What to do if Your Clients Can’t (or Won’t) Pay Their Invoice?

By Guest Blogger, Melanie Fischer

It’s not uncommon for professionals in any industry to be the victim of a non-paying client. When a client doesn’t pay a bill, it can be difficult to decide how to handle the situation. Should you sue the client for the amount owed? Should you negotiate with the client and settle for a lesser amount? Should you just let it go and chalk it up to “a good learning experience” – and vow to never let it happen again?

There is not a good answer to the question: What to do if your clients can’t (or won’t) pay their invoice? because every situation has its own set of unique circumstances. Nonetheless, if you do find yourself in this situation, it’s good to know your realistic options.

Find Out Why Your Client Did Not Pay
If you have been waiting months for a client to pay a bill, it’s entirely possible that the non-payment is the result of an oversight. It’s possible that your client moved, or no longer uses the physical address or e-mail address you have on file. It’s important to keep in touch with clients whose invoices are past due because there might be a legitimate reason for the delay. Therefore, before assuming the worst, take time to make contact with the client. Remember, even though you might be irritated that your invoice is past due, it’s usually easier to make headway when you come across as friendly, yet concerned – as opposed to angry and threatening.

If your client has not paid their invoice because of financial difficulties, you will have to make a decision about what to do. As a solo attorney, you can opt for:

• Allowing the client to set up a payment plan
• Negotiating with the client, and giving the client a discount
• Accepting the fact that the client will not be able to pay
• Sending the client’s account to a collections agency
• Suing the client in court

Is it Worth the Effort?
When you are a solo attorney, you have many responsibilities. You must run your office, work on client files, return phone calls and e-mails, attend networking events, meet with potential clients, and more. You are BUSY. Given this fact, you must evaluate whether it is worth the effort to spend time trying to collect an outstanding invoice from a client that may or may not ever pay. A few things to consider include:

• The total amount due – is it only a couple of hundred dollars, or is it thousands?
• Is your client on the verge of filing for bankruptcy?
• Do you think the client might file a complaint against you if you try to collect – even if you know the complaint would be frivolous?

How to Avoid Clients that Will Not Pay
The best way to avoid having to deal with clients that can’t or won’t pay their outstanding invoices is to avoid these types of clients from the get-go. Make sure all of your clients sign a detailed letter of engagement that clearly states the financial terms of your agreement. Other tactics that often help solo attorneys collect fees that are owed include:

• Collecting fees upfront that are held in a COLTAF/TRUST account until they are earned
• Accepting credit cards
• Insisting that clients pay for services rendered every month – instead of sending a large invoice when the file is closed

While it might not be possible to predict with 100 percent certainty which clients will pay their invoices and which will not, the ability to select the most reliable clients should become easier with time and experience.