If I Push Too Hard To Get Paid, Will I Lose My Client?

By Nina Kaufman, Esq.

Are you having trouble getting paid? Afraid to push too hard to collect on this debt?  It’s a common scenario for small business owners.  And as I’ve said in my program, “How to Train Your Clients to Pay You,” the only thing worse than having no clients is working like a dog and not getting paid.

For example, you may have fond memories of doing business with Client X on various projects.  For years, you had good chemistry, and when you heard their voice on the phone (or email address in your inbox), you felt your spirits rise. They helped fill your pipeline. You got paid.

Now, though, when you send invoices, you don’t hear ka-CHING in your cash register; you hear crickets. Your phone calls go unreturned. The unpaid balances continue to mount.

Here’s the dilemma:  if you push hard to get paid (such as by pursuing collection, start a lawsuit, or file a lien), you run the risk of alienating the client to the point where they’ll never do business with you again.  But if you don’t take a hard line, you run the risk of not getting paid at all.

So what can you do?

My colleague, Jocelyn Nager, Esq., runs one of the oldest law firms dedicated to debt collection (and is also a certified Women Owned Business!). She offers the following suggestions (my comments in italics):

Evaluate the client with these steps:

  1. Take emotion out of the equation. (If you get stuck on “it’s the principle of the thing,” you’ll lose).
  2. Acknowledge that a business relationship must be mutually beneficial. (Like other relationships, there needs to be a two-way street; if it’s all give and no take, it doesn’t serve you).
  3. To determine if the relationship is truly profitable, prepare a cost-benefit analysis. Consider the following:
    •  the resources used to service this client as a whole
    •  the time value of money when paid
    •  your ability to have secured alternative work for which you would have been paid (did this assignment take you away from paying clients?)
    •  the loss of not taking on other projects
  4. Is the result of not getting paid a benefit to you?
  5. Will taking on business from this “client” and others like them cost you money?

As Jocelyn points out, the results of the evaluation will provide realistic–hard, tangible, numbers-driven–information to you. And when you can evaluate the situation dispassionately, you can quickly get out of “analysis paralysis” to take action–one way or another.

If you liked what you read, watch our video to see if Kaufman Business Law is a good fit for you.