What To Do When a Client Doesn't Pay

What happens when someone refuses to pay you money you are owed? Will you get paid? Will you have to walk away? Is it worth taking legal action? It’s going to depend on your written agreement with this person.

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Okay, back to our regularly scheduled content: 

Let’s consider a hypothetical situation. 

Mary is a VA who bills her client at the end of every month. She works 10 hours per week at a rate of $30/hour. This month, Mary’s $1200 invoice goes unpaid. She stops work per her contract, sends multiple reminders, and she gets nothing but crickets. 

Uh oh. 

Mary realizes it’s time to try something different. So she remembers the advice given to her by a friendly lawyer (it was me!), and she takes a screenshot of her contract clause about payments, plus a screenshot of where her client signed and agreed to her terms. 

She also takes a screenshot of a very important piece of her contract, one that just might get her paid: The Arbitration Clause.

She sends these off, along with one final, firmly worded email. It said something like: 

Dear Client,

This is your final notice that you owe me $1200 for work completed during the month of X. You have violated our contract terms by failing to pay the invoice. Please see the payment terms here: (screenshots, aka, the receipts).

Since I have not received a response from you and the payment is now XX days past due, I will be requesting arbitration, per the terms of our contract: (screenshots/receipts go here). 

The arbitration fee will be $650. The company will contact you to set up our virtual hearing. Should they conclude that you are in the wrong, you will owe $1200 + $650 to cover the fees for arbitration. 

I will be contacting the arbitration company in X days if I do not receive payment on my outstanding $1200 invoice. 

Sincerely,

Mary

🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥

Short, sweet, and to the point, with all the necessary receipts. Now, in my experience, it is a rare delinquent client who will opt for arbitration. 9 times out of 10, that invoice will be paid. 

But what if it’s not??? 

In cases like this, I recommend using an arbitration company. My go-to is FairClaims.com. They charge a flat $650 fee, so if you have an unpaid invoice worth more than that, it’s often worth pursuing. Especially if you are confident you are in the right according to your written contract. 

An arbitrator will set up a meeting. You will present your evidence, aka your signed contract and any invoices/receipts, and they will issue a decision. 

If all your legal ducks are in a row, you get paid, your client is on the hook for the arbitration bill (and hopefully learns a very valuable lesson - you gotta pay your people!). And you? You move on with your drama-free business. 

Bottom line? Your written contract is your best line of defense against ghosted payments and unpaid invoices. And, it must include an arbitration clause!!

Check your contract right now and see if it has this important section included. If not, you need to add one. 

Here’s some language you can use, for free!, if needed*: 

DISPUTE RESOLUTION.

Should any dispute arise between Client and Company, it would be preferable to work it out amicably, but if that is not possible, Client acknowledges and agrees that the dispute will be resolved by FairClaims.com.  Client agrees to participate in the arbitration process in good faith, and further agrees that the decision made by the Arbitrator is binding, not subject to appeal, and enforceable in any court of competent jurisdiction as a judgment of law.  

As I mentioned before, should you need to enter arbitration for a dispute, I highly recommend FairClaims - not only is their fee reasonable, the process is smooth and easy to navigate. Their tagline is Be Heard. Resolve. Move On. My kind of people! 

I hope this was helpful for you, and while I hope you never have to worry about shifty clients and unpaid invoices, if you do, now you can handle it with ease and the least amount of drama possible. 

Tell me: did your contract have an arbitration clause already, or will you be adding one? Hit reply and let me know! 

PS: Shop all the super protective legal contracts you need for your business at LayneLyons.com! 

*Quick reminder, this sample contract language is not legal advice, it's education and information for you to use as you grow your business.