“If you’re good at something, never do it for free”

The famous quote by the infamous Joker isn’t just memorable for its authentic delivery but acts as a real-life guideline for professionals dealing with their clients.

How many times have you sent out invoices to your clients only to be ignored?

How often are you left with anxiety issues when the deadline for your payment expires?

Hounding after a non-paying customer is like a dog chasing after cars, it’s a complicated process and costs valuable time. Time better spent running your business.

Fortunately, there are reliable methods to prevent missing out on your payments. In this article, let’s understand the popular reasons for refusal of payment by your customers.

Further, Cleverism provides you with practical solutions on how to solve this age-old issue.


Assume the following situation.

After numerous hours and days, you finally find yourself a real client for your brand-new business.

This is it. It’s time to put on your dancing shoes and offer them your best work.

Fast forward a few weeks after your delivery and the payment remains pending. Nervously, you type a follow-up email and put your most polite behavior on display reminding them of your pending fees.

Months pass, with no payment insight, you’re left frustrated and low on funds. And your client has completely ignored your cry of help.

If you’ve been in this situation, you understand non-paying customers are always a bad bet.

What exactly are you doing wrong with your payment policy?

Let’s find out by understanding why your customers don’t pay on time.


Small businesses are more likely to face delayed or non-payment issues compared to large corporations.

While some clients genuinely have a reason for their late payments, others neglect their payments for various reasons.

1. Mediocrity in Overall Work

Sometimes, we assume the work we put out is exceptional and we are worth the money paid. This isn’t true.

We don’t mean that the services you offer are necessarily bad.

However, clients have a huge issue when the people they work with don’t share their level of vision. It results in unsatisfactory work that isn’t worth paying for.

For this reason, clients proceed to ignore paying for services they deem unworthy.

If you sell your services, as a professional, it’s your duty to understand the various requests that your clients require and ensure they are getting their money’s worth.

While taking the job, pay attention and communicate clearly on the type of work they’d be expecting from you.

If possible, provide a link to your website or a portfolio of your finest work. If they find any of your previous work matching their goal, request them to highlight it.

Making false promises to your client is ultimately going to demonstrate your final work as shabby. Hence, it’s best to avoid taking up projects that won’t meet their expectations and avoid nonpayment issues altogether.

2. Customers are Going Through a Financial Crisis

Most often than not, your customers are likely facing a financial crunch and don’t have money to pay you.

It’s critical to understand the market conditions that contribute to a poor economy before selling your services in your respective field.

How do economic factors affect your services, you ask?

Simple! when an economy has crashed, the asking fees of professionals is devalued.

While their financial situation is of no concern to you, it’s a good idea to follow up and receive an update on when their situation is likely to improve. Especially, if the client you work with has a long-term commitment.

Remember, not all non-paying customers are holding your payments on purpose. Some customers have a genuine reason that they weren’t expecting. After all, we are all human and the future is unpredictable.

However, on the same note, it’s not alright for clients to seek professional services without the ability to afford them.

Pay special attention to bankruptcy updates posted by your clients. If they file for bankruptcy, it’s a wise idea to contact them immediately. During their asset liquidation, there is a good chance to receive your payments if you’re first in line.

3. Inconvenient Payment Methods

Maybe the fault lies in allowing your customers to pay by outdated methods such as checks and money orders.

If you haven’t embraced the online business model yet, you’ll always have clients finding it inefficient to pay you.

However, having an online payment portal doesn’t assure you timely payments either. Modern clients are busy, and their time is extremely precious to wait for your invoice to pop up in their mail.

That’s why it’s important to get in touch with your client and mention a payment structure if it’s a long-term project. Inform them that your invoice would be sent on a specific date, get their approval, and stick to these dates.

Automated invoice software is convenient and handles timely invoice processing. Popular payment software includes Pabbly and Invoicera.

4. Freeloading Clients

Clients that look for faults on purpose in a perfectly executed project are nicknamed “freeloaders”. Their idea is to get away with free work done in exchange for valuable contribution on your part.

With plenty of services being offered by various professionals, freeloaders find it convenient to hitchhike their work through various projects that are never paid in full.

Instead, they find excuses to blame you for it.

Here are the 5 types of freeloading clients, you’ll likely come across.

  • The Underpaying Client – “What??? $400 for website design? That’s just madness, I could have got this done for half the value.” ­
  • The Fake Perfectionist – “Stuart, I’ll need this re-edited for the 40th time, it’s simply not satisfactory. I won’t pay you a dime if you refuse to get this sorted.”
  • The Busy Bee – “For the next 30 years I will remain busy as I am building a space colony for earthlings on the moon. Please get in touch with me after this duration for the payment I owe you.”
  • The Sampler – “I am looking for a long-term commitment from your end, unfortunately, there won’t be any pay for you until you show me a sample of your finest work. It’s the way I prefer to do business.”
  • The Quintessential Bargainer – “Well Stan, I’ve witnessed your work and I am impressed. I believe we can be partners for a long time. Except your fees are outrageous! Let’s shake hands at 1/3rd of your quote. Deal?”

While they come in different forms, these clients have the same motive – refuse to pay you what you’re worth and get the work done for free or at the bare minimum price.

Remember, a client that appreciates good work is always ready to shell out money for a job well done. It’s easy to spot a freeloading client, they usually enter an agreement only after putting plenty of tough conditions that they expect you to never fulfill.

One rule of professional trade is – if the client comes up with a complicated contract. Avoid it. It’s usually a trap to get you to accept terms for pitfalls you aren’t expecting.

5. Liberal Credit Privilege

One of the biggest mistakes professionals commit is offering a liberal credit policy to their clients.

If you let your customers make partial payments, it allows them to get comfortable with their payments and guess what?

You end up with delayed payments.

Offering credit to your customers should be limited or removed from your professional contract to eliminate late payments.

If you must, offer credit to only your long-term high-profile clients that have a phenomenal financial history of repayment.

A financial advisor helps with structuring the financial charges for late payments if you must provide a credit-based payment system.

Ultimately, a credit policy is always bad news, to begin with, and if you’re starting out, it’s best to do away with this practice.


Now that we understand the mindset of non-paying clients, it’s a lot easier to come up with solutions to your money problems.

By following the below methods, you’ll gain immunity against non-paying clients and rest easy going forward with a contract.

Here are 6 methods to handle non-paying customers:

1. Late Fees Chart

Alright, so you’re a small business that is unable to refuse work that comes your way. After all, this is your growth phase and it’s better to work for nonpaying clients than not work at all.

As a small business, you can still charge late fees to your clients and create a detailed structure on your website or on the contract, so your client knows what they are getting into.

Here’s a sample personal chart with late fees.

Customer Name Amount Owed 1-30 Days Late Fee (5%) 30-60 Days Late Fee (15%) Total Due per Client
Client A $7000 Nil Nil $7000
Client B $5000 $250 Nil $5250
Client C $10000 Nil $1500 $11500
Total Amount $22000 $250 $1500 $23750

The following chart keeps a record of all the clients you are working with along with the payments they owe.

Client B and C are yet to make their payments and have crossed their due date with Client B being less than a month overdue and Client C being over a month overdue.

Sending intimation emails or calls with a detailed invoice every month will remind the client to pay up the money owed or risk paying the penalty.

Even after the late fees, if your clients refuse to pay, follow the other methods below.

2. Legal Contracts

A legal binding contract that lists all the project variables is an effective way of never dealing with non-paying customers.

Legal contracts provide you with protection against any clients that intend to breach the contract or delay payments.

Every legal contract should include the following structures in the document.


The starting point of your project and the date of delivery should be clearly mentioned. This is to give your client financial security to ensure their work is done by the mentioned time.

Contact Information

Phone numbers, emails, business addresses of both – the professional and the client should be included for transparency.


If your nature of work includes editing and providing revisions for your clients, the number of maximum revisions allotted per project should be mentioned.

Exit Clause

An extremely critical section. If at any time, you or your client decide to backout or terminate a project, the necessary grounds of termination need to be listed here. It safeguards both parties from discontinuing once the project has begun.

Intellectual Property

Apart from protecting the client from copyright infringement, it also allows you to refer your work on your own portfolio of completed projects.

Financial Terms

The most crucial bit of information that protects you from payment defaulters. Mention the following points in-detail if it pertains to your services.

  • Late Fees Charged
  • Partial Upfront Payment
  • Money-back Guarantee
  • Discounts & Offers

Mention any other payment-related terms that you’d like your client to know beforehand.

Once you’ve prepared the following rulesets, your legal contract is ready to be offered to your customer.

This allows them to take your work seriously, and if they still avoid paying up, you’ve got a legal right to prosecute your client based on the contract.

3. Discounts for Prepaid Projects

An excellent way to get paid in full is by providing an ‘Early Payment Discount’ to your clients. The discount could either be a fixed amount or a percentage of the total project like 3-5%.

By providing prepaid offers, you’ll force your clients to make the full payment before the project begins, especially if they’re recurring clients.

A great way to reward your loyal clients and secure money in the long run.

There are plenty of benefits to providing a service discount.

  • Clients enjoy the discounted cost of the project
  • Mental peace knowing your project is funded without financial risk
  • Advance cash flow is ideal to increase your working capital
  • Positive cash control for future services rendered

The origin of ‘Early Payment Discount’ began with eCommerce websites securing their finances before shipping out the product.

This ensured that the customer was in no position to cancel a ‘Cash-on-Delivery’ order and they had the working capital to build their business.

Today, several professionals have begun to provide discounts to their clients in return for full payments.

4. Escrow Services

Ask yourself – What is the one thing that prevents a new client from paying you in full before the project starts?

Lack of trust!

In an increasingly digitalized world, ‘Trust’ is an invaluable resource. In fact, it’s equally hard for you to trust a client about fulfilling their end of the bargain upon project completion.

That’s where digitalized middlemen services are provided to connect the breach of trust between you and your client.

This type of service is known as ‘Digital Escrow Services’.

It’s relatively a simple concept.

  • Your client funds a well-known escrow service like Escrow or Stratuscore
  • Begin work once the escrow service confirms receiving the payment
  • Upon project completion, request payment transfer to the following – Paypal, Bank Account, Wallets, etc.
  • Once the client is satisfied with your work, they’ll accept the escrow transfer

Piece of cake! You’re happy, your client is happy.

Utilizing an escrow service eliminates the need for your client to postpone payments. The concept is simple – You work only when the escrow service receives payment.

5. Client Background Check

We believe researching your client beforehand saves effort and time to keep nonpaying clients at bay.

Researching your client before entering a contract will provide you with valuable details.

Chances are if you’re working with a big company, the company’s reputation usually speaks for itself. Large organizations rarely ever avoid paying for services used to prevent legal tussles.

Smaller clients don’t have a reputation and it’s almost impossible to answer –  are they creditworthy?. That’s why it’s incredibly critical to know them before proceeding to work with them.

Here are 3 Ways to Research Your Client Effectively

1. Professional Social Networks

LinkedIn, Quora, and Facebook are excellent areas to begin your initial client investigation.

Every small or big business worth their dime has their own professional profile and glancing through some of these pages will give you an idea of their reputation.

Some of the things to look out for are

  • LinkedIn provides testimonials and reviews posted by previous customers and business partners. Leverage this information and form an opinion on whether the general opinion is negative or positive.
  • Quora provides plenty of information regarding specific businesses and customers share their experience on the platform. It’s not difficult to find out if the response is overwhelmingly positive or borderline negative when searching for your client’s business.
  • Small businesses throng towards Facebook to build their online identity. Finding a client’s Facebook page and performing your due diligence on customer’s feedback will give you a head start.
  • If there isn’t any social networking page or internet history to research your client, that’s a red flag that your client isn’t verified. Either refuse to work or ask for a full upfront payment.

2. Verify Client via Video Call

A simple Skype video call to establish identity goes a long way in saving yourself from non-paying clients.

Questionable clients immediately refuse and will generally create long-winded excuses on why they’d prefer to do their business in an anonymous fashion.

Anonymity is a direct way for your client to steal your work without paying.

There are several benefits to revealing the identity of the client you’re working with.

  • A professional bond is created with recurring projects
  • Effortless communication
  • Establish a streamlined work environment for both parties
  • Know exactly who you’re working with and provides a source for your portfolio

Remember, clients that refuse a video call aren’t all dubious. They might have their personal reason to avoid revealing their identity, in such scenarios, it’s always best to get a payment upfront while you respect their privacy.

3. Google Alerts

Google is the internet’s all-seeing eye that knows everything going on in shady organizations and their deepest secrets are revealed for the public to see.

Why not make use of it?

Google Alerts helps leverage information by typing a keyword into the search bar.

The keyword can be the name of your client’s company to get a detailed list of search results revealing important news or other details that were previously unknown to you.

Much of the details that are shown are from recent blogs or articles to give you a current state of your client’s reputation.

Google Alerts also comes with a filter option to narrow down your results to a specific location, source, and region. It’s especially useful when you wish to track long-term clients from going rogue due to bankruptcy, layoffs, financial difficulties, etc.

Adding your email address lets Google send the latest news directly to your email.

6. Factoring

With most of the advice circling around future clients, it begs the obvious question.

What do you do with existing clients that haven’t cleared their dues?

Well, consider ‘Invoice Factoring’.

Factoring provides you with an option to sell any unpaid invoice in your possession at a percentage of its total value.

Don’t get it?

Allow us to explain.

Let’s say you have a total outstanding invoice of $1000 that’s unpaid for months. When you sign up to a factoring company like Kabbage or Payability, an option to sell the unpaid invoice for 70-75% of its value is provided by the factoring company.

Essentially, these companies buy your invoices and will proceed to recover the loans on your behalf.

The only drawback is you don’t receive the full payment that was originally entitled to you but it provides you with a way to clear all unpaid invoices and focus on your paying clients.

It’s important to read the terms and conditions that factoring companies provide you with before you sell your invoices. Many factoring companies commence their own form of debt collection from your defaulters.

Depending on the risk they are undertaking and the reputation of your client. The percentage offered on your invoice could be much lower. But it’s always a good idea to sell any unpaid invoices lying around.

Some money is better than no money.

For a detailed in-depth video guide on factoring, Paddy Hirsch provides a tutorial.


Unscrupulous clients are a part and parcel of every professional’s career. At the end of the day, your time is better spent in providing the service you excel at and n­ot in chasing your money like the IRS.

The carefully constructed methods provided in the article are a critical guideline to follow when conducting business. This way, you set up a defense shield against disreputable clients while only working with the prized ones.­

Have you ever been hounded by nonpaying clients? Review your experience with us in the comment section.

How to Prevent and Handle Non-Paying Customers

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