What Can I Do When A Client Does Not Pay

When a client does not pay you, you have a few options. However, often times, your clients leave you limited options.

Obviously, we prefer that everyone holds up their end of the bargain in every deal. Unfortunately, that’s not the world we live in.


First and foremost, you need well written protective contracts. The primary concern in any contract is that the expectations are clear and understood. In addition to that, they need provisions that protect you in case of breach.

Secondly, you should screen your clients. Certain things are red flags. For example, if your client can’t pay any money up front, you should be cautious. Additionally, clients who have been through multiple providers in a short period of time, that’s pause for concern as well.


Often times, the cheapest solution in dispute is negotiation. It may not seem fair, but offering a small discount in exchange for payment is usually your best option. The first thing I recommend offering is a payment plan.

It also depends largely on your situation, but one of my professors once said “it is better to get something than nothing.” If the client is refusing to pay, negotiation can sometimes get you at least something from them.


Collections can be an option in some circumstances. However, it is unavailable to most small business owners. Most collection companies won’t take on accounts unless they exceed a certain dollar value. I obviously haven’t checked every collection agency out there. However, the ones I have seen won’t provide their services unless you have an account above $10,000 or a collection of accounts $10,000 or more.

If you’re seeing the occasional few hundred dollar accounts, this option isn’t for you.


If your contract specifies that arbitration should be used to settle disputes, this is your next step. If negotiation fails and collections doesn’t work, arbitration might resolve the dispute. Fortunately, a binding arbitration award can be entered as a judgment in a court with jurisdiction.

I advise against using arbitration for small dollar amount contracts. In arbitration, you have to pay the upfront costs which tend to be in the thousands. Your contract can specify that the arbitration costs are to be paid by the losing party, but that’s still a risk to you.


“I’ll see you in court.” When all else fails, a lawsuit might be your only option. Unfortunately, businesses are required to hire a lawyer to handle their disputes in North Carolina. This can end up costing you as much as some of your claims. However, with the right provisions in your contract, you can recoup these costs if (1) you win and (2) the debtor has enough assets to pay up.

Mediation When a Client Does Not Pay

Often times, you’ll want to mediate your dispute. A mediation is a formal proceeding with a mediator. The mediator is a professional who is skilled in helping two parties resolve their dispute. For these alternative dispute resolution processes, you pay for your attorney and half of the mediator’s hourly rate.

As with other methods of dispute resolution, you can specify that the losing party pays for the attorneys and mediator. However, since mediation is a formal negotiation, who pays the attorneys can only be decided in that process.


If you are experiencing a client who does not pay, and want to discuss your options, feel free to contact us at info@lawplusplus.com or by calling (919) 912-9640.



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