While the saying goes that the ‘customer is always right’, that’s certainly not the case if they are refusing to pay for the services you’ve provided, and it can be hard to know the best thing to do if you’re not being paid the money you’re owed.
In many cases, a lack or delay in payment can be put down to miscommunication. So it’s best to start off by giving your customer the benefit of the doubt.
There are also steps you can follow to resolve the issue between you and the customer. But if they fail, court action can be a final resort. If a non-payment issue does go this far, the court will want to see that you have acted reasonably, and exhausted all other options first.
Here, we’ve gathered some dos and don’ts from our Which? Trusted Trader assessors, and outlined the steps you may need to take to get your payment.
Actions to take
1. Has the customer been told how much they owe?
If additional work has been carried out since you issued an initial quote, make sure the customer has been issued with an up-to-date quote, along with details of when payment is due. Quotes should be as detailed as possible. It’s also recommended to include a payment schedule with your quote, so both you and the customer can see how much is due, and when.
2. Make sure you’re asking the right person
Have you established who is going to be paying the bill for your services? It may be different to the person you’ve been dealing with, so make sure you have the correct details when issuing a bill.
3. Is there a reason why the payment is late?
If you’re satisfied with the previous two points, informally contact the customer - ideally via a phone call - to ask whether there’s a reason the payment has been withheld. This will give you an indication as to whether or not there is a larger issue at play.
4. Try to find an amicable solution to any problems
Depending on why the payment hasn’t been made, it’s preferable to try to work through with the customer before you or they escalate it. For example, if they’re not happy with the work you’ve carried out, try to put this right. If it’s at the end of the job, you could conduct a site meeting with the customer and come up with a snagging list of things to work on. Or, if they’re struggling to pay what they owe, consider coming up with an alternative payment arrangement that gives them more flexibility to get the money to you.
5. Confirm any agreements in writing
Email or send a letter to the customer detailing when any conversations took place, what was said and what has been agreed. This means you both have a record of the changes.
6. Refer the customer to the ombudsman
As part of your Which? Trusted Trader endorsement, your customers have access to the Dispute Resolution Ombudsman. In cases where customers are dissatisfied with the service they’ve received, they can take their case to the ombudsman, which will consider the facts and decide whether the customer has been treated unfairly.
Things to avoid
Getting angry with the customer
As frustrating as it is to not get paid, getting angry with the customer is only likely to make the situation worse - regardless of why they haven’t paid you. It will also reflect badly on the reputation you’ve worked so hard to build up and failing to treat customers politely and professionally also breaches the Which? Trusted Trader Code of Conduct.
Breaching your contract
We’d recommend sticking to your side of the contract or quote, and complete all of the obligations you’ve agreed to. Then, if an issue with customer non-payment persists, your fulfilment of the contract may help your case.
Removing materials you’ve installed
Don’t dismantle anything you’ve built or remove any materials that have been fixed as part of the work you’ve carried out - again, it’s important to remain professional and try to stay on good terms with the customer.
Advice on small claims court
Despite your best efforts to resolve the matter, some customers may still refuse to pay. In these cases, you may have to undertake formal action to recover the money you’re owed, which can result in taking them to court.
There are several steps you should follow with this process, in order to make sure the customer is aware of what is happening - hopefully, they’ll pay up before you actually need to go to court.
Step 1: Write to the customer
You need to let your customer know, in writing, that you are intending to start court proceedings. You must make it clear that this is a ‘letter before action’ - that is, you haven’t actually started the process yet.
The letter should also contain a record of what has happened so far:
- the work that was carried out
- when any quotes or invoices for this work were issued
- how much the customer owes for the work and when it was supposed to be paid.
You should invite the customer to contact you to resolve the dispute, and remind them that you have access to the Dispute Resolution Ombudsman which can help resolve it - if you do go to court further down the line, it may want to see that an alternative dispute resolution has been offered.
In case the customer changes their mind, you can also remind them of how you can be paid. Plus give them a deadline of when you will begin court proceedings if you still haven’t received payment. This would preferably be 14 days from the date the letter was sent (which should also be noted).
Step 2: Send a follow-up letter
If the deadline in your first letter comes and goes without a payment, you should issue a follow-up letter.
This should refer to your first letter, and include copies of the correspondence.
You can also advise the customer that failure to pay will result in court proceedings, which may result in a county court judgement being issued in their name. These can have serious consequences on their credit rating in future.
You should again remind the customer of what they owe, how you can be paid, and set a final payment deadline - again, this ideally would be 14 days from the date the second letter was sent.
Step 3: Start a county court claim
If all previous steps have failed, you may want to issue a county court claim. The rules vary depending on where you are in the UK:
- England and Wales: claims up to £10,000 are counted as small claims - make the claim online and it can cost between £25-£410. You can claim for the amount owed by the customer, as well as court fees. But note - you can’t claim for solicitor’s fees, so if you employ one the payment will have to come from your own pocket.
- Scotland: you can issue a Simple Procedure for claims up to £5,000, or an Ordinary Cause if it’s worth more.
- Northern Ireland: small claims include those up to £3,000, nidirect.gov.uk.
After you’ve made a claim, the customer will be informed and will be asked to respond. They may dispute the debt, in which case you may need to provide more information and may be asked to attend mediation to try and settle the dispute.
If mediation is unsuccessful, the court will arrange a hearing, which you should attend. The judge will then make a decision. If you win, the customer will be given a court order to pay.
If, after all of this, you still do not receive the money, then a debt collection service may be able to help recover the money you’re owed. This will probably mean an end to any good customer relations, and should be an absolute last resort.
- Find out more: how to use the small claims court
How to prevent late payments
It’s always better to prevent the occurrence of late payments altogether if you can, so being as detailed as possible can help:
- Fully break down your quotations: Any quotes you give customers should detail the work you’ll be doing and the products you’ll be installing. If additional work is required or requested, you should provide a revised or additional quote - that way, there is no question of the customer being unaware of what they are being charged for.
- Include a payment schedule: this should form part of your quotation, so your customer knows exactly what money is due and when.