past due noticeHow does your small business deal with non-paying clients?

Non-payers – at some point, every business will get one. Well, we just had our first – ever (since 1997) so I guess I should be counting my blessings, but the experience has me wondering how other businesses deal with non-payment issues.

Once you get over the fact that it’s not a reflection your business but of their business, and in this case, of the business owner as a person – you come to terms in having to deal with it. This tipping point only occurs after hours of detailed research into your companies’ actions and stated deliverables.

Now I’m not talking about late paying clients, our business is based on servicing small businesses, so we deal with late payments enough to know that stuff happens – I get it. I’m talking about a client that simply doesn’t pay. Perhaps they intended from the start that they weren’t going to pay – who knows for sure. In our case, it was a Florida attorney who duped us out of paying months of delivered services.

So after months of pointless dialogue, empty promises, and reporting games, we decided we had to make some changes to our business policy to prevent this from happening again – or at least, be better equipped to handle the situation should it happen again. To that end we implemented termed contracts (something we have been recommended to do for years) and we hired a collections firm to distance ourselves (and emotions) from the process.

Even though we will lose a bit of the monies owed, our thinking is that it’s better to collect something than lose everything. I suspect it will also be satisfying to close the loop on being duped. One thing I’ve’ve learned for certain, chasing after money was a complete waste of resources (billable time and emotionally).

So I was wondering, when all due-diligence fails – how do other businesses collect from non-payers? Do they institute similar policy changes? Do they work? If not – what do they do differently that does work?

What say you, how does your company protect itself from non-payers?
Or deal with non-payers when all efforts to collect have failed?

Duped once – shame on them

Duped twice – shame on you