What Can I Do If My Customer Will Not Pay?

Your business is beginning to thrive and you have many current and previous customers. Unfortunately, all of your customers may not have paid you in full for your services. Business owners wonder, what can I do if my customer will not pay? There are some things you can do if someone refuses to pay. There are also some preventative measures you can take to protect your business from accumulating bad debt.

Review and Enforce Purchase Contracts

A contract to purchase goods or services is a legally binding document. Both the business and the customer have some responsibilities and requirements that they must fulfill. If you have fulfilled your side of the deal the customer has a legal obligation to pay. It is a good idea to include a clause in your contract that requires customers to make full payment within a specific number of days after the work is complete or services are rendered.

Require Customers to Make Down Payments

A down payment is a sum of money that is paid by the customer in order to start the job. It may be used to order equipment or supplies necessary to complete the job. The contract should include a payment schedule that provides for a down payment to be made. The payment schedule may allow for several or more payments in intervals based on the work that is being completed. The final payment is made at the time the job is completed. Make arrangements with the customer ahead of time so they are prepared with a check at the time of final service.

Set Up the Terms of Payment

Once a job is complete the customer may have a certain amount of time to provide payment. You can define this timeframe in the original contract. The payment terms are expressed with the words “Net 30” for example.  The words “Net 30” in a contract mean that the entire balance is due within 30 days of job completion. You may also choose to give a discount as an incentive for early payment.

Contact Customers for Overdue Invoices

If you have implemented contracts and procedures properly you should have few late payments. However, there will be some customers who have difficulty paying. Contact customers as soon as possible to request payment. In some cases you may need to get help from a commercial law attorney. Your lawyer will review the situation and send a letter on your behalf requesting immediate payment. If necessary, further legal action may be required.

Contact the skilled lawyers at Udall Shumway to assist in all your legal needs.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding My Customer Will Not Pay, or any other litigation issues, please feel free to contact us at 480.461.5300, log on to udallshumway.com,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.