Dealing with clients who don’t submit a payment can lead to bad debt, a dent in cash flow and stress. There are several ways to get back to recoup what you’re owed. As a security business owner, the last thing you can afford or want is a client who is reluctant to pay you. Receiving late payments, or no money at all, can push you into bad debt or severely cramp your cash flow. Let’s call a spade for what it is. The security guard is generally a poor person and does not have a big budget. They need to be paid on or before the last day of each month. Luckily, sometimes there are resources available in the security company and steps can be taken to help make things right.
While in business it is assumed you will be paid for the service you provided, things don’t always go as planned. Unfortunately, there are occasions when clients simply don’t pay or delay payment. As uncomfortable or frustrating as it may be, approaching a non-paying customer doesn’t have to be difficult. You can combat this problem by diplomacy, seeking legal action, reviewing your contracts or contacting collections agencies, just to name a few solutions.
Preventing payment issues
Chasing a nonpaying customer is often a messy process, so it’s best to take the following precautions to avoid the issue altogether:
- Research your client.
- Have a contract.
- Ask for a deposit.
Approaching clients who submit a payment
Sometimes, no matter what you do to prevent the issue, you’re still left empty-handed. If you’ve taken all the precautions and a client still hasn’t paid the invoice, you need to act fast. Here’s how you should proceed:
Weigh your options
Ask yourself if chasing down the client is really worth it. If the payment was only a small percentage of your yearly income, it may be better to let it go and write off the client for future business. You could end up spending more money and energy than what the invoice is worth. Clients who pays 30 days in advance are usually the one’s to breach contract, by not paying on the payment date as stipulated in the agreement. Best-case scenario, if you have a winnable case, and the defendant has the money to pay and doesn’t declare bankruptcy, you usually will still have to pay your own attorney’s fees to collect, and those can accumulate to tens or even hundreds of thousands of Rands, depending on the complexity of the case.
Follow up
Don’t hesitate to send out a letter or email if the invoice has not been paid by the agreed-upon date. There’s always a possibility that the invoice was lost or misplaced. Maybe the client was on vacation or had a family emergency. You shouldn’t instantly assume that the client is a deadbeat because they didn’t pay on time. Send them a friendly yet firm email reminding them that the invoice is past due, (I call it a “soft reminder”) and you’d like to resolve the issue as soon as possible. Also, ask if they have any concerns with the product or service that you provided, or if they need assistance with the payment process.
Talk to a lawyer
If your client is still resisting or ignoring your requests and the unpaid invoice is worth the trouble, consult a third party, someone who is not a friend or an individual whose help you sought out online. Seek legal advice from an actual attorney who can suggest which legal courses of action you can take against the customer. Once you’ve tried all else, it’s best to hire a lawyer to write a letter of demand. Many businesses and individuals do not understand the legal obstacles involved in collections. If they are a debtor and your lawyer contacts them, many will just pay without analysing further, or they will terminate the contract.
File a small claims case
As last resort, you can also take your grievances to a small claims court, which is specifically designed for minor disputes. You can utilise this court if the money in question is under a certain amount. For any situation at your clients premises, security is the point of reference. Security is the first to answer questions, sort out problems, and maintain a secure environment, but often the last to be paid by the client. Security should be on the priority list of payments by the client.
Need a reliable security company to ensure your safety? Contact the South African Association of Unified Security today.
