so I learned the hard way to have people pay me BEFORE I start work. Sometimes I’ll split the payment in two and they’ll get the final images after they pay me the final installment. It stinks because you want to tell a person what is on your mind, but I think it really doesn’t do any good and hurts your business in the long run. I dealt with the losses, but now I don’t have to. I also have a no refund policy so that any time I spend on custom work isn’t wasted, but I do unlimited revisions so I make sure my client is happy with whatever I come up with. It’s a solution that has worked really well for me!

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Geoffrey

That’s a good policy Erin. I don’t like terms on design work because there is so much project creep. However when it comes to website design its a little easy to control the process.

I ask for 50% upfront and then upload the completed website on our demo server. Then when the work is done and they are happy we ask for the balance before the website goes live. They always pay because they want the website live.

I have walked away from a few deals, but not many. I find that if you involve the customer in enough of the steps of your work there is no surprise at the end and they generally are happy because they have already seen where you are going.

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Erin @ Strawberry Mommycakes

I agree…I’ve had a couple people that want draft after draft…it gets exhausting. However, I usually end up only doing 2 or 3 drafts so I figure it evens out in the end! Some people are just hard to please and I’ve learned how to spot those people before I even start work…it’s just not worth it!

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Sue

Maybe you’ve already done so, but I would suggest including x number of drafts with purchase, and any additional drafts would be charged at $__/draft thereafter.

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Becky Blanton

I like this policy! Good for you!

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Jen Aiken

Thanks for the video, Derek! I am dealing with this right now…I design websites, and usually ask for half up front, half at completion of the project. For 99% of customers this works great, but then I get one that just refuses to pay. It is very frustrating! Maybe I will try killing them with kindness and in the future ask for the full amount up front!

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Shaleen Sharma

Hey Jen! I can understand the frustration, but if you would allow me to suggest. Please don’t ask for upfront payment. Especially in creative projects like yours. Like you said 99% of your customers pay and are a delight to work with. You don’t wanna scare the 99% away to insure yourself against the 1%. I think, something on the lines of what Geoffery suggested above, would be a nicer solution. :)

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Jerry Nihen

@Shaleen I don’t necessarily agree with not asking for an upfront payment. I don’t feel that asking for an upfront payment scares people away. At the beginning of this year we switched from half up front and half upon completion to entirely 100% upfront payments (including turning our monthly retainers into 3/6/12 month contracts with a full payment upfront).

Our clients didn’t even blink an eye, and we have had absolutely no problems. Of course we get a little push back every now and then, but I’ve never lost a contract because of upfront fees.

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Richard

I completely disagree. There are many clients who will pay up-front, so you’re not losing much by pursuing them. And the rare clients who don’t want to do this talk in the exact same way as the ones who don’t pay after it’s done… so it’s not like actually spending hundreds of hours doing the work is going to increase their willingness to pay.

If they hesitate I will offer to split up the project so they have less risk. If they don’t trust me enough to risk an amount that is much less than a regular deposit on a full project then we have no relationship worth spending time on.

When your business is doing more than $5-10m/year then you might start to think about extending credit at some point in the distant future. Just take the easy way while you still can. Unless you’ve had a job at a collections agency in the past and enjoyed it, get full payment before doing the work. Clients respect people who have standards.

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Eddie

I also do ask for prepayments.
Question; what are your points of arguments you give when the client starts to question this such as “we never do prepayments basta!”?

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Richard

You can’t convince people with arguments. You just need to believe in the value of what you do and say this is how it works. You can also say you do this for everyone and that you want to focus on their work, not chasing down some old invoices. But if you have to explain that much they are probably going to be frustrated that they aren’t winning the argument with their logical reasons. Just remember that there are many people who are happy to work with you this way and you’ll do better work, so spend your time finding them instead of arguing with people who don’t see it your way.

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Eddie

I also ask payments upfront.
Question; how you you argue if the client insist not to do business with upfront payments arguing “we never pay upfront basta”?

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Eddie

I also deliver only with prepayments.
Question; how are you arguing when the client insist that he/she is only doing business without upfront payments with a statement like “we never did that and never do it, basta”?
Like to hear your views – thanks

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Eddie

SORRY Derek,
I posted an answer but never saw it displayed. So I repeated the process. Please delete what you feel is not necessary.
Thanks and sorry again!

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Martina McKeough

I’m a hypnotherapist and like some of the other comments all my clients pay before they walk in the door. Learn’t the hard way after booking rooms and finding the client couldn’t be bother to show. Now I don’t have to chase and can concentrate on my job.

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Natcha Maithai

Great post Derek. As a health coach, I help many people who are very frustrated and worried about their health, so the people who come to me would either just pay for it if they can afford it, or vent and leave. My solution: don’t do the work unless it’s paid for just because I don’t want the latter category. But holistic health requires the clients to do a lot of work for their own health, and it’s harder to qualify people for that even if they do pay money. The next question I have: is there anything you’ve learned about increasing the chance of people taking action on the product or services that you sell?

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Sue

Derek, I second this request: “The next question I have: is there anything you’ve learned about increasing the chance of people taking action on the product or services that you sell?”

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Kyle Alm @ SEO Bandwagon

I try not to work until some of the money, usually half, is paid. It’s easier with web work than for reports. Once a report is issued you can’t get it back, but there are other options when you do web design.

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Jessica

It happens to me sometimes. I get half up front and 25% partway through to minimize my risk. I often don’t deliver final documents until I get complete payment. The client then earns my trust and can get looser terms down the road. Oh – I also collect credit card info at the beginning of each project so if they do “forget” to pay, I have a backup plan.

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givesuccess

I host websites for local small biz and they sometimes can’t pay. However it is not really an issue bc I only have to pay around $50 for the vps I run the sites on. It generates enough to cover that plus 7-10x back so I am missing a few months here and there!

I sometimes ask them to help me back by recommending me to some of their biz friends…lol!

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Jessica Weagle

OHHH. I had a super crazy massage client !!!! This person bought a gift card during a sale I was running. During the session made it very clear to me wanted a relaxation Swedish massage, which I felt I gave.

Then a few days latter, writes 1 star reviews on every place they possibly about bashing how horrible my massage was and how the pressure what too light, wasn’t deep at all! WTF

This person never once asked for more pressure every during their session. I gave their money back and put them on the do not book list

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Sue

That sucks. One thing I’ve learned tho is that it is impossible to please everybody, so I don’t sweat it when the person blames me for THEIR inability to communicate. It is frustrating when you find out about a problem they were having, something that could have so easily been resolved at the time, had they but asked. Nothing you can do after the fact so just take a deep breath. WoooooSaaaaaa!

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Becky Blanton

One way to counter bad reviews is to post a sympathetic, soothing response to the review, such as, “I’m sorry to hear this. In fact, this is the first I’ve heard this! I would have gladly returned your money or given you a discount on another massage if you’d let me know within 24 hours of your massage, as is my policy. During our session I was under the impression you did not want deep pressure. I’m sorry it was an unsatisfactory experience for you. I enjoy all my clients and am more than happy to remedy or correct issues if I’m told about them.” That puts the onus on the passive aggressive client. Sometimes competitors will send a jerk your way and there is nothing you can do….but reply. It tells the public YOU want to make things right, but the reviewer is a jerk.

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Scott

I do recruiting videos for high school athletes wanting to play their sport in college. A mother from my daughter’s soccer team wanted me to do a video for her daughter. She didn’t like my “discounted” price so I discounted further for her (Call it the “Friend and acquaintances” discount). I produced the video without asking for 50% down (as I usually do) and her daughter ended up getting a scholarship to the University of Pittsburgh….probably save $60k-$80k over 4 years. Never did she pay and after a few awkward emails and passes by on the sidelines, she said she would pay me when she got her tax return $$. Of course, she still never paid….yet still continues to travel with the team across country to tournaments. Lesson learned….people can be shameful…..all clients now pay 50% up front….that way there’s leverage and they have some skin in the game.

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Vicky O

I love that you addressed this topic Derek. There are clients who can afford to pay, are more than satisfied with the service but still refuse to pay and it’s awful.

What I’ve learnt is that it is always best for small business owners to get paid for work in advance. Ask for 60% or more of the money in advance so that your overheads are covered. I also think it’s important to be selective about which clients you take on- only deal with people you truly enjoy working with.

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Kimberly

I once had a client who bashed me through email!

We scheduled a shoot together and I sent her a contract to read and verify our plans, agreements and payment. She emailed me saying that for me to receive 100% payment before the actual day of the shoot was unprofessional, unrealistic and sleazy! She told me that she would bash my name all over social media and warn people about me stealing money from customers!!

And I gotta be honest – it did scare me. I never had that happen to me before from a potential customer and once you have a bad rap, it can make or break you. But once I realized the reason for her reaction (she was pissed because she knew that she had to actually commit to my services and pay up) I let it go.

You can’t please everyone & if I got that reaction by having her read our agreements, the session would have been a horrible experience. Thanks for the post Derek!

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Sue

That’s a nice way to screen out clients that will be high maintenance or flight risks before you run into problems. I like it! :) Plus it shows you provide a valuable service that is worth paying 100% up front for. Stick to your guns. It sounds like it’s working.

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Michael Kelly

When it gets really bad… I let them know that I have contacted a collection agency and they have reviewed my situation and know that I have a case. And proceed to tell them that they are standing by to collect and if I don’t receive payment in X days, I will release them.

No one wants to have collections people bothering them. Its all about making paying you the easier option.

Also, I usually append with, if you are having financial issues, let me know and we can work out a payment plan.

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Carol

I’ve learned to have clients pay for services up front, before they get the website, designs, and web marketing setup and monthly strategies implemented. They get billed mid June for the July. If I don’t see the check before the first, they’ll see a drop in leads and traffic to their website and social media.

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Simon Green

Normally I take half upfront and deliver final product on final payment. This doesn’t always work though, and upfront 100% payment would solve the issue.

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Jennifer

I’m a wedding musician, so I simply don’t leave the site until the balance is paid in full. It’s not usually a problem, but there was one time that the mother of the groom was responsible for paying, and she did everything she could to avoid it — ignored me, told me her purse was upstairs, etc.

I just stood there patiently while everybody was getting their photos done, and then after about twenty minutes later mentioned to the bride that I was still waiting for the payment. She said something to her new MIL, and the woman finally huffed off and got her purse.

She came back to me with her checkbook and said she didn’t have a pen.

Anyway, I finally did leave with my payment. Sheesh!

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AB L

As per others’ suggestions, I instituted a wonderful practice of 50% deposit before the job begins and 50% upon completion, with no credit terms. For a small business it is just not possible to manage cash flow and absorb the costs of defaulted payments.

However when you encounter a true con-man, it is easily possible for a person of good conscience to throw their own rule book out the window in the face of the con man’s well oiled machine of deception. True sociopaths have no conscience, no empathy and no respect for the rules of society—but do tend to have extraordinary charm.

It was under such a circumstance that I began a manufacturing job for a client who would never pay. Had I done my homework better, I would have learned—as I subsequently did—that this individual was a professional fraudster who left a trail of victims far and wide across the country.

As the amount I lost was well into the tens of thousands of dollars, I then took it upon myself to create a website under his name with a detailed list of the fraudulent and morally offensive deeds he had done to various victims. Reports from new victims were received and tabs kept on his latest whereabouts, family contacts, usual schemes, aliases and photographs.

It was with great relish some years later when I received an email through this site from a sergeant on the Sacramento police force, who was investigating this nefarious individual for serious crimes that went way beyond petty fraud. With help from the information collected, the officer put together an open and shut case, and now our man Michael Gilles is serving a 20+ year sentence in Sacramento prison.

http://www.sacpd.org/newsroom/releases/liveview.aspx?release_id=20100326-055

Moral of the story: Do your research and never, ever break your own rules.

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JM

I am so inspired! I got conned in 2012 and it was horrible! My website was temporarily held hostage. I would love to think I could facilitate this kind of justice to keep the d-bag from doing it again. Good work! :)

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Sue

Good job! Fraud is one of the toughest crimes to get a conviction on. The police are more of the attitude, “Buyer beware.” But through your efforts you were able to bring a criminal to justice and save others from becoming future victims. Thank you!

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dudley

I sued their asses. 3 times in small claims, 3 victories. Sometimes just a letter to their lawyer will do the trick.

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Barbara

I had a client who ordered additional work to her website. Since she was already a customer and we agreed on a price, I did not ask for any $ upfront.

The job was to keep the integrity and brand look of her HTML site and add another 5 dozen individual products to her existing 6 ecommerce items. She had a deadline and asked her husband to help her get the photos and product descriptions together for me. I proceeded to manually add each item separately via Paypal – very tedious.

Her husband heard from his buddies that setting up an e-commerce site shouldn’t be that hard, shouldn’t cost as much as I asked, and after an all-nighter (or two), when it was completed, I went to meet with her, my invoice in hand.

She explained that she would be discussing payment of my invoice with her husband first. I was shocked and did not know how to respond. I just nodded and left, basically.

Later, I emailed her that if it was not paid for, the website would come down. I gave her a deadline. She was upset, as I had never threatened anything like that before.

She paid what she agreed to but shortly thereafter I notified her that she would need to find another webmaster.

It was about that time I looked around and saw that she was just one of my 80/20 clients that gave me too much grief and her referrals were some of my other too-demanding clients!

I’ve since been on a journey to revamp my client list, but it has gone more slowly than I like. :-)

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Mckenna Hallett

Something that is “tedious” or hard is not what we are getting paid for and when the husband’s friends said it shouldn’t be that hard, I would have been tempted to send a list of instructions.

We get paid not because it’s hard to do (sometimes it’s very simple stuff), but because we have figure out how to do it and the client either won’t take the time to learn or really just can’t learn it (tried and got beat up) and sees the “VALUE” in hiring someone. So defending ourselves with “how hard” we worked for them will seem like we are lying or being manipulative to get respected. It’s better to just explain that you completed the assignment, you went above and beyond with the last minute changes, and met a deadline that was very tight.

Frankly, I would have slapped an extra 15% rush charge on the last minute add-ons. SHE had the need, not you. And THAT 15% will often help the client “prioritize” their “needs” – it’s a simple but effective tactic. How bad does she need those extra products uploaded? It reinstates your worth and it “feels” like they are getting what they paid for when they pay that rush feel. Seriously – it works!

Not getting paid is less of a problem IF (if) we really have earned the trust and respect and made it clear that we are real experts running real businesses with real policies and real results using our REAL skills to solve their problems.

I just hired someone to help me with my website (it’s a mess!) because this was my first attempt at wp and I just don’t have time right now to figure it all out. The many hours it would take for me to learn what it takes to re-vamp that mess is time I need to work with building other important parts of my growing business.

I have built over a dozen websites over the past many years, but wp has me stumped. I know that the person who will do the fixes could do it in their sleep. THAT is precisely why I am hiring this person!

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Jeanie

I can come to this from the customer’s point of view. Having been very badly let down by a family member who was way out of his depth building my website but wouldn’t admit it, I hired someone to do it for me. He was wonderful. Totally professional, totally helpful.

And I made it my practice always, ALWAYS to pay him the day he sent me the invoice. No arguments.

And this has paid off for me, the customer too, because whenever I have a query or a problem, he always goes the extra mile to help. I think sometimes customers would do well to realise this!

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Terry Matlen

My bigger problem is that people are unwilling to pay for my services. The comments? “You should be helping people for free. ”
I even developed a program that is incredibly inexpensive just so anyone, pretty much, could afford it (online ADD coaching) and still…I get this comment. Very frustrating.

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Yael Grauer

Great video!

I have Freshbooks send out late payment notices automagically.

If they still don’t pay, I will have a VA contact the client on my behalf to discuss payments. There’s just less emotional volatility that way… the VA can be sweet and not angry about it, something that’s harder for me to do.

I also took one client to small claims court (and got paid) and one to collections (didn’t get paid). In general I try to warn others of magazines/sites/etc. that don’t treat freelancers well.

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Nadia

Hi,

sorry, I’m not familiar with the term “VA”. What does it mean?

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Annette

I’m developing an online training course and am considering the option of 3 payments over time or one payment upfront at a discounted rate. Can anyone who also does online training courses tell me what the average % is of clients who request refunds? Is there an ‘average’ to expect?

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Duncan

@Annette there isn’t an average to be expected of refunds. Honestly, people think they should get a refund no matter what because maybe they want it for free. I cannot tell you how to run your online business, but giving refunds depends on you and your brand. Remember you have to build people first and the people build your business. That means get the right people in your firm or clients. Also you have to think about your cost your next ROI etc. it goes on.

In my business there is only certain times I give refund and time I give no refund, but value. In SEO work I cannot guarantee your website be number one, it might be one day then next day it wouldn’t because google anorhythms changes.

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Annette

Thanks Duncan!

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Sue

@Annette, I love the way you are thinking. Don’t focus on the refunds, there will always be folks who just want to get it for free and you can’t do anything about it. One thing tho is the psychology behind the pricing. Too low and people will wonder if there’s any real value. Too low and you will get a higher percentage of returns. (Not sure why, just a proven fact). And if you set up a sales funnel with upsells and downsells, you can offer both. Example: Main sales page with the full price offer. If people click away, set up a downsell page with payment plan choices. If people click away from that page, offer a discount. If people click away from that offer a modified version of your training course with just the basics. On the other end of the spectrum, if they do buy on the first page, make sure to offer them an upsell while they still have their credit card in their hot little hands, perhaps a software program that automates something or additional coaching from you personally. You get the idea.

Hope this helps!

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Joseph Montes

Hey Derek,

Been on you list for a few weeks!!! I love the straight talk you offer! Ive done a 50/50 payment with customers and to date have only had one cry “POOR”, so the second payment is still awaiting.

Thanks for the vid and look forward tot he next one!
Joseph Montes

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Naomi Catalina

I’ve only had this happen to me twice. 1st time the client decided he didn’t like the work I did, so didn’t think he needed to pay. Thankfully he had a partner that I was able to talk some sense into.

2nd time was a regular and prompt paying client that I had followed up with 4 times with no response. It was very odd since we had a good relationship in the past, but I figured they decided to dump me and show their true colors.

My final attempt to reach them was an email with the subject line “I’m Confused”. Content saying what a great and prompt paying client they have always been and have my follow ups been getting lost in their spam? I ended up getting a response from everyone on their team with major apologies and a check in my mailbox 3 days later.

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Jon D Hawkins

“Honest business people always win in the end” This is so true.

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Allison

I’d love to hear your perspective on this–I (as the client) made one payment out of three (100% of the cost to be paid prior to any service provided). Life circumstances changed, due to an unexpected surgery. I contacted the business owner and asked if the payment I had made could be applied to a less expensive package. I did not ask for my money back. The business owner replied that I could apply what I had paid ($500) to another package she sells for $197. I was completely turned off. Pay $500 for a $197 pkg? No thanks. Keep in mind that zero service has been provided. I would rather let her keep the $500 than to work with her at all now. To me, her integrity is in question. Am I missing something? What’s your perspective?

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Jane Grey

As a small business owner of a holistic life coaching and counseling service, who coaches other small businesses, and I would offer this perspective. You agreed to purchase a product for $1500 to be paid in 3 installments. This is a tacit contract. After the first installment paid of $500, you cancelled. As you defaulted on your agreement, the business owner may not owe you anything at all, depending on the terms of your agreement. Your hard luck doesn’t mean she should be out business which has been contracted. You were offered something of value so it wouldn’t be a total loss for you, which I think is more than was necessary but certainly a nice gesture on the part of the business owner. That said, when my clients give me what is essentially a “My hard luck is now yours, too” story, I generally reimburse them politely — and take them off my mailing list FOREVER.

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Shaleen Sharma

How to deal with a website that posts just before you’re about to leave for a date? Lol.. its k.. she could wait for five minutes. Btw.. it also depends on how genuine your client really is. Like if youre stuck with a repeat offender, being kind gets really tough, and sometimes you’d find out about his history only after the default.

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Rosie Taylor

Derek is so right about not getting angry. You can even say the same for feeling resentful. A client stiff me two years ago and even though I ‘wrote it off’ the resentment still hung around like a dark cloud. Finally, I emailed the client a few months ago explaining that I was disappointed in how our business relationship ended up. I also pointed out that by now they could use some work on their website to demonstrate that I still cared about being a resource to them. I didn’t get angry and didn’t rant. They wrote back and with a few reminders paid. Now I have them back as a client… as long as they pay me the bulk upfront. I like what Derek said about having clear terms up front and making sure you stick to them. If you act wishy-washy and change the rules, people will take advantage.

I’d like to also comment on 100% prepayment. That can be hard to get, but I’ve recently made my payment schedule so that 80 – 90% is paid before final delivery. That way if they stiff me, it’s a small loss. I do ask for prepayment on monthly services since the work would come before the payment. Hope that helps…

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Eddie

Fully agree on your points made. I have gone through all those stages. Since all is prepaid I have no hassle anymore and can focus on the content to be delivered.

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Frank Schwarz

Great video!

I had a client decide to not pay. No phone calls answered, noe email responses. (even tho I knew he was opening the emails with the fun yesware tracker.) After months of this I requested the my follower copy and paste a plea email and send it to him.

Basically, “we, like you are a small business and have done the work and you would be hurt if your clients did not pay. Please pay so we can just end his relationship and move on. PS- If you decide to ignore all of us we will use social media to inform future clients of how you do business.”

That afternoon we received our final payment with an apology about how they had just had a “slip of the mind.”

It worked, but was such a pain in the ass.

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Anne

I’ve mostly encountered customers who were like – dude my credit card got stolen or omg, that’s so embarrassing…and then paid not only the payment that didn’t go through but the remainder of what they owed me.

I guess the way I handle it is this – Infusionsoft has a 2-3 emails that they send out if a payment fails. It gives them the chance to change their payment information. The good thing is that I don’t have any clue when these go out. I only get notified by infusionsoft if the payment has failed 3x. Once that happens, I send a nice email letting them know that “my system” emailed me.

I deflect it off of me as long as I can so I don’t go personal fast. I make it about fixing something, rather then them not paying on purpose…which it turns out is the case most of the time.

Usually it works and the issue is fixed right away.

However, there are a handful of people – literally 3 past customers who just refuse to respond to me or anything. In fact, what’s funny is to see that they open all my other emails and even “like” stuff of mine on instagram and Facebook.

I’m not quite sure how long I should be the bill collector, but a few of those folks owe enough to annoy me a little when I see their names liking my stuff. In my mind, I can keep emailing them indefinitely, but is that a waste of my time?

What do you think I should do about those non-communicators?

Great video and so timely!

-Anne

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Sue

Good question. I’d really like to hear what Derek has to say about the non-communicators. In my business, (vacation rentals) both the host and the guest get to leave reviews for each other at the end of their stay. This review then becomes part of each party’s permanent reputation so it keeps folks on their best behavior. They know that if they want to keep using the website for booking rooms, they have to keep their record clean. However, that only works for that individual service. Wish there was a single review/reputation website that would be linked to each person and follow them around wherever they went (electronically speaking). Closest thing right now is Yelp.

Any web designers/programmers out there that want to partner up and run with that idea? :)

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Shelley

As a holistic nutritionist I usually offer 6-12 week programs that can be paid in full or monthly payments. I always get first instalment before starting any work for them and they sign a contract with dates that subsequent payments are due. The contract helps, as I have also done daycare for many years not using a contract and always got taken advantage of.
I also like bartering for people that are short on cash and really need help to get better. I’ve exchanged work for sewing lessons And help with my website. Most people that are genuine will do this and almost everyone has a skill that can help you in personal or professional life

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Sue

Shelley,

I agree! Bartering is a great way to go. I’ve been known to trade a room to stay in for photography services, website SEO help and internet marketing. It’s a wonderful way to do business because it’s more like sharing and it builds strong friendships. Highly recommend!

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AJ

I had a client that’d always pay within a few days, these payments were fairly small values, less than $200 each. I was doing these tasks for the client because their original supplier repeatedly let the contact down with low quality work and failure to answer emails.

Then the client wanted a big piece of work complete, and 60 hours later the work was done, completed way above specification and it blew their minds. Then a week later I got a email back, sorry we don’t need the work any more, I’m leaving the company next month.

I had put a clause into the contract, if they didn’t like what I’d done, they could cancel and they’d be no cost. I put this clause in to give my contact peace of mind. But I hadn’t banked on my contact leaving the company.

Arrrrggghhhhhhhhhhhhhhh!!!!!!!!!!

After much thought and a sleepless night – I sent a very polite nice email back just pointing out that if they didn’t want my work, they’d have no supplier whatsoever. Well I didn’t put it as blatantly as that, but they read between the lines. They’d be leaving the replacement member of staff heck of a mess with nobody to provide the service.

The contact agreed that they needed to follow through, I got paid.

Sometimes all it takes is to think through on behalf of the client what will happen if they don’t pay, and communicate it to them gently and subtly.

Out of this I got the original piece of work, and now I have another gig at my contact’s new place of work.

Sweet.

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Jan Arzooman

There are lessons learned slowly. I give discounts to folks who find me on social media and also to authors who are in writing groups. One client I met in my own writing group was hurting for money, but he said he’d be able to make small monthly payments, so I gave him a pretty low price overall and started the editing job on just a small deposit. $40 payments were due every month, and month after month went by with no payment.

I am struggling myself now, because work is slow, so it’s annoying. But that’s a problem unrelated to the client’s failure to pay. I sent a couple of polite emails that he didn’t respond to, but when I sent a snail mail letter I finally got a small check. The remainder owed is too small to take him to small claims court over. If I get paid it will be nice but I’m not going to lose sleep over it.

Lesson: if someone tells you up front he is struggling, take the hint. Let him get the money together before you start the work.

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Sue

Jan,
Just wanted to say how much I agree with your lesson learned,

“Lesson: if someone tells you up front he is struggling, take the hint. Let him get the money together before you start the work.”

I have found that to be true too. When I accept reservation requests for my bed and breakfast, I have always run into trouble with the ones who either NEED a discount, DESPERATELY need a place to live on SHORT NOTICE or who will ask someone to HELP THEM PAY. I have learned that at the first sign of desperation to just say, “no.”

I have also found that if you do reach out to “help” these folks, thinking that they will appreciate it, their appreciation quickly changes to an attitude of entitlement and they expect you to give more and more. Sadly, in situations like this, you can never give enough so it’s better to not even start down that path in the first place.

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Storm Cestavani

As an astrologer, usually a client not wanting to pay or one that reverses charges (happens very rare btw) because they didn’t get the information that they wanted to hear — which usually pertains more towards someone consulting me about their love life rather than business. In some cases, I offer them an additional 15 minute conversation for free where I help them with the issues that they had difficulty with or I simply chalk it up to a business expense and that you cannot make everyone happy.
I have learned that often it is not worth arguing with the client and will often just refund them the money or offer them their money back. Further, I think that some clients just purchase informational productions on impulse and then the reality that they cannot afford it dawns upon them.

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Clare Fitzgerald

I’ve just started to offer a series of sessions to clients where people commit to pay a monthly rate for my time over 3 months.

You’ve got me thinking Derek.

Your post has made me wonder whether that payment process should be automated so that each client is debited each month automatically so that I avoid these sorts of problems occurring.

Thanks for the advice.

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Anton

When I was producing audio/visual presentations back in the 1960′s I wouldn’t even start until clients paid one-third up front. I identified a “milestone event” half way through the production for an additional payment of one-third and the balance was COD. Only one client delayed the final payment (an exceptionally large corporation that had consumed my operation for more than 8 months). Their stalling included telling me that I “had to understand” and that my terms were “highly irregular”. I had a showdown with them in their corporate boardroom whereupon I pretended to slash my wrists (I had small bag of beef blood up my sleeve) in a fit of desperation and wouldn’t leave the boardroom until one of the directors offered me a “personal” check for the balance. I didn’t accept but suggested that he could send his secretary to the bank and come back with cash. Needless to say, I never did business with them again, BUT their competitors kept me busy for the next four years.

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JM

omg I am crying laughing. BEEF blood?!?! you didn’t get paid but man you did it in style

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Hank Eder

I always approach it as if the client made a mistake. “You must have missed my invoice,” I tell them. “If you like, I can resend it.”

That way the client has no need to get defensive. This has worked for me on a number of occasions.

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Adrienne Andreae

I haven’t had this happen to me as a freelancer, but years ago I used to market events at some of the best restaurants in Boston. Every once in awhile someone would call after an event and complain about the bar bill or some other fee. While their bill should’ve been no surprise to them, they clearly didn’t read their contract. (In fact often I spoke to an assistant who didn’t want to look bad in front of the boss.) Usually, if you’re kind and firm, you will win. Also, I learned a lot in these conversations about what people really read and what I needed to make sure I highlighted for them. Any customer interaction–even the tough ones–is an opportunity to improve your business. (Unless, the customer is crazy. Then you’ve just got to find a way to make the interaction quick.)

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Idasa Tariq

Peace Derek,

One way I make money as a music producer is selling beats. My aim is to get select paying artists I can work with, instead of finding artist just to lease my beats to, so my prices are higher. I had an artist who loves my production but didn’t want to pay the price for it, so I came down to my low price and offered her a wholesale deal since she only need 5 beats for her project.

She still wanted lower, and basically at the cost of leasing prices. Mind you this a potential client and not someone I’ve built a rep with or done business with before. She lost me as a producer right after she put down myself and other producers for our price and reasoning for it. This method has worked with other artists that bought a few beats at a lower price instead of one, and still buy from me today.

Also great video. Not saying this is a must have everytime cause it’s not, but the visual effects this episode were a nice touch. Keep up the good work Derek.

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Idasa Tariq

Pardon some typos, using my tablet.

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Tom Bentley

Derek, I had a client—a prosperous businessperson from a wealthy area in California—a bit back for whom I wrote the copy for an entire website, 15 pages total. He was paying for his girlfriend’s home care service website development. I’d sent a proposal to him that outlined the scope of the project, my writing responsibilities, and my bid. We discussed it on the phone, and I agreed to knock down the price for the completed project. My mistake was in not getting a signed contract, either on paper or by email, but since he had agreed, I worked on the project in good faith.

After meeting set milestones, I had received two-thirds of the fee, along with lots of praise for the work. But when I sent the final invoice, no response.

I then sent him a number of emails over the next few months—all mild in nature, just inquiring why no response. No reply whatsoever. There had never been any friction between us over the course of my writing on the site, only responses of “good job!” and some editing discussion. A certified letter from me was refused.

I emailed him several more times and then told him to please respond, or I would report him to the Ripoff Report, Preditors and Editors and similar sites. No response, so I did report him. At that point, I probably should have let it go. But I was angry that the website I’d written was bringing clients to that business, while I wasn’t paid.

So, I took the nuclear option: I reported a DMCA violation to the site host, and they took the site down. I continued to send him an invoice every month, again, never anything harsh, saying I’d rescind the DMCA order if he paid. No response for months, and then, he finally responds, saying that if I’d have the website put back up, he’d pay me.

No. The old “once burned …” Anyway, when I said I’d fix it all once I had the check, again, no response. I continue to send him a monthly invoice, that is, if anything, friendlier than ever. It’s kind of a poetry writing exercise for me now…

Sorry for the long response!

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Marielle

Great video, I’m a freelance illustrator. One time after a client didn’t want to pay me, I offered a 3 payment plan. One would think why in the first place they hire someone they won’t be able to pay, but long story short. They did pay me on the dates we planned.

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Alex

The best way to get paid is get your money upfront. If it’s sold appropriately you will get paid and it will stick on the books.

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Komal

as a makeup artist I ask for 50% deposit if they book me for their wedding or event. Then the remaining money at the end of the day that I was hired for. Saves from anyone not paying in the end because it’s much more convenient for them to pay in installments

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Jay

When a friend gets an assignment from an iffy client he buys the url: NameOfClientCheats.com. If they don’t pay he tells them he will put up a landing page at that url and show the billing that wasn’t paid and describe the job and the dude who didn’t pay… and let the client know that anyone who Googles him will see that page. So far has worked 3 out of 4 times. The 4th time his lawyer said not to mess around. I am not a lawyer. Cool solution maybe.

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The Get In Shape Girl

Never happens to me.. Everyone has to pay up front/ sign up before I begin collecting information from them. if they want to work with me, they put their money where their mouth is.

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Nicole

I ask very, very nicely for payment. In the letter, I tell them to please contact our office if they have questions or if we need to come up with a creative payment solution. All they have to do is call / email! If we don’t hear from them, I send a 30-day notice in a brown envelope (the color is key) with a red stamp “Past Due”. That usually gets their attention. If we STILL don’t hear from them…off to collections! …and off my mind!

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Jay

When I hire a free lancer I include a “turn down fee” of 20% so if something goes wrong — bad job, too many mistakes, unresponsive, attitude — once the job gets underway I can refer to the turndown fee and feel that this was mutually agreed upon and conclude the relationship. Just as there are stinker clients there are stinker freelancers and it’s good to cover yourself . Thoughts?

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Duncan

I am a website designer and seo consultant. I have numerous of people who don’t pay or flat out lie to you in your face. I think where I live they are the breeding ground of dishonest people; however for long term clients of mine I will make a payment plan and help them out. First, time clients I ask upfront cost for websites or half depending on their attitude. You can tell when a person is shady or unsure about things, but I give them the benefit of a doubt. SEO is different once work is going its stays in the net cannot take it back; you either lose your money or gain some. I’ve started now upfront down payment then bill them monthly started on the 2nd month of their contract.

I had one client who cancel on the 3rd month in which is fine and I told her that these links I cannot take it back and it will get drop if not maintained. She told me yeah, but I found someone can do it far less. I wish her luck. 6 months later she came back saying she isn’t getting enough traffic and they where from different countries blah blah blah. Well the person she hired wasn’t doing it correctly and probably from a 3rd world country who knows. I explain to her that SEO is a long term investment you cannot really pay someone that offers dirt cheap SEO to your business. Its like a surgeon saying “well sir I have a heart for you for the heart transplant however its from a cow or made of plastic, but it works.” She paid in payments slowly because I have to clean up all the other links and start from scratch.

What works for me is education to the clients very well make them feel more comfortable that they are in good hands. This day I do not jump the gun on new customers and just get their cash. I evaluate, train, educate, show them options, pros and cons etc. There are bunch of times I don’t feel right with the customer and turn them away. Which yes, I lose money however I found out that I don’t deal much of heartache about getting my money worth.

Always have a contract in hand signed and returned. Always follow up with clients letting them know what you are doing. For me I have a live dashboard where all projects uploaded and google analytics so my clients can log on and see what I’m doing, where the links are, ranks, traffic etc.

All you can do is be honest with yourself have great integrity in your business brand. There are a lot of suckie people out there and it something we have to dodge and get around. Thanks Derek for the great video.

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Duncan

Oh yeah i forgot I also had a client who still hasn’t paid me and he still calls to have me fix his website. I keep telling him you have unpaid balance due he said ok and never pays. Then 2 or 3 months later he calls again asking me to fix his website. The cycle repeats it self and this has been going on for 2 years now.

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Starr O'Hara

I take money up front, as a rule. Nearly all of my social media/content development clients are on prepaid, monthly packages. I don’t have to worry about not getting paid, and the responsibility to “pay up” falls on me, not the client.

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Mike Linville

After 16 years in the business we’ve learned one thing.

“Good fences make good neighbors”. Meaning – we set up contracts and payment terms that are fair for all but more importantly – we don’t release work until final payment is made. We have done it on occasion and more often that not it leads to extended terms, chasing money, etc. Not what I got into business for.

Now we have clients accept projects, issue final invoices and if they want it up immediately – they better peddle their bikes down to the office as soon as they can.

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Benji Walklet

To echo what others have already said: do your research.

I get a lot of my clients through Elance…so before I ever submit a proposal I look at their work history (i.e. what reviews they’ve left for others, how much money they’ve historically spent, what percentage of jobs they’ve actually hired someone for).

Referrals are a little bit trickier to do background checks on…but you can generally get a good feel for the type of person they are after one short conversation.

For me, clients who don’t pay usually pay eventually. Sometimes they just forget.

Since I started using FreshBooks that has all changed though.

It automatically sends out invoice reminders for clients who haven’t paid on time. It also automatically adds late fees, which are a percentage of the overall invoice.

Before using Freshbooks it took much longer to get paid. So these two features have really helped!

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Liz

I wouldn’t say this is a best practice, but it is a true story. A man with a construction dumpster-rental business could not get paid by a residential customer. The customer had rented a jumbo-sized dumpster for a home remodel project. When the rental period was over, the dumpster was removed. After several weeks (maybe months), the customer wouldn’t pay after repeated requests. Finally, the business owner brought the huge, dirty construction dumpster back to the customer’s upscale suburban neighborhood and set it down right in front of his house. When the customer called to complain, he was told that it would be removed when payment was received.

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Duncan

exactly what i would do. I buy him a beer for that.

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Becky Blanton

I get paid up front, but for those clients who pay a “final upon completion” payment I either upload the final to e-junkie, where they pay to download the final files, or if they stiff me I write them off. It’s not worth the aggravation to chase them down.

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Phoebe

I had a similar issue when I taught music classes for children in a room in a store. The store owner collected the money and then seemed to think I collected the money. I gave her copies of all transactions, clearly stated what was owed to me and she refused to pay. So I created a check in the amount owed, written out to me from her and taped it to my computer screen. I received the check in the mail within the month. So grateful to the Law of Attraction.

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Gavin

I had a client who just couldn’t make it a priority to get us paid. After reminders, phone calls text messages the only thing that moved the needle was an emotional appeal.”Hi Client -I’ve sent you a few notifications over the last months but I need this $x,xxx paid so I can make my rent/eat. Could you please pay in the next week?”

It was close to begging, but nothing else worked. I then moved on from the client as soon as I could.

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Tom

In my early and mid 20′s I was doing freelance computer repair and web design as a word-of-mouth business in eastern Minnesota and western Wisconsin.

Though I had a number of clients ask for their money back several months after saying how amazing I was when something else went wrong on their computers, the worst was a person that I designed a website for.

He had a ridiculous concept to sell people information about whether or not a house they were looking at buying had been a meth lab or not and in order to populate his database he was going to send postcards to every police station in the US asking them to go to his site and type in all the locations of former meth labs.

Anyway, I figured “no big deal, I’m just making the website, what difference does his shoddy business model make to me?”

Well, after spending way, way more than the agreed amount of time creating the site, he finally paid me the original amount and refused to pay for the extra time, which I was mostly fine with because he was such an annoying person and I was happy to not have to see him anymore.

About a month later, he started emailing me daily for a week demanding his money back ($500), saying he was going to sue me for the $1 million he assumed he had lost in revenues because my terrible web design had cost him his business (after several iterations, he had finally just drawn me a picture that I copied exactly), claiming that he found another web designer that redid the entire site exactly how he wanted it who did the entire job in a day and for only $20, and even went so far as to claim he was going to have me jailed for fraud.

I responded to every email in the same way, informing him that his accusations were unfounded, that his website was still exactly the one that I had made for him, and that I was not going to refund his money.

That weekend he started calling the family members that knew him and had recommended me to him, telling them he was going to sue me if he didn’t get paid. I happened to be with one of the people when he called and was able to tell him that harassing my family was completely unacceptable and he tried to play it off like they were having a casual conversation and the topic just came up.

It was about this time that I learned that no one I knew actually liked him and almost everyone thought he was an unreasonable jerk. He had even tried to get out of paying one of them for some carpentry work.

After that I got one last email supposedly from his lawyer, but from his email address, claiming that he was about to file the papers to sue me unless I paid him immediately. I told him he should go right ahead and I never heard from him again.

A year later I learned from the family members that had known him that he had lost his other home business, lost his home, lost his wife, moved down south somewhere, and gotten cancer.

So, I guess in the end karma got him on that one.

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Dave Bross

Some great ideas here.

If it’s a service it’s wise to get paid up front. Due to human nature people see less and less value to the service after they’ve recieved it…no matter how well it worked for them. This lack of appreciation accelerates the further away it gets from when the service was delivered.

In some states you can file a mechanic’s lien (even if you’re not a mechanic, these cover most services) quite simply and inexpensively.

A friend did this with everyone who screwed him for years and years in a little local auto repair business. Every now and then a little money would trickle in as someone who had ripped him off got into a situation where they had to pay the lien before they could get something else they wanted.

The real jackpot came when they widened a major road through the area and the state would not pay any of the money for the land they bought until all liens were satisfied. Payday….big time.
My buddy actually got to charge his choice of yearly interest rate for all the years the money was owed.

Another friend had a well drilling business. When all hope of getting payment was exhausted he would sneak back onto the property and pour a sack of ready mix concrete down that well early in the wee hours.

Yet another friend sold race car parts. One of his “customers” managed to defraud him out of a lot of money owed via a sleazy lawyer.

My friend is a very large man. His ex “customer” was foolish enough to laugh at him and ridicule him as they were headed out of the courtroom and down the outside steps. My friend beat him senseless right there on the courthouse steps.

This was quite a few years ago. Do that now and I’m sure you would be looking at further litigation. Hard to beat for total satisfaction though.

OK, enough tales from the wild, wild southland…back to work.

Dave

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Sue

Dave,

Thank you for sharing. I couldn’t agree more with you:

“If it’s a service it’s wise to get paid up front. Due to human nature people see less and less value to the service after they’ve recieved it…no matter how well it worked for them. This lack of appreciation accelerates the further away it gets from when the service was delivered.”

And this is a perfect topic for Social Triggers to explore as we are dealing with the psychology of why people do what they do. I have found this principal of “accelerating lack of appreciation” to be in effect 99% of the time. It seems only 1% of the population insists that they pay for services rendered or to replace things they break. Is it integrity, a sense of responsibility, maturity or something else that causes the 1% to do the right thing? What do you think Derek?

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Sue

I’ve been running several vacation rentals in LA for 3 years now and I love it. However, I have to admit that I HATE collecting money from people. What’s so great about the vacation rental business that I run is that I use a third party provider that acts as the middle man and handles all of the financial stuff for me. So when the guests arrive, I can greet them like friends who are coming to stay rather than with my hand out demanding payment before they can enter. But every now and then I offer additional services to my guests for airport pick-ups and private custom tours. I have learned the hard way to always collect payment up front. It seems to be a common gene that people share that once they have received the services, they simply don’t feel like paying afterward. And once they have that mindset, well, let’s just say I wish I had a dumpster I could park in front of their house to help persuade them to pay for services rendered.

Aside from always collecting payment up front, does anyone have any ideas on a dumpster-like solution for tourists who have received transportation services and are sleeping in your bed, eating breakfast with you and smiling saying they just don’t feel like paying you?

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jordan f

Client one: I called Guido. Payment promptly received.

Client two: Called a “friend” who mailed back their VP’s fingers to the client’s financial person one at a time. Payment promptly received.

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Shannon Lagasse

So funny! I now ONLY charge clients upfront for freelance services. I had one woman try to tell me that she wasn’t happy with the work I delivered, even though I sent her mock ups every day. Eventually, I offered to discount what she owed and told her that was the end of our working relationship.

Another client refused to pay for her services, despite the fact that she emailed me about 10 times a day, taking up a lot if my time (this was earlier on in my business). I had chalked it up to a business lesson until she went to buy from another client of mine. I told thus client what had happened, and she told the woman she wouldn’t let her buy her products and programs until she paid my bill first. :]

Now, all my clients who use payment plans have automatic payments set up on Paypal. So whether they like it or not, those payments are automatically taken out of their account. Before I did this for one client, she had more than $10k in unpaid payment plans (which I helped to recoup half of by calling clients and kindly asking them to pay – similar to your tactics)

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Carma Spence

I know its silly … but I got a little thrill when I heard you say “my name”. Yeah, send them my way and I’ll get them in the end. :-)

Now to answer you questions:

I’ve had two clients not be able to pay what they owed me. One made payments and eventually stopped and started bad mouthing me behind my back. That hurt because she was a friend. She was going through a tough time financially and if she’d just talked to me, we could have worked things out. I eventually just had to release in my mind the $3,000 she still owed.

Another person, also going through tough times, wanted to pay me. We eventually worked out a monthly payment plan of $20 a month. It will take awhile for the full amount to be paid, but she could work with this and it allowed her to stand in her integrity with what she owed.

Now I’m more careful about who I work with. These were valuable lessons.

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Ron

Some comments I want to make:

1. I agree that empathy and patience is important when dealing with tardy or forgetful payments. If you blow up at a client/customer, then you risk ruining the business

2. Rarely, people do get defensive when confronted about payment. Reminds me of the one time I saw this guy storm out without paying at a noodle restaurant. When confronted, he yelled “the service was !@* and the food was !*@#. I’m not gonna pay!” Seemed like an angry customer, but looking at his clothes, it’s likely he was very poor and trying to convince himself that he doesn’t need to pay.

3. Deposits before doing any work are a good way to weed out jokers, flakes, as well as dishonest people.

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Muhammad Gohar

I manage a full service interactive digital agency where we have clients in the design, development, online marketing, and PR fields.

For design and development tasks I take 50% upfront and 50% after delivery of work.

For online marketing services I charge full 100% upfront. However, for some clients we charge them after one month because we have full control over their digital assets and do a 6 months contract.

In situations when client refuses to pay , we talk to them and try to resolve the issue, if we think that it was our mistake then we don’t charge them and give them the service for free (if it cannot be resolved) . However If we think that client is just trying to refuse to pay then we refund him and stop his work in a way that he cannot create bad word of mouth.

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Jane Grey

In over 20 years a holistic life coach, counselor, hypnotherapist and Reiki master with a private practice as well as teaching live events, I’ve had fewer than maybe 5 people who wouldn’t pay. One was a guy whose cheque bounced, and he kept promising to make good on it, would make appointments to bring me cash and stood me more than once. He was so aggressive I was afraid of provoking him, frankly. But it rankled not to be paid and to be given the run-around, so more than a year later, I finally wrote him what I call a “reverse love letter” by email, writing what I myself would have liked to have received from him, addressing it to myself. Let’s say his name was Dennis. I wrote “Dear Jane, I just realized I never made good on that check from our last session and am so sorry to have kept you waiting all this time. You certainly deserve to be paid for the session which of course was very helpful. I really appreciate that you did not take me to small claims court or cause me any trouble over this. I am sending you payment of [amount owed] right away via _____[state your preferred method]. My apologies again and thank you for your patience. Yours sincerely, Denis” . Well, I got a very quick reply, a sarcastic and nasty take-off of the reverse love letter — but I got paid immediately.

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Sue

Love, love LOVE the “Reverse Love Letter” idea.

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Foteini

As a therapist I have also faced this problem. Even though I have agreed ways of payment from the first consultation, difficulties do arise from time to time and depending on the therapeutic relationship with the client I discuss together with him/her to find the best solution in a warm, clear and accommodating way. It works wonderfully as we both feel appreciated and respected and I always get paid.

However, I still remember one particular client who not only pleaded special off working hours consultation but forgot to pay me. When I calmly called her to confirm when she made the deposit she sarcastically told me she had no time for that (did I tell U she was a bank employee?) and that I was greedy, pushy and thought only of myself.

I took a deep breath to contain myself and calmly replied: I am so sorry to upset you but I was worried that something happened to you, as you are a very conscientious person in so many ways.
She paid me within 24hrs.
However when she called again for another emergency online consultation I was clear that first she should pay and then the consultation would take place. She never called again.

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Dawn

As always I really enjoyed your video, great content :-) I run a small cleaning business and with my new residential clients we collect payment after the job is completed typically….we had one client who decided after his 4 hour cleaning session that he should negotiate the price down because his sister only paid her housekeeper “$x.00″. I learned a valuable lesson that day about biting my tongue and walking away from a volatile client. We did eventually get paid only after we sent a lien letter, but we now charge upfront for 1st time customer deep cleans.

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Tamara Baranova

I’ve had clients in the past who were happily working with us, then things would happen to their business – like they would lose some major clients of their own or personal difficulties so they weren’t able to work. Then they would hit problem with paying us. Usually I offer a payment plan for their outstanding balance with a small admin charge for managing their payment plan, plus put account on hold until the debt is settled. But a couple of times I’ve had to experience more dishonest clients who were still paying for other things and signing up for expensive coaching packages – but claiming they were in financial difficulty. It’s very hard to prove that’s the case – so I would still follow the same approach, just make sure that either we won’t work again in the future, or any work is done on 100% prepayment basis.

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Jeanie

I have a friend who is in business by himself and is ALWAYS having problems with clients who will not pay. But part of the problem – a big part – is that he always underestimates when he gives a quote and then the bill comes as a big shock to the customer.

To be caught out once or twice is annoying, but it happens. But to be caught out repeatedly suggests we’re doing something wrong!

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Kamila Gornia | for passion-driven solopreneurs

Hey Derek, great video as usual – very insightful.

I had a client tell me before they didn’t have the money and being that I’m an understanding person, I tried to kill them with kindness. Except, they never paid. They would feed me the same lines over and over but I felt like they were just taking advantage of my being nice and walking “all over me” because of it. I never did get paid for that gig.

It’s so frustrating when people don’t pay – I’m like, why did you hire me in the first place if you couldn’t pay?

Now I have people pay up front (for coaching and products) or at least do a 50% deposit (for the photography I did). Solves a lot of the problems, I’d say.

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Eddie

Thanks Derek, nice video. I just shared with a friend who has often such problems.
Many years back I used to have my service paid after delivery and faced all such problems – from smallest to largest corporations. Since many years now all is prepaid. No hassle and can focus on my work.
Derek, with no intention to hijack this topic, why I liked to watch it was, that clients can’t commit to promises. So, like not paying they’re not responding to made promises.
Thanks for posting this :)

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Janet Falk

A client, who was also a neighbor, had trouble paying me. She spaced out the payments, sometimes paying me $50 here and there. It was not awkward, because when we saw each other, we did not mention it. Eventually, she paid me in full.

I ask for 50% upfront of my estimated bill. I had trouble getting paid by someone who I was warned about. When she finally settled, I decided never to work with her again. A year later, she referred a potential client to me. Go figure!

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Geniece

Hi Derek. I had a situation once where I started work for a client and I initially sent him a paypal invoice. I did let him know that payment was due before service began. Well he did not pay immediately and I still started servicing him (my fault!). Then he asked if he could pay with a check so I agreed even though I prefer electronic payment. A week goes by and he still doesn’t pay. Not only did he not pay, but he was one of those clients that was just becoming more than what it was worth to continue to work with him.

So finally I sent him an email and let him know that I didn’t think we were a good fit for each other, made some recommendations on what type of virtual assistant might best serve him and politely as I could, mentioned that he never paid his invoice nor sent the check payment that he said he would.

He tried to keep me and even though I did want the money and thought he would be a long term client, I didn’t want to have to deal with hunting him down monthly for payment. So I dropped him and didn’t ask for the payment again.

About a week or so later, I finally received a check in the mail from him but learned my lesson going forward. If I say payment is due before service then I don’t start service till payment is received.

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Lou Johnson

I had to FINALLY tell an agent that STILL did NOT pay, that I’m holding the paperwork needed to take him to small claims court. He sent the money.

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Peter Zapfella

We all have a story to tell. Since I introduced signed Terms & Conditions and a deposit with booking, I have only had a few problems where clients have refused to pay, passed rubber cheques and so on. I send them friendly reminders, make polite phone calls. But these people were never going to pay me anyway. My Terms & Conditions scare most of those people away.

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Irene Pollak

I think my father taught me a valuable lesson in learning how to negotiate with difficult clients. He would make me ask 5 times for mine and my siblings pocket money. So I am pretty good with getting money out of clients. But I do have a clear stipulation that work does not begin till the 50% deposit is paid and then payment is required at each stage of the website build. But with social media clients they pay me a month later, but I have started getting clients to pay me in advance. I have found I work harder and with a lot more joy knowing that I have been paid for my months work in advance. So something I resented as a child has turned out to be a great gift in business, there you go. :)

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Jerry Silfwer

Hey Derek, big fan and also a happy customer who’ve taken your online course in the past. The lessons has helped me greatly, not just with my blogging. Now, I’m also a freelancer and I have to deal with absent payments more than I ever anticipated before going out on my own.

My best tips is to make sure to follow-up the minute the money should’ve been in the bank if they aren’t. And don’t do more work until that conversation is out of the way. I’m always respectful and in listening mode, but I want to clearly signal that I’m serious about getting paid on time.

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Mike

Good advice all around, Derek. I have taken a similar approach, but slightly different additional step. In addition to contacting a client to determine why they have not paid, in those cases where they refuse to respond after two attempts I send them a letter that says basically ” I would really like to know what the problem was and how I can provide better service. Since you have not contacted me after my requests, I can only presume that you were dissatisfied in some way and that you do not value my services to the same extent I anticipated based on our agreement. Thus I would still like to hear from you. But if I do not, please consider sending what you think the services were worth and I will close your account and we will part ways amicably.” Amazingly, a significant percentage of people either send what they owe me or contact me to express their concern.

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Brian Krall

I too have dealt with this plenty of different ways. I have had people use and abuse my services and cheat me out of money of all different amounts. I even offered one girl who couldn’t afford to be a client a free internship and had her not show up for it. Sometimes someone would show up for a session and when it would be time for them to pay at the end of the session they would tell me that they did not have the money…this literally happened multiple times.

After realizing how irresponsible people are I started having people put down deposits on the sessions they scheduled. Then I noticed that some people who had said they were interested in service and were in the process of signing on would bail when it came time to pay for it. I realized that these were the people who would have bailed on payment after the session had I not been asking for it before the session. I was loosing clients…but they were clients who were not going to pay anyways.

However sometimes when selling a bigger program to people, and allowing them to pay session by session, they would spontaneously cancel their coursework because they had decided they wanted to be doing something else with their money. Oftentimes someone would sign on for an ongoing program and only take the first course! And then not return for further courses even though they had said they wanted the entire course work and I had already planned it out for them. Since this would happen after I had already designed someones course work for them and become very invested in their personalized program, I would be at a loss for the work I had put into designing their program. The problem with me is that I really take care to give the best customized service to each of my clients. So my investment would not be worth it when a client cancels their service spontaneously for no reason. So I started only offering monthly service packages, and only designing my programs month by month. This then went on to continue weeding out bad clients, this time weeding out ones who seem all gung ho about a personal transformation program when in actuality they just want me to design one for them in case they want it, and test the waters with just a first session and maybe not proceed past that point, even though they had told me they wanted the whole thing.

Now the clients I get are sound investments. I make them pay for the whole month of service up front, and if they cancel a session or do not show up without giving me 24 hours notice that session is paid for from that service retainer and they do not get a refund or reschedule on it. I am very generous with my time and energy and make sure my clients are happy, but I do not have a return policy. I record every session so they can retain all of the information and do not get any complaints.

I do have products that people can download and automatically request a refund from paypal on, virtually stealing the product though…thats a problem I do not know how to correct.

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Duncan

@Brian
How about offering a 14 day trail and only give good bits and pieces of the program? From there they see how good you are and the benefits they are receiving?

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Wayne

As I charge per project, I very seldom find myself having to work out payment schedules for projects that I undertake.

For new clients, I always ask for a 75% deposit and the balance on delivery.

I keep my clients informed of progress on a regular basis, and as such have found that two delays from my side (hey, life happens) did not cause any ructions.

My regular clients do not have an issue paying 100% upfront.

I have had my share of prospective clients who “can get it cheaper with so and so”; when I hear those words while I am discussing a project with someone, the conversation is over.

I have had to turn down a few projects because prospective clients don’t like my terms, but rather that than sit with the headache of trying to get payment for delivering what you and the client agreed to before you even started out.

Once you have developed a pricing system within your business; stick to it.

Don’t let any sob stories or batting of eyelashes change your mind.

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Ann

Yes, the number one scenario worked as I kept my cool and was patient because I knew we had a good relationship and there must be a reason.

I got paid half and then waited and waited as I sent unanswered invoices to my client. I called him and he did explain that he didn’t have the money and he asked if he can pay smaller payments. I said, “absolutely”. A week later, I a small payment in the mail.

Even though my friends gave me a lot of angry advice, I just listened and nodded and knew I wouldn’t go nuts on my client because even though he didn’t pay right away, he has lots of potential clients for me. Since then, the client recommended me to someone else while he continues his payments.

I felt a little burned so, I told my next client that I needed to get paid in full once he approves my design. It was no problem.

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Nick

Getting paid is linked to perceived value (in the eye of the buyer).

Sometimes clients or buyers have preconceived notions about the services or products that they buy online.

Other times, clients/buyers just get bad advice from those around them (friends and family). This explains the happy client who suddenly turns nasty midway into the project, and refuses to pay.

Its actually quite common, especially with online services, and information (training) products. A lot of people automatically assign less value to services and products bought online.

I use an internal benchmark process to screen clients. This has helped me filter out the “non-payers” quite early on.

There will always be the odd “unhappy” client or buyer, who just won’t be pleased, regardless.

Better to step away from such clients fast. For each one of those, there are 10 potential customers, who are happy to pay for my products, or services rendered.

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Michelle

Hey Derek,
Great message. I wear several hats. I design websites and require 50% up front. This is needed to pay for hosting and I always require the customer to pay for their own website name.(to protect them). The remaining 50% is due upon completion. Have had no problems with this at all.
My other “hat” is reading Angel Cards and my readings are all paid in full up front. No problems there either.

However, I do have one surefire way for getting a client to pay. You can advise the client that you will send them a 1099 (works best at year’s end) to advise the IRS they have received a product or service over $600. Harsh, hell yes, but so is eating a loss for someone who has no intention to pay. Issue that 1099 and let them take it up with Uncle Sam.
Thanks for the video – entertaining as always.
Michelle

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Stephanie

Hi Derek,
Firstly Love your work. And … looking good :).

OK.
I’m a web designer and I take 50% upfront before we begin. To show commitment to a project.
I had a client happily pay this in January. I last saw him in April when we went over the finalised designs and working website, ready to go live after he placed his new content in it….

Since that day, I haven’t seen him since.
I’ve sent countless emails.
No response.

I sent him a letter.
No response.

I’ve called his office….
No response.

How do I find this guy… Has he died!

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Nick

Seems the client may have changed their mind about the project. Or maybe life is taking them on a detour.

I’ve had something similar that happen to me recently.

Perhaps best to move onto active customers, but expect to hear from them at some point. Most likely they’ll contact you desperate for your help…

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Kathyrn

I’m a private practice therapist and my clients pay at the end of the session, or via PayPal through my website before the session. I charge a hefty cancellation fee for less than 24 hours notice and set the expectation that their account must be current before I will schedule a future appointment. I go over the cancellation and payment policies with them at their first session and have them initial that they understand. So far, I haven’t had any problems collecting. Knock on wood. :)

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Deb C.

All of this advice is great about getting 50% or more upfront, and requiring payment in full before a website is brought online.

But what do you do when you follow all this advice, and the customer has what they want, and 3 months later they file a chargeback falsely claiming the services weren’t “as described”?

We’ve challenged this fraudster with a well-documented merchant response, but don’t hold out a lot of hope we’ll win. Most of the time the credit card companies side with the consumer.

The “customer” is still actively using the website he is ripping us off for by charging back every dime he ever paid us. We’ve pointed this out in our merchant response, that the site is still up and being used for his business, in spite of him saying it isn’t acceptable (on his hosting, not ours).

I’ve been strongly considering filing a DMCA violation report with his hosting company to try to have the site pulled down, but wonder if that will actually hurt my chargeback case?

These things can take months to resolve and I don’t know if having the site disappear will help his side or not, but I hate to see him getting business from it day after day while defrauding our company. We’ve lost over $2600 in revenue PLUS there are $150 in chargeback fees because there were several transactions over the course of three months, and he charged every.single.one.back (deposit, changes, final balance, etc.)

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Hazel

@Derek
I had encountered Client #1 before. She was a nice client to deal with and had nicely explained her financial difficulty to me. I split her payment into two, got paid for the first one and delivered the first half of the job. But she wasn’t unable to send the second payment. I had been following up her once a month for 3 months, gently asking if it was right time to send the invoice. And she said yes, I sent the invoice over and no response. To be honest, I don’t feel that I’m at loss because I had taken precaution of that. And I truly understand (and believe) she has no money or has to use that money to pay for survival. Just yesterday, I sent her a courtesy note to inform her I’d be holding off on her project until we settle the payment. I told her no pressure on my side and would be happy to resume when she’s ready. Then I shelved her project. You right @Derek, it’s best to get paid NOW but sometimes you want to play it correctly so you’d get paid EVENTUALLY when “now” is not possible.

I had another client who probably fall into #3. We started as a “bartering” service where I helped her and her client something and in return, she had to help me with something else. I delivered everything. And she told me she wasn’t able to deliver her promise and would like to pay me instead. I was fine with the alternative and the payment has being dragged since then. I followed up a few times. The reason given? She has no money to pay because she hasn’t receive payment from her client instead. It was a small amount of money, and if she would pay me $10 a week, we could already settle the payment long ago. I believed her every time when she said she was going to pay. But after watching this video, I think I’ve been “bullied”. I knew that wasn’t a valid reason but I’ve no idea how to response better to that. So I could only took it as a lesson learned.

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Lin

Thanks for your excellent video. It was the pep talk I needed and confirmation that I am proceeding in the right way.

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Keiran

Some customers are great and pay early, others are awful and will look for ways to avoid paying at all. Unfortunately it’s usually hard to tell which is which before you start.

The most annoying customers are the ones who want everything done asap, then when it comes time to pay they give me a hard luck story.

I find the most difficult situations are where the customer has been referred by a mutual friend and they are slow in paying. For some reason they don’t seem to be embarrassed by this, and I don’t want to upset them for fear of upsetting the mutual friend.

I’m terrible at setting payment terms at the outset and need to work on this. Some people I know in the same business as me (Web Consulting) are very strict (and business-like?), but I don’t seem to be able to get myself organised.

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Andre

Nice Post and Video. What happens when they tell me, “The heck with you I am not paying at all!” Sue them perhaps…Just kidding you made some great points.

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