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Monthly tips to improve the business and practice of members of The Society for the Advancement of Consulting, LLC - Issue #18: March, 2005

clients who are not paying

Regarding clients who are not paying:

  • Check with accounts payable to see if your invoice is in the system at all. You'll usually need the date, number, and amount.
  • If so, ask why it hasn't been paid and cite the terms. 
  • If accounts payable cannot immediately help you, contact your buyer and mention that the payment is being delayed, the invoice wasn't forwarded, or the buyer hasn't approved it. Ask for immediate approval and a manual check. 
  • If the buyer indicates a problem, find out specifically what it is. If it relates to performance on your part or a legitimately-perceived lack of delivery, remediate it immediately. 
  • If the buyer states that "He'll get to it," do not accept that. Ask for approval immediately and an anticipated release date. 
  • If the buyer cites a groundless reason (e.g., cash flow is tight, they've decided to hold back to see how things are going, they want to renegotiate something already agreed upon, etc.), tell the buyer that you're happy to talk, but only after payment has been received per your legal agreement. 
  • Never let "friendship" get in the way. If the buyer is a friend or claims to be, then you should be paid. "Friends" don't fail to honor commitments. 
  • If there is no resolution, stop working immediately and inform the buyer that all work is ceasing. (This is why it's helpful to get paid in advance--such issues never arise.) 
  • If the buyer still will not pay, go to the buyer's boss. If the buyer is the top person, or the boss refuses to intervene, consider legal action. 
  • If the amount is less than $15,000, you're best off writing it off as a loss. If it's over that, legal action may be worth it. 
  • You can always threaten to "go public," and let the media know that a larger company is taking advantage of a solo practitioner, and you can inform credit reporting companies of the breech, which could affect a credit rating. Sometimes the combination of legal threat and bad publicity is sufficient to obtain payment.

This is a cash flow business, not a lending bank. Allow your client no more than a 30-day grace period after a fee or expense reimbursement is due, and then follow the above sequence. And, whenever possible, try to be paid your full fee in advance.

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