What to do when a customer cant pay

MediaGuy

Hi Everyone,

I have a quick question that I hope someone can help with. I have an international customer who can't pay his bill. The bill in question is approx $5000.

Now I don't want to chase them through the court as they are in a different country and the legal system is different. It could quickly get expensive.

I mean sure, they could perhaps pay $50 a month, but it would take years to recover the money.

What, if anything, are my options. Suggestions also welcome.

Savvy_Sue

If they CAN'T pay, then coming to an arrangement to pay $50 per month is probably as good as it gets.

Enforcing it if they default is not going to be easy ...

DKLS

Do you know if this is a can't pay or won't pay? I had a similar thing with a customer in the states but when I switched his website off he soon paid up in full after threatening to sue me silly of course . I would suggest keep communicating with this customer and take whatever cash you can get.

I would then look at minimising your risk and tweak your credit control and terms.

Agreed stage payments: can work very well depending on your business. Starting with a kick off payment so at each stage your risk is limited and some customers love it as they can pay for projects in stages and manage how and when they are delivered.
Set and manage credit limits.
Withhold copyright: which works well for photographers, web and content designers
Communicate with your customers and understand their payment process, some of my largest customers have the most complex billing systems.

Pennywise

Probably too late now, but you need to ensure you have some leverage to make them pay, especially foreign customers with a different legal system. As said above, a web designed can turn off the website. For the future, to avoid these issues, you need to hold something back until payment, and write that into your contract.

Mistral001

I agree with Savy Sue. $50 a month is probably as good as you can get. This will mean at least communication is kept up. If they stop payments then, perhaps a flight to the USA is not out of the question. At least you will get acquainted with their legal system which might be useful in future international dealings with clients.

paddyrg

What was the product or service? Can it be recovered in some way? Even if it means calling a 'Better Call Saul' type lawyer to visit the premises and remove the item to resell?

What's particularly crappy is the customer must have known they couldn't afford $5k at some point before delivery, but wanted to abuse you. As such, if you can turn off the website or get any leverage, it's a good plan.

If they're offering $50, ask for $200 and settle at $100/month, maybe, with the option to revisit the rate of payback annually to see if their business is healthier? Maybe ask for a copy of the company accounts etc. as a part of the deal, so you can see if they're offering you $50/month but paying themselves $5000/month...

Vectis

Sorry, but I have to ask, how on earth did a customer in a foreign country rack up $5000 of credit?

Were you getting paid previously for work and then it stopped or was this a one off service/payment?

It really needs to be money upfront (or, at least, enough to cover your costs) as it's so difficult to collect payment afterwards.

As said above, try for more than $50/month and see what happens. Whatever you get back now will be a bonus I think.

Hopefully a lesson learnt.

paddyrg

Just to reassure you a little though, I'll bet every one of us here has been mugged off by a customer once when we were starting out. I was nailed for £7k about 20 years ago. You learn from it. You take more upfront, you learn to never let the client forget they owe you, but ultimately you need to realise there may come so point where chasing the debt is harder work than walking away and getting on with decent clients instead.