Five tips for dealing with non-paying clients (after deploying a site)

repomen-non-paying-clientsCan I tell you a story?

My wife grew up living in affordable housing. Because she didn't grow up with a lot, she developed certain tendencies. One of them was to hide bills.

I'm not talking about the little $24 bills, I'm talking about the ones for several hundred dollars. It wouldn't matter if she had the money or not. A big bill triggered something for her and she'd just hide it. And then hide the next one. And the one after that.

I didn't know this when I put her in charge of the mail.

So one day I came out to the driveway and my Honda Civic wasn't there. Assuming it was stolen, I took our other car to my morning meeting. And only on my return did I find out that we'd skipped three months of bill paying and our Civic had been repossessed.

Yes, I've had a car taken from my own driveway for non-payment. It took years to even talk about it because of the shame I felt (and I had the full amount to pay for all three months in our account – this wasn't about not having the money).

I was one of those people.

Why did I tell you my Repo story?

I told you that story because lots of people talk about non-paying clients as if they're those people. Runners. Horrible and evil and wrong. And they apply the concept of repossession to issues like dealing with non-paying clients and website projects.

But let me tell you the moral to my story.

Sometimes there are more things going on than what you assume, when you make assumptions about why you haven't been paid.

In our case, Honda Financial had tried to call us but had a wrong number. So without being able to reach us by phone, and with three payments not made, they made some assumptions. I get it. And it was pretty painless to give them their money and get my car back. But it was horribly embarrassing. And it's not like I could explain to Honda about my wife's childhood.

But just because I couldn't explain it didn't mean it didn't exist. And just because I hadn't paid didn't mean I didn't have the money.

Who are non-paying clients?

First, let's define what a non-paying client is and isn't.

A non-paying client isn't someone who hasn't paid you within 7 days of getting an invoice. Not if your terms are 15 or 30 days.

And with some clients (enterprise clients, for example), it can take months (if not quarters) to get payment. But they're not a “non-paying client.”

Non-paying clients aren't people you can't reach. Phone numbers may have changed. They may be travelling.

A little over a week ago, I was on a plane to Ft Lauderdale. Chase was worried that my card had been compromised and issued me a new one before leaving on vacation. But I had booked a single night in a hotel (before our cruise) months earlier with the old number.

While I was flying, they tried to charge the room charges to my card and it was declined. Now, even though they had already received a package at their hotel that day (which suggested I was still coming), because they couldn't reach me (on the plane), they cancelled my room reservation and gave it to someone else.

Were they allowed to do this? Sure. Did they come across as jerks? Absolutely.

Because they assumed I was one of “those” people.

I define non-paying clients as people who you can reach, and who have an issue with you, and have stated they do not want to pay you further for the work you've already done. Those are non-paying clients.

Most other folks that you can't reach within 2 days, or haven't received payment in 4 days, deserve not only the benefit of the doubt, but aren't ones that I put into the non-paying category – because it makes me look bad, not them.

Are you talking about someone specific here?

I don't do a lot of projects because I have a full time job. So every now and then I do work on a project to help a friend, or a friend of a friend. But if you're reading this right now, no – I'm not being indirect here.

I'm writing this post because of a post I saw on Facebook with a lot (and I mean a lot) of advice I would question. So I decided to respond, but not on Facebook. Instead, I thought I would write about it here.

The situation was pretty simple. Someone went to work with a client on an $800 project, without a contract. The site was developed and deployed. And then, post-deployment, the person couldn't reach the client to get the remaining $400 that was due.

The advice included taking down the site, defacing the domain by putting up a notice that the client hadn't paid and had debt, changing the GoDaddy account and locking them out, etc.

People even justified taking the site down like repo guys do with cars. And that's when I decided I'd share with you five tips for dealing with non-paying clients.

Dealing with non-paying clients

I'm going to give you five tips – none of which have to do with getting a contract up front. That's good advice and you already know that. But in this case, it didn't apply because (as usually happens), you find yourself in these situations when you don't have a contract.

 1. Evaluate what's on the line for you

If you have a client that is stiffing you $400, you need to start by evaluating what that $400 represents to you. Does the amount of money you risk losing make up 10, 20 or 30% of your yearly gross? Or does it represent less than half of one percent?

This is critical because all the time you spend dealing with it may be more than what's owed to you. Another way to think about it is that if your time is worth a lot, you may be better off moving to another project and earning that money for your time, rather than wasting it on non-productive efforts to reclaim a small amount of money.

2. Evaluate what your actions say about you

I know everyone will tell you that you're in the clear and it's legit to take down a site you worked on. After all, it's like a repo man. Right?

But here's the thing. Most of us don't invite repo men to our parties. Right? They're not universally liked. And the justification for repo men is that the car can be sold to someone else. But that site you worked on likely won't be useful anywhere else.

Your actions say more about you than anything you say. So don't let your actions turn you into someone no one likes or trusts. Think about all the future clients that watch as you deface a site with a big “this dude's site is not here because he still owes me $400”.

It doesn't look bad just for him. It looks bad for you. To everyone else.

3. Get legal advice from lawyers, not from Facebook

Do you know why I'm not going to give you legal advice? Yes. Because I'm not a lawyer.

And when people start their advice with, “I'm not a lawyer but…” you can just ignore the rest of that sentence if they're trying to give you legal advice.

Trust me, no amount of The Good Wife episodes is going to educate your Facebook friends.

Get a lawyer if the amount that's owed to you is substantial. But remember that lawyers cost money. So don't get them for $400.

But if you're dealing with a client that is disputing what you've delivered, and doesn't want to pay, and the amount owed is substantial, start looking for a lawyer.

4. Evaluate your own communication style and approach

I know it's easy to get frustrated by a client that is ignoring you (or that you assume is ignoring you). But how you communicate, and the methods you use to communicate may be part of the issue.

Don't text. Don't DM. Don't FB message them.

Registered letters can help. Phone calls can help.

But things are always better if you can meet with someone face to face to talk about things.

After all, we are all much more prone to aggressiveness when online (and don't have to face someone before we're rude). In person meetings are always more tame and professional.

And do a fair share of listening. The customer may feel like that last payment is the only thing they have left to hold back before you walk away. Sometimes just explaining the next steps, post-deployment, can really help someone understand that they're doing themselves a disservice.

5. Learn from everything you do

Some folks only build sites on their own servers and transfer them to the client upon final payment. Others don't do that.

Some folks only start building sites after 50% of the project costs are delivered. Others don't do that.

Some folks only work with folks after they've signed a contract. Others don't do that.

The reality is that there are a lot of ways to work. But the reason those folks work that way is often because they've each learned something in their own past that has shaped how they work now.

But just because they do it doesn't mean you should do it. You need to learn from your own mistakes and decide which ones are painful enough not to repeat.

Because I'll be honest with you, sometimes the remedy for mitigating a particular risk is more trouble than the cost of the potential downside.

And that means that you may not want to copy a play out of someone else's playbook because the cost to you (based on your own personality) is higher than potentially losing a couple hundred bucks.

Did you notice something?

Notice that I didn't tell you anything about that site you developed. Notice that I didn't tell you to back it up, turn it off, lock someone out, or all that.

Honestly, there are two reasons for that. And, like normal, I'm better explaining it with stories.

Story Number One

My daughter sometimes gets mad at her little brother (she's 8 and he's 6). When they're playing with legos, and he takes a piece she planned to use, she gets really hot! I mean she can lose it – yelling and stomping.

So you know what she does? She grabs a bunch of other pieces, stomps to her room, and declares that no one is allowed to enter her room. Then she slams the door.

And do you know what the result is? Her little brother (often with my wife) keeps playing with the rest of the Legos and forget that she was ever there. All while she fumes in the other room – doing nothing, all alone.

Sure, you could get angry. Sure you could deface a website or destroy it. And you could stay angry and wait for someone to pay you what they owe you. But it's just as likely that that client has forgotten about you and has moved on in life.

Story Number Two

My second story relates to my day job, where I lead software engineers in building projects for large enterprise clients. Every now and then, one of them shows up and tells me that I have to choose between two different high priorities because we can't do both at the same time – even though clients want that.

It's one of those classic scenarios where they're looking for me to give them the coverage to allow them to say no to someone. And in the end, I may have to. But not before we sit down and chart out exactly what happened over the last several months to get us to this point.

Often we find out that things didn't need to come to this final showdown. There was a way, months before, where if we'd been strategic about our communication and choices, we could have mitigated the quandary we're in.

This is often a long and painful meeting to have with my staff – painful for them. After all, all they wanted was a quick decision.

And I end those meetings by saying, “The fact that we have to make this decision, the fact that we have this ultimatum, is because we've made tons of poor choices before this. Let's not do it again.”

The second reason I haven't given you advice on how to adjust/tweak/lock the site is because it's too late.

Your clients and you have trust issues – if that's what's really going on (assuming it's not that they just lost their phone and need a new one). And trust issues don't get solved by escalation. They get solved way up front, when you're building the relationship. When you're setting expectations.

At this point, your best bet is to ask how you can step out of this with the least amount of trust and professional image damaged. And that may mean you eat some cost.

Concluding with non-paying clients

I want to end with one little strategy that I find useful to keep in a back pocket.

Instead of chasing after people who owe me money, instead of making a nuisance of myself, instead of acting in an unprofessional way that will impact future clients – instead of all that, I just gift people that portion of the project and move on.

That's right – I give it to them as a gift.

And you know what happens when you give someone a financial gift like that? At the end of the year, you need to let the IRS know that you did it. And if the amount is right, they'll end up having to pay the IRS some money for that gift you gave them.

That's after they paid someone else to finish up or build them a new site.

I know I don't get the money, but it lets me be generous while also making sure they still end up paying a little.

And sometimes, just sometimes, when I let them know not to worry about that last payment, and that I'll gift it to them (but that they can expect a 1099) – I get an immediate response.

People, after all, like the IRS even less than the repo man.