What to do if a customer doesn’t pay or can’t pay

While we like to say that the ‘customer is always right’, truth be told, this isn’t always the case – especially if you’re confronted with a customer refusing to pay for work done by your business despite signed contracts and agreements.

And although many cases of delayed or missed payments are often down to simple miscommunication by yourself or the customer in question, when non-paying customers become an issue, you might be at a loss for what to do.

Fortunately, there are several avenues that you can pursue to get around a customer not paying for your services. Take a look at our top tips below for what to do if a customer doesn’t pay.

What to do if a customer is not paying

Even though it can feel like a customer is being difficult by not paying on the agreed date, most of the time, they may simply need a gentle nudge to make the payment, and they will usually do so promptly after a reminder.

Still, if you feel you’re in a dispute with a customer and need to take action in order to resolve a payment problem, we recommend doing the following:

1. Reach out to the customer with a reminder of payment

First, we highly recommend reaching out to your customer with a polite and friendly reminder that they still owe you payment, giving them the benefit of the doubt that they simply forgot about the deadline.

Within this reminder, it’s a good idea to include how much they owe, the original date on which fees were owed, and what the next deadline for payment will be before further action is taken.

On top of this, if additional work has been carried out since you issued an initial quote, make sure the customer has been issued with an up-to-date invoice, along with details of when such payment is due.

2. Make sure you're speaking to the right person

While it should have been established who would be making payment for your services at the start of a project, if a customer is not paying, then it’s always a smart idea to double-check who agreed to handle the bill.

It may be that a different person to whoever you’ve been speaking with could be responsible for payment, so make sure you have the correct details written down when issuing a bill.

Inquire if there is a reason why the payment is late?

If you’ve sent a reminder and double-checked that you’re speaking with whoever agreed to pay for your services, and you’ve still not received payment, then you should look to informally contact the customer to inquire as to why payment has not been made.

Ideally, this should be done via a phone call, giving you the opportunity to ask directly whether or not there’s a good reason for your payment being withheld, as this will give you an indication as to whether or not there is a larger issue at play.

 4. Try to find an amicable solution to any problems

Depending on why the payment hasn’t been made, it’s always preferable to try to work through the problems with the customer before you or they escalate things to a isolution that will likely involve legal matters.

For example, if they’re not happy with the work you’ve carried out, you should listen to their feedback, examine your work, and then aim to put any failing right (assuming there are any to be found). Alternatively, if it’s at the end of the job, you could conduct a site meeting with the customer and come up with a snagging list of things to work on.

On the other hand if the customer is struggling to pay what they owe, consider coming up with a different payment arrangement that gives them more flexibility to get the money to you in smaller, more affordable installations.

5. Confirm any agreements in writing

Assuming a contract of work was signed initially, it’s always worth highlighting this agreement in an email to the customer detailing its contents, as well as detailing when any conversations relating to the aforementioned work took place, what was said, and what had been agreed. This means you both have a record of the desired work.

6. Refer the customer to the ombudsman

Finally, should all other options fail, then we’d recommend referring your customer to an ombudsman for an external review of their complaints, though this will not be applicable should they not have given you a reason for a lack of pay.

For example, as part of your Which? Trusted Trader endorsement, your customers have access to the Dispute Resolution Ombudsman. In cases where customers are dissatisfied with the service they’ve received, they can take their case to the ombudsman, who will consider the facts and decide whether the customer has been treated unfairly.

What not to do if a customer is not paying

Although it’s incredibly frustrating and worrying to not be paid on time by your customers, it’s always best to take a moment and cool your head before taking steps to resolve the issue.

However, there are a few things that we recommend not doing when reaching out to customer to avoid unnecessary escalation:

1. Try to avoid getting angry with the customer

Anger and annoyance are common things to experience when a customer is not paying, but getting angry with the customer is only likely to make the situation worse - regardless of why they haven’t paid you.

Losing your temper will only reflect badly on the reputation you’ve worked so hard to build up, and failing to treat customers politely and professionally also breaches the Which? Trusted Trader Code of Conduct – should you be a member.

2. Do not breach your agreed contract

Whatever you do, do not do anything that might breach your agreed contract as you work with the customer to resolve the issue at hand. We’d recommend sticking to your side of the contract or quote and completing all of the obligations you’ve agreed to.

That way, if an issue with customer non-payment does persist, then the fulfilment of the contract will likely help your case, should you need to bring it to legal matters.

3. Never remove any materials you’ve installed

In the same vein as sticking to your agreed contract, never dismantle anything you’ve built as part of your contract or remove any materials that have been fixed as part of the work you’ve carried out.

Again, it’s important to remain professional and try to stay on good terms with the customer to make the whole payment process easier.

When to take your non-payment case to court

If, despite your best efforts to resolve the matter, a customer still refuses to pay, then your best course of action will likely be to take them to court as a formal means of recovering the money you’re owed.

There are several steps you should follow with this process, in order to make sure the customer is aware of what is happening, and hopefully, they’ll pay up before you actually need to go to court itself:

1. Write to the customer informing them of your intentions

To start with, you need to let your customer know, in writing, that you are intending to start court proceedings. You must make it clear that this is a ‘letter before action’ - that is, you haven’t actually started the process yet – giving them time to respond and potentially pay you.

In cases where the customer does change their mind, you can also remind them of how you can be paid, and give them a deadline of when you will begin court proceedings if you still haven’t received payment. This would preferably be 14 days from the date the letter was sent (which should also be noted).

This letter should also contain a record of what has happened so far, such as:

• Information on the work that was carried out.
• When any quotes or invoices for this work were issued.
• How much the customer owes for the work and when it was supposed to be paid.

You should then invite the customer to contact you to resolve the dispute, and if you’re a Which? Trusted Trader, you can again remind them that you have access to the Dispute Resolution Ombudsman, who can help resolve the matter.

Such a letter can also be useful to have  - if you do go to court further down the line, as they may want to see that an alternative dispute resolution was offered before legal action was undertaken.

2. Send a follow-up letter

If the deadline in your first letter comes and goes without a payment, your next step should be to issue a follow-up letter. 

This should refer to your first letter and include copies of the correspondence.

You can also again advise the customer that failure to pay will result in court proceedings, which may result in a county court judgment being issued in their name, which can have serious consequences on their credit rating in future.

Alongside this, you should again remind the customer of what they owe, and how you can be paid, and set a final payment deadline - again, this ideally would be 14 days from the date the second letter was sent. 

3. Start the county court claim process

At this point, if all previous steps have failed to elicit payment from the customer, you may want to issue a county court claim process. The rules around what you will need to do will vary depending on where you are in the UK:

• England and Wales – claims up to £10,000 are counted as small claims - make the claim online and it can cost between £25-£410. You can claim for the amount owed by the customer, as well as court fees. But note - you can’t claim for solicitor’s fees, so if you employ one, the payment will have to come from your own pocket.
• Scotland – you can issue a Simple Procedure for claims up to £5,000, or an Ordinary Cause if it’s worth more.
• Northern Ireland – small claims include those up to £3,000, nidirect.gov.uk.

After you’ve made a claim, the customer will be informed and will be asked to respond. They may dispute the debt; in which case, you may need to provide more information and may be asked to attend mediation to try and settle the dispute.

If mediation is unsuccessful, the court will arrange a hearing, which you should attend. The judge will then make a decision. If you win, the customer will be given a court order to pay.

If, after all of this, you still do not receive the money, then a debt collection service may be able to help recover the money you’re owed. This will probably mean an end to any good customer relations and should be an absolute last resort.

Tips for preventing late payments

It’s always better to prevent the occurrence of late payments altogether if you can which is why we recommend being as detailed as possible when setting up a pay arrangement:

• Fully break down your quotes – Any quotes you give customers should detail the work you’ll be doing and the products you’ll be installing. If additional work is required or requested, you should provide a revised or additional quote - that way, there is no question of the customer being unaware of what they are being charged for.
• Include a payment schedule - this should form part of your quotation, so your customer knows exactly what money is due and when.

Expand your options as a Which? Trusted Trader

You should hopefully have a much better idea of what to do should you be faced with a customer who is refusing to pay you for any work carried out.

Customer disputes are never easy, but one way you can help take the pressure off your business and the customer is to employ an unbiased third-party, such as the Dispute Resolution Ombudsman service offered to Which? Trusted Traders.

Made up of reputable trade business across the UK, those who qualify to join our Trusted Traders scheme will not only benefit from access to our disputes and claims service but they’ll also be assigned a dedicated account manager to help them get the most out of their membership.

Get in touch today to learn more about joining our Trusted Trader scheme, and don’t forget to visit our advice guide hub for more insightful business articles like this one.

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