Thursday, January 29, 2015

When is it Time to Fire a Client?

So here I am again, sending the same invoice reminder for the second time this month, to the same client who has not contacted me.

Many of us have been in this predicament. As a small business, your clients payments are the lifeblood of your business. But what do you do with the ones who do not pay for months, or constantly pay late?

Here's my gauge:
  • Is their money (not there) actually helping you? 
  • Is the stress of not receiving payment, while still providing them with service not worth the fee?
  • Are you spending valuable time and resources chasing down this client for payment every month?

But how do I end it without denting my reputation? 

That's the question that makes us keep these clients. We are actually afraid to let them go for fear of losing income and a bad review somewhere.
These are tough questions, especially for small businesses with a small clientele. Large companies can make stringent guidelines for client payments. If the client does not follow those guidelines, well, the company is so large that losing one or two, who don't pay anyway, will not hurt them. It actually helps them by not having to waste time and resources chasing down those clients.

Below is a great snippet of an article from Inc.

INC. - Many articles that ask the question, "When is it time to fire a client?" list non-payment as a primary reason. As valuable as that client's money is to your business, if months have passed with no payment, that money is obviously not helping at all. Even if payment eventually comes in, the time and mental overhead you spend each month tracking payments, sending notices, and worrying that the client won't pay aren't worth it. In this case, the best thing you can do is put the late-paying client on notice that you'll be ending your working relationship at the end of its current term.

Unfortunately, ending a relationship with a client is one of the hardest parts of being an entrepreneur, even if that client's late payments have caused you unnecessary headaches. Many entrepreneurs feel loyal and grateful to their clients, or are concerned about their professional reputation. But you can still graciously bow out while still being firm, especially if you've mentioned the problem with late payments to the client previously. Try first discussing the problem politely with the client and, if it still doesn't get better, carefully plan the conversation before making the call.

If you can end things professionally and amicably with the client, that's ideal. Unfortunately, there will be cases where your client won't take it well despite your best efforts. As long as you've conducted yourself as professionally as possible, you shouldn't have any regrets. As time goes on, you'll likely have a few relationships with clients that don't work out, but the stress relief will be totally worth it.

So this is great advice. It's a tough decision to make, but one that has to be made. I constantly find myself feeling bad for these types of clients, and I always give them one more chance. But I am realizing that there is only so much you can do for someone. They eventually have to take responsibility and realize, that they are causing themselves to be removed as a client.


No comments:

Post a Comment