Startups & Non-Paying Clients (what can you do?)

Posted January 21, 2021 by in Career

Startups are the stuff of dreams. Or they’re the beginning of dreams coming true, at any rate. Ask your average billionaire scrunching their toes on a beach that they had made out of granulated crystals and they will tell you that it all began with a startup. Without that first business venture, putting a sports car into orbit around the sun just for fun would never be possible (that’s a real thing – fresh from the Elon Musk big book of what to do when you’re bored on a Thursday and money is no object).

Startups only work if they are profitable. That much should be obvious. Or you’d think it would be obvious. But far too many people let eagerness get in the way of getting paid. How? By giving in to clients who refuse to pay their bill. It’s a frequent occurrence. Some startup hopefuls are all about the hustle right up until the beginnings of a confrontation over settling the bill. That’s where they crumble. So, how can we avoid such a confrontation in the first place?

Let’s look at your options:

Professional Invoicing

Invoicing is not difficult when you use the right tools (for example, click here if you need an easy to use invoice template). Aside from tax concerns that mean you should always have an invoicing system in place for future reference. Invoicing can help you when it comes to clients who show signs they may not settle their bill. 

Part of the freedom enjoyed by clients who feel they are under no obligation to pay stems from a difficult to navigate loose agreement regarding pricing. If you exchanged messages over social media, through email, over the phone, and via text messaging, the trail of what was agreed and when it was agreed can be full of grey areas. 

Clients who know startups are eager to deliver good work will not think twice about using every loophole in the book to get work out of you for free (or at discounted rates where pricing can be argued – whether the dispute is fabricated or not). Invoicing allows you to come to an agreement over an itemised bill for your services. You can also list payments schedules and accepted payment methods. 

Payment Prompts 

Do not feel guilty about sending payment reminders to your clients. You should ideally have three prompts in place. The first communication should be sent several days before the payment due date, informing the client of the upcoming payment deadline. The second prompt should be sent on the day the payment is due. 

If you still do not hear anything by lunchtime on the payment due date, try to contact the client to ask if there has been an issue with transferring the money (something as simple as incorrect payment details could be holding things up). 

The third and final prompt should be sent only if you cannot reach the client. Again, send this prompt on the payment deadline date, pointing out that late payments may incur fees. In some countries, this is backed by law. Always look up the laws wherever you are based if you are unsure. 

*Photos by Ketut Subiyanto