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How to get paid by a client who owes you money!

You wrote great copy.

Nailed the consultation.

Signed the clients.

But when the time rolled around to get you to get paid on the remainder of the monies, you hear crickets.

What do you do?

This post may be most useful to those of you who are business owners, but in fact, anyone who is owed money can use this information to help collect what you are owed. Debt collection is a highly regulated industry. Our old friend the Federal Trade Commission (you bloggers should be familiar with the FTC by now!) and the states have many laws in place to protect consumers from abusive debt collection practices, so it is always a good idea to look over those rules before you start calling your customers and demanding payment from them.

Here, though, we will discuss how to get started on the collections process, who you may want to hire to help you, and what independent avenues you have to recover money locally.

#1. Look at your contract.

First, figure out what your contractual recourse is. You may have an enforceable oral agreement, but it’s even better to have a written, easy to understand contract spelling out what remedies each party has when the other party does not hold up its end of the agreement. Your recourse may be that you can get full compensatory damages, or it may be limited to an agreed-upon amount in the contract. Before you start trying to collect, it’s good to know what you can legally collect.

#2. Make polite contact with your debtor.

Once you’ve figured out what you are owed, an easy next step is simply to give your debtor a polite reminder that they owe you money. You might make a friendly phone call or send them a written reminder via email or mail. If you make phone contact, be sure to call during reasonable hours, do not leave information about collecting a debt from them on an answering machine or with someone else who takes a message from you, and never threaten them with legal action. You should keep records of when and how you make contact, and detailed notes if the debtor agrees to send any payment or follow up somehow.

#3. Send a formal demand letter.

If you can’t get ahold of your debtor on the phone, or they won’t agree to send you payment, you can send a formal demand letter requesting payment. A good demand letter sets out the facts of the situation, what the debtor owes, a request for payment, and probably includes a method to pay and deadline. If you have any invoices or other documentation, you should include them with the letter. It always uses professional language and does not threaten the debtor with any action or punishment that is not within the realistic boundaries of the situation (meaning, you shouldn’t threaten your Aunt Sally with jail time because she owes you $500). You may, however, tell the debtor what action you intend to take next if he or she does not pay you.

#4. Go to small claims court.

If the amount you are trying to collect is nominal, you may decide as a next step to sue your debtor in small claims court. This is done without lawyers, so it is a more affordable way to collect a smaller amount. In small claims court, claims are usually limited to $5,000 or less. Just because you win in small claims court does not necessarily mean that the debtor will pay. But once you have a judgment against your debtor and any time for them to appeal has passed, you may be able to attach a property lien on their property, garnish their wages, or attach a bank levy to their accounts. Each state has its own rules on how to go about these processes, and they may be time consuming.

#5. Hire someone else.

If you are trying to collect more than a nominal amount, or you are too overwhelmed by trying to collect on your own, then you may want to hire an outside collections lawyer or agency. These options are expensive and will reduce the amount you are able to collect, so they should probably be considered as a last resort.

Collections Lawyer

A collections lawyer will advise you on what the statute of limitations is for your specific situation (meaning, how long you have to pursue collections before the debt is extinguished) and what your legal recourse is. Sometimes, having a lawyer send a demand letter on your behalf is enough to convince the debtor to pay up before they have to appear in court. Lawyers also have flexibility on what avenues they can take to collect: they can send letters, file a lawsuit, or negotiate a settlement. They are also bound by the rules of professional responsibility and hopefully will represent you in a professional way that does not violate the debt collections laws of your jurisdiction. Lawyers, however, can be expensive, so you want to consider whether it will cost you more to hire the lawyer than you may collect in the end.

Collection Agency

Another option is to hire a collections agency to collect the debt on your behalf. You can find one tailored to your business size or amount of debt. Agencies charge a fee – either a flat fee or a percentage – and you will not likely see close to the full amount if they can recover. When looking for a collections agency, it’s important to find one that is licensed, bonded, and insured. As discussed above, debt collections is highly regulated by the states and federal government, so it is crucial that your agency both follows the laws and has insurance to protect you from any potential lawsuit from the debtor.

#6. Do your research.

Both the federal and state governments regulate debt collection. The Fair Debt Collection Practices Act generally governs third-party debt collectors – those who are collecting on your behalf. It prohibits debt collectors from engaging in abusive, unfair, or deceptive practices. Many states have their own fair debt collection legislation. Some states’ legislation mirrors the federal legislation, but some states’ laws also regulate creditors (that’s you!), what specific collections practices you can engage in, and set forth more onerous damages for violations. For more information on your state, check out:


If you are looking for a primer on the FDCPA, take a look at:


How to get paid by a client who owes you money!

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