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How Can I Handle My Clients Not Paying On Time?

Michelle Dale - Wednesday, February 10, 2016

I have a membership site where my members can contact me on email and I'll help them on the fly with any dilemmas they're having with clients or questions they have about their business. Today I had a really excellent challenge to help with, one I think many online service providers face, and that's about clients having issues with payment terms or paying late. I'd like to share my response in more detail...

The Situation

When you really like the client (in terms of the work you do), but they have issues paying, for example, they never pay on time, which is a problem if you have a team, or they share their financial woes with you, it's really hard to not get personally involved and take those problems on board.

But there has to be a line you draw.

I'm sympathetic to people in financial difficulty, but not to the point where it would negatively impact my business, my family or my team, and that's the line you need to draw.

It's understandable there may be times a client has difficulty in paying, heck, a couple of years back, my bank closed down for days due to an economic crises and I was unable to pay my team on time, but economic crisis is one thing, poor money management or over committing, is another.

Any client who comes to you with problems paying more than once, is forming a habit... Take a step back and see this as a reminder that your clients' financial issues can't be yours, you need clients who are comfortable paying your rates, and clients need a VA who they're comfortable paying as well.

But I don't want to lose the client...

I know you don't...  But enforcing payment terms is something that has to happen, for several reasons, such as being fair to other clients who are paying on time, paying your team on time, making sure you're valued (I once had a client pay an invoice of over 7.5k and they thanked me for it). Nobody can make you feel undervalued unless you undervalue yourself, but the clients who thank you when they send you money (on time!) - they are the kind of clients that make you realise how appreciated you are and that's good for the soul.

So I would say, if you want to keep your client, you can put it in such a way that perhaps they can meet you halfway - no payment, no service. That sounds fair, right? There aren't many people who could argue that point.

The Email

I suggested that this person send something along these lines, I've made a few edits so it's more generic, and you're welcome to use it yourself if such circumstances arise.

"Hello {Name},

I'm very sorry to hear that you're having trouble paying your invoice because of [ENTER THE REASON].

Please understand that due of the nature of my business unfortunately there's no wiggle room for me to be able to [ALTER PAYMENT TERMS], particularly because of my responsibility to my support team and the demand for my services. I have these terms in place to ensure I can offer my clients the best possible service in terms of quality and reliability, and also respectfully pay my team who help me to support you in your business on time.

[NAME], I really appreciate your understanding in this matter, and I very much hope we can find a solution so we can continue to work together.

To accommodate any delay in the payment you may have now or in future, I'd like to suggest we simply pause any service provision after the due date (e.g. 7 DAYS) and then resume services as normal as soon as the invoice is paid.

Does this sound fair enough?

If you have any further questions, please don't hesitate to ask."

If the client comes back and says, "No, you should keep working for me without payment." I think you should assess whether you really want to be working with someone like that...

Avoiding That Altogether...

Really, the best thing is just to avoid that altogether. With a majority of the clients I work with, I now always take money up front, and if I don't, let's say they ask me to do a quick, over and above task, I cap the hours to just a few and add them to the next invoice.

By taking payment up front, and not starting work until the money is in, this will inevitably help you to provide a better service, particularly with a client who has a history of being concerned over prices, payments or anything money related, because it simply gets that detail out of the way.

A very common issue believe it or not, but it doesn't have to be! On the blog post today I chat about handling clients who aren't paying on time...

Posted by Virtual Miss Friday on Wednesday, February 10, 2016

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Hi I'm Michelle, an entrepreneur specialising in virtual assistance, a digital and real world nomad, and a down-to-earth mother of three.

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