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Triangle Law Group
877-427-1252 | 919-301-0716
We Make Legal Services Affordable.

We offer consultations for up to 30 minutes for only $99.00. No consultation charge for most contingency matters.

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Protecting your business from nonpaying customers

As much as you love your work, the freedom of owning your own company and the satisfaction of a job well done, getting paid is also important to you. When customers delay or fail to pay what they owe, it may create a domino effect of financial trouble. You can't pay for your supplies, your office space, your insurance and your employees. You can't put food on your table or cover your mortgage payments.

When you keep your end of the contract with a North Carolina homeowner or property developer but your client fails to keep his or her end, you are the one who suffers. Now you must use your own time and resources to collect the payment, and this can be even more costly. It may help to know your rights and where you can turn for help with collecting what is rightfully yours.

Take proactive steps

From the very beginning of your business setup, it is wise to have a system in place for collecting payment and dealing with customers who are delinquent. Your system may include steps such as the following:

  • Investigate potential clients' ability to pay by doing background checks and contacting other contractors who have worked with them.
  • Be willing to pass up jobs from customers who have a history of nonpayment or other difficult issues.
  • Develop a payment schedule that clearly specifies the intervals at which you expect to receive payments and the penalties for late payments.
  • Be ready to cease work or carry out other penalties, such as filing a mechanic's lien, if a client misses a payment.
  • Be kind but persistent when following up when a customer owes a balance.
  • Include your payment plan in your contract.

It is rarely wise to begin any project without having a solid contract that both parties understand and agree to. Take the time with your customer to review your payment policies and answer any questions the client may have. If the customer has a clear understanding of his or her part of the deal, you may have fewer issues getting the customer to pay up when payment is due.

Having a system may not completely eliminate dealing with those customers who refuse or are unable to pay. From time to time, you may still have a customer whom you must pursue for payment. You may find that seeking the assistance of an attorney can help you understand your options and rights in this difficult situation.

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