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
How To Deal With Clients Who Refuse To Pay
I overheard some guy screaming on the phone. I didn’t catch the whole conversation, but I heard him say, “I didn’t do this work for free motherf*er!”
And that got me thinking:
That’s exactly what you DON’T do when someone owes you money.
The situation is already explosive. Approaching it as if you’re a modern day mobster is like throwing gasoline on a fire.
So, what can you do?
I’m Derek Halpern, the founder of Social Triggers. And in this video, I’m going to show you how to deal – and how NOT to deal – with a client who won’t pay up.
The first step in dealing with a client who won’t pay up is to figure out WHY.
Often, knowing why can be the difference between getting paid and not getting paid.
And in my experience, there are three reasons why a client won’t pay you:
1. The client doesn’t have the money.
2. The client isn’t happy with the service.
3. The client wants to spend the money they owe you on something else.
In all cases, it’s annoying. And it’s definitely not fair for you as a small business owner. But there are a few things you can do to come out okay in the end.
Let’s take a look at the first scenario:
The Client Doesn’t Have The Money To Pay
If this is the case, then understand that it’s not a reflection of you or your product or service.
Also, understand that just because they can’t pay NOW doesn’t mean they won’t be able to pay you in the future.
And handling this scenario the right way is key.
If a client reaches out to you and explains that money is tight and they need an extension, don’t lose your cool. If you do, you risk the client shutting down completely and changing their mindset from “I’ll pay you in the future” to “screw you.”
Instead, kill them with kindness. Tell them you empathize with their situation and are willing to put their account on hold or work out a new payment plan.
This obviously isn’t ideal for you and your business. But it’s better to get paid eventually then to not get paid at all.
Plus, a lot of times, people who are struggling to make their payments really do want to make them. And by offering them another solution, they will be grateful and will work even harder to make sure they pay what’s due.
Okay, now let’s look at the next two scenarios:
The Client Isn’t Happy With The Service or The Client Wants To Spend The Money They Owe You On Something Else
Now, I’ll just come right out and say it: These people suck. And there will be times these people can’t be reasoned with.
But sometimes, you can win them over, and I’ll show you how.
Let me give you an example:
At Social Triggers, I sell online training courses, and there are usually payment plans for these courses.
They also come with a 30-day guarantee (or something similar). This guarantee states that you have 30 days to test the waters. If you’re not satisfied or you think the training won’t work for you, no problem. As long as you email us within 30 days of your purchase, we’ll issue a refund and cancel your remaining payments, no questions asked.
This is a lenient policy. I want my customers to be satisfied, and if they’re not, I don’t take it personally. I issue them a refund and wish them the best of luck.
However, every now and then, a client emails me months after our 30-day guarantee has ended and says something like:
“I’ve made X amount of payments. I don’t think it’s worth any more than that. Please cancel my future payments.”
So, what should you do if you’re in that (or a similar) situation where your client won’t pay?
This is how we deal with it at Social Triggers:
First, we figure out where our client is coming from.
Maybe they aren’t happy with something that can be easily fixed. If that’s the case, then open, honest, KIND communication is key. You do not want this client to shift into defensive mode and ignore everything you say. And if you can make one small fix to make them happy and ensure that you get paid, then it’s worth it.
If that doesn’t diffuse the situation, then we further explain our policies to them and let them know that they were made fully aware of these policies when they first signed up. We also explain that we are a small business, not some large company. Not that screwing over a large company is okay, but sometimes making it a little more personal helps change their tune.
Many times, this is enough. The client understands, apologizes, and completes his remaining payments no problem.
But every now and then, a client gets hostile. I had one client threaten to bash me and my company all over social media if I didn’t cancel his remaining payments.
To that I responded, “go for it, but you are still legally obligated to settle your debt.”
And other times, a client acts downright RIDICULOUS.
I’ll never forget about this one guy who bought my product, emailed me because he wanted to be a testimonial, and then 2 weeks later, emailed me again asking for a refund. Why? Because he wanted to buy something else.
Yes, this happens. And unfortunately, not everything and everyone is fair in business.
At Social Triggers, I add these people to the BLOCKED and BANNED list and go about my day feeling better knowing that I’ll never have to deal with them again.
Now, there are some things you can do to scare these types of people off BEFORE they even become a customer.
If you’re a freelancer, for example, you can require 100% payment before you do any work.
Seriously. Honest people will never have a problem with this, especially if they choose to hire you in the first place.
But usually, no matter what you do, you’ll have to deal with those crazy, irrational clients every now and then. Depending on how much money they owe you, it’s probably not worth your time. Sometimes, it’s better to just chalk it up as a business lesson and hope karma gets them in the long run.
These situations are stressful, but you’ll get through it. Honest business people always win in the end.
And that’s it for today’s video. So, here’s what I want you to do now:
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?
Also, if you’re new here, subscribe to my YouTube channel and you’ll get videos like this each week.
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Do that now. And I’ll see you in the next video.