What to Do When Customers Don’t Pay: What Are Your Options?

When it comes to breach of contract, there are many types of situations that can occur. Many people tend to assume that the company is always in the wrong. After all, the customer is always right.

But sometimes customers’ actions are not legally sound. An example would not be paying for goods or services that have been already rendered. This can happen in the construction field, when a contractor does everything right and gets the project completed on schedule, but the customer refuses to pay up. This often happens with lenders as well, when a bank loans a consumer money and the customer fails to make the requisite payments.

Unfortunately, breach of contract is common in the freelance world as well. A freelance worker may complete a project, only to never get paid by the client. If they do get paid, the payment is many months late or not the full amount.

So what do you do when this happens? This can be a frustrating situation, especially when there is a lot of money at stake. Many companies protect themselves from breaches of contract by taking deposits and advance payments. If you did not, the law is still generally on your side, as long as there is a solid contract in place.

When a breach of contract occurs, the affected party is often entitled to seek a remedy from the other party that has not met their responsibilities. You may be entitled to a remedy, as long as it is not excessive.

Next Steps

Once payment has been missed, you need to act right away. Here are some steps to take:

• Send reminders. Start with friendly reminders, since many missed payments are accidental. Send an email or call shortly after the due date. Use professional but firm wording, restating the amount owed and the due date.
• Charge late fees or interest. If your contract or invoice terms allow, apply late fees or interest to overdue balances. This creates financial consequences for delays and encourages faster payment.
• Offer payment plans. For clients facing genuine financial struggles, negotiate installment payments. This approach often recovers more money than demanding full payment immediately.
• Withhold services or products. If clients fail to pay for ongoing services, you may suspend delivery until payment is made. This prevents further losses.
• Escalate internally. Involve a higher-level manager, the finance department, or even the company’s legal team, if possible. Escalation can help prompt quicker resolution.
• Pursue legal action. For lower amounts, you can file in small claims court. For larger amounts, your remedies include seeking a civil judgment or placing a lien on a client’s property. Lawsuits are time-consuming and costly, so weigh the pros and cons.

Contact Us Today

As a business owner, you may have to operate under the general rule that the customer is always right, but sometimes, they are clearly not. If you are not getting paid for the goods and services that you have rendered, then you have legal options.

A Bradenton business litigation lawyer from Cahall Law Firm will be there for you. We are ready to protect your rights and vindicate your business interests in any Florida business legal dispute. Schedule a consultation today by filling out the online form or calling (941) 281-2019.

Source:

uschamber.com/co/run/finance/how-to-handle-customers-missing-payment