Hey Coaches! What To Do When a Client Refuses to Pay

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What To Do When a Client Refuses to Pay

Has your client ever refused to pay her invoice or latest payment? Your client refuses to pay you what you’re owed — and you already gave up the goods.

This sickening feeling washes over your body:

I’ve done all the work. She said she would pay. How could she do this? Doesn’t she know that I need to support myself? Why would you say you’d do something and then just refuse to pay?

You go down the rabbit hole a little further: maybe I shouldn’t do this anymore. See, this is why I can’t trust people. I thought this was a good idea. But maybe I just shouldn’t put myself out there to potential clients and work with people if they’re not going to pay. I won’t get burned again.

I know exactly how you feel. Not only because it’s happened to me (anyone who says it hasn’t isn’t being honest) but because I get so many emails from you saying the same thing.

Before anything, I want you to take a deep breath and give yourself a hug. It’s going to be OK — I know it feels awful and like someone took advantage of you (they did). But it’s not going to have the disastrous effects you think it will. And there are things you can do about it.

What do you do if a client refuses to pay

What do you do if a client refuses to pay?

1. Your Contract Payment Terms

What does your contract say about missed or late payments? Does it clearly state the due date? What about if she owes the full amount or payment installments? Wait… you do have a client contract, right? You want to make sure you’re using a contract that is tailored to you and your business, because if it isn’t it may not be a legally binding contract and it might not actually cover you.

Your contract (if it’s legit) will always be your guide. That’s why you have it! What it says, goes. (Learn how contracts save your tush here!) So if your contract says your client has until a certain date to make her payment, that’s the date she has until. Or if it says there’s a certain penalty for late payments, that’s all you can enforce (if it’s compliant with states’ laws re: late penalties, that is.)

If your contract doesn’t say anything about late/missed/overdue payments, now’s a good time to make sure you add in language to protect yourself the next time a client refuses to pay.

2. Dunning Emails

Do you have Dunning emails setup in your business? If so, awesome! Your Dunning emails should automatically go out as soon as your client refuses to pay.

In case you don’t know, “Dunning Emails” are a series of automated emails that you send to your client as after an unpaid invoice as payment reminders, like 90 days past due, etc. (Learn more about Dunning emails in this helpful article.)

They start out simple — just a quick “Hey! Your payment has been declined/Your invoice is past due. You can update your card information here” type of thing. As they go on (I use a 4-email sequence), they get a bit more “I’m not messing around. This has gone too far…” type of thing ; )

Would you want me to teach you how to draft and setup Dunning emails for your business? Let me know in the comments below!

3. Choose Your Path

Now that you’ve checked your contract, and your Dunning emails either went unanswered or you didn’t have any setup at all, you have a choice to make:

Do you want to reach out to your client yourself? Or do you want to bring in the big dogs?

It’s really up to you. Each choice has its pros and cons:

  • Reaching out yourself // Pros: cheaper, faster, friendlier. Cons: not as scary to comply with, so it may not be taken seriously. Sometimes non-lawyers accidentally waive their rights and give their clients an unintentional pass for not paying.
  • Hiring Lawyer/Debt Collections Agency // Pros: possible higher chance to collect what you’re owed, they know your legal rights, they won’t violate debt collection laws (hopefully!! lol). Cons: they take a portion of your collected amount, cost, intimidating to clients, time consuming, not guaranteed, typically settle for less than what you’re owed — making it not super worthwhile.
Reach out to your client

4. Reach Out to Your Client re: Late Payment

If you choose to reach out to your client yourself (sharing more about reaching out to your client yourself here!), you want to keep it professional and fact-based. I know you feel a lot of different things right now — but that’s to chat with your friend or mentor about, not your client.

How You Communicate

You want to communicate only in writing via email. Don’t contact your client through messaging apps or social media since it won’t help you if you choose to go down the collections path.

If a client doesn’t respond or you have a good working relationship, try getting on the phone. You can clear up these issues faster if you talk it through together.

Just the Facts

Keep your communication just about the facts. Start out friendly and matter-of-fact: you missed your payment, $x amount was due on X date. Can you take care of this right away? Thanks!

If you have a really solid client contract with clear payment terms, now’s the time to refer to them, too. Copy and paste the exact language used in your contract and refer to the paragraph section/number.

5. Next Steps

So if your client paid – YAY! Celebrate and call it a day. But if your client still hasn’t paid after you reached out, now you have a decision to make:

Drop it and move on OR hire a collections lawyer/collections agency to try to collect payment from your client.

There’s really no right or wrong here. It’s more how you want to spend your time, money and energy. In the past, I’ve told friends going through this that I really didn’t think it was worth their time, money, or energy to go after the owed payment.

Reasons why you might choose not to fight a client who doesn't pay
There are a few reasons why you might choose to stop if your client doesn’t pay or respond to you:
  • The amount of money you’re owed isn’t worth the amount you’ll have to pay to collect.
  • She wasn’t a great fit anyway, so you’re OK saying goodbye.
  • The amount of energy spent chasing after the client could be spent finding a new client who’s a great fit AND who pays on time.
  • You did something “wrong” in the process (ie., didn’t use a contract, didn’t have clear payment terms, were too loosey goosey with payments, maybe you think you should have offered the client a payment plan or think about offering them a discount so that they’ll pay you SOMETHING, etc.). It’s important to accept responsibility for your part, learn from it and move on.

If you want to take legal action, you could always reach out to a local-to-you collections lawyer or find a collections agency online to talk and see what’s best for you. There might be something that precludes you from being able to collect — like no contract — that’ll easily make the decision for you. Otherwise, you may be able to pursue collections using small claims court, but that will ultimately be a decision that you and your lawyer make together.

A Personal Note: When a Client Refuses to Pay

I want to give you permission to let this owed payment go. Not because of any legal rights you have or don’t have. But because of how draining it is. I also give you permission to immediately stop working when a client refuses to pay because I’ve been there, thinking that “if I just give them a larger amount of time to pay me, maybe they won’t withhold payment”…but in the end, that’s just time wasted for you.

Honestly, most instances of late/no payments I find are either:

  • Part of the cost of doing business — especially when you sell courses or products that people can buy anytime online.
  • Partially your fault — yep, I said it.

So often there’s something WE as the small business owner can learn about why our client didn’t pay.

Maybe it’s something about our:
  • contract not being clear or saying anything at all.
  • failure to talk with clients about payment expectations and the amount owed.
  • boundaries being too loose.
  • messaging being off. So we attract clients who think they can “try it before they buy it” or who aren’t the right fit (since we’re not clear). Then they want their money back after they discover the program’s not helpful for them.

And although some clients refusing to pay, and skipped or late payments, are part of the cost of doing business online — you can prevent some of these instances moving forward. In this video, I share how to get your clients to pay consistently.

If you’re ready to not only have legit contracts (with clear payment terms) but also to learn how to legally attract and onboard clients who pay you on time, learn more / get the Ultimate Bundle right here. the Ultimate Bundle® gives you 13 DIY Legal Templates and 35+ video trainings to learn how to get paid, work with clients online, protect your content and so much more.

Next Step: Watch my free legal workshop

If you’re ready to legally protect your business and have the legal knowledge you need to know what to do with difficult clients, watch my free workshop ‘5 Steps to Legally Protect & Grow Your Online Business’ right now by saving your seat here.

In that workshop, you’ll learn: 

  1. How contracts can actually save your (vegan, GF) bacon — if you have the right one.
  2. What your website needs to be legally protected.
  3. How to keep copycats off your content.
  4. The mindset shift you’ve got to make if you want to actually grow your business without looking over your (online) shoulder.
  5. The only way to form your business so that you’re personally and professionally protected.

Ready to watch? Sign up for my free legal workshop below. 👇🏽👇🏽

You’re only 60 minutes away from the peace of mind that comes with having a legally sound business… 

Want me to show you how to prevent clients from skipping payments? Comment “prevention!” in the comments below ? and I’ll write a post for you showing you how.

Hope this was helpful! Any questions or just want to say ‘this was helpful!’? Drop those in the comments below, too.

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  1. Hi Sam, Nice blog post. Agree that clear contract language is the key.

    Yes, teach us how to create Dunning emails. I had never heard that term before.

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