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How to Deal with Deadbeat Customers

Honored Contributor

How to Deal with Deadbeat Customers




Sometimes your customers pay you late and sometimes not at all. But here are 5 ways to deal with these types of customers.


1. Factor the invoice: When you factor your invoice, the "factor" buys the invoice and gives you about 70-85% up front and then gets the remainder of the money from the customer. Which will then be yours, minus a fee.


2. File a lien: When you file a lien, the property becomes collateral until you get the money owed to you.


3. Call a Lawyer: Sometimes when you have a lawyer contact the customer, that puts some fire under them to get you what you're owed.


4. Hire a Collection Agency: Their fees can be 30-50% of the invoice, so only use them as a last resort.


5. Write it Off: If it's been over 6 months, you probably want to write it off.


Check out the full article, "How to Deal with Deadbeat Customers".

Occasional Advisor

Re: How to Deal with Deadbeat Customers

I suggest to offer quality services and offer them a pleasant environment for business talk. This will make them feel that if they don't pay on time they will loose a good business connection and can be a long term pain. Every business is there to make profit.

Online Payday Loans by FaaastCash
Contributing Solution Provider

Re: How to Deal with Deadbeat Customers

I agree with Steve regarding the importance of the relationship.


Over the years, I learned how to watch for my client's financial boundaries. If they start to pay slow, it could be an indication of a future financial problem, or they don't understand the importance of paying on time. When we come to an agreement of the services we will deliver, we also discuss and have the client agree, to the payment arrangement. If a payment is slow or missed, we remind them of the agreement. If we have built the relationship properly in the beginning, the potential of default is much less.


When providing my clients a solution where I will be buying products or services from someone else in order to fulfill the solution agreement, I grant my clients a shorter payment schedule than I am granted. This way their payments should match with my obligation.


I have used factors several times for large product based programs, and find their fees to be reasonable for the amount of risk they are taking. Only once have I factored a slow paying customer. I have a conversation with my client to let them know it was not a collection agency, however, the factor may be more aggressive in the timeliness of the payments.


Wishing you awesome and continuing success,


Sumner Davenport



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Regular Advisor

Re: How to Deal with Deadbeat Customers

And for retailers that sometimes get sucked into purchase orders from schools and organizations, I'm here to tell you that you won't lose that much business if you don't offer terms. We simply ask them kindly to pay up front. They'll often borrow a credit card from someone in the office and make it work. I hate to inconvenience them but I've had too many friends struggle to stay in business thanks to deadbeat customers. Now and then you'll lose a customer but for the amount of headache we've saved, it's been well worth it. Most of the schools/organizations are understanding and they cooperate.

Mike Donovan