What To Do When Clients Don’t Pay
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What do you do when a client doesn’t pay?
I remember the first time I got my first default payment and it felt like the world erupted. The first time a client ghosted me, it completely broke me. And then, over time, I realised this was something I was going to have to learn to hold in my journey of entrepreneurship.
The honest truth is that everyone in business faces a client not paying, behaving badly, ghosting us (and our team), or in even more honesty, them simply not getting results from our services and wanting a refund.
And another honest truth is that there is a lesson in it all.
And today, I’m letting you in on everything I know about how to deal with it.
This weeks episode of the Magnetic Woman Podcast is coming straight from my hotel room in Los Angeles, where I am attending a two-day retreat with my Mastermind group.
In this episode, I will be drawing from personal experiences, as well as stories my clients have shared, and diving into the topic of the difficulties we face when clients don’t pay. This is a common occurrence, and happens at every stage of business, but the key lies in maintaining integrity, setting boundaries, and having those difficult conversations.
In this episode, we delve into:
How to handle rejection in business
The need for integrity, flexibility, and boundaries in business
My stories and personal experiences with difficult conversations with clients.
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Transcript
Hello, Hello. And welcome to this episode of the podcast. I am currently sat in my hotel room in Los Angeles. I'm here for a two day retreat with my Mastermind, hosted by the wonderful Danielle Canty, who I've been working with for the last few months.
And I'm feeling the vibes. I am feeling the vibes.
From this evening and over the next couple of days, I'm gonna be surrounded by 35 female entrepreneurs. And, honestly, guys, I cannot wait to share with my clients all of the insights and business ideas and business trends and business knowledge that I know I'm going to be witness to, and flooded with, in terms of information and excitement and inspiration over the next couple of days.
Now, because I'm here in LA, this is the first time that I'm actually recording a podcast on my phone. So, throwing this in there just in case it sounds a little bit different to normal. It has been tested, but it feels quite good to know that, actually, I can still record podcasts on the go.
I was sat here today and thinking about really what I wanted to speak to. And actually, inspired by a conversation that I had with a dear friend who lives out here in LA, I decided to record this episode, which is speaking to what to do when clients don't pay. This is something I've wanted to speak to for some time, because a hundred percent, it happens in our industry, and I don't think it's spoken to enough.
Yesterday, having a chat with my friend, she said to me, I have never had so many clients not pay me (she works in public relations) than I have had in 2023. And I was like, you know what? Same.
We have so rarely had problems with clients not paying or attracting bad eggs, should we say. But in 2023, we did have about four cases where people behaved really badly.
I thought I would share a little bit of insight into how I manage this in my business, and some advice and support for you if this is happening to you and your business right now, or has happened in the past.
And, of course, because we are human, and business is business, and these things do happen, a bit of a sounding for, if it happens to you in the future.
So first up, this does happen. Clients do not pay. Clients do ghost you. It happens. I've spoken to many clients about this and many peers about this, and it happens at Every Stage of Business.
And the first thing I really wanna speak to here is really not making it mean anything that it doesn't need to mean.
I think we absolutely get to normalise it because it does happen to everyone. And what I personally find is that it's really a brilliant opportunity for me to feel into how I make stories in my head, and how I attach to those stories, and what I make those stories mean about me, what I make those stories mean about the business.
And every time it happens, I realise that it doesn't need to mean those things.
I'm gonna give you an example of this.
Maybe four years ago, it happened where a client, actually, was very respectful in the way that she ended our contract. And this was a client who'd signed it for a year, one to one, and a lot had changed with her circumstances. And at that time, I had basically a month clause. So, you could give me a month's notice, and you you could opt out of the contract.
And she was really, really thankful for the contract. She said, you know,
I've been in situations before where it's been like, no. No refund. No nothing. That's it. And, yeah, I really respected the way that you that you worked, Pandora.
And then, fast forward six months, this lady comes back to me, and she's like, actually, I have some feedback for you, and I wanna get on the phone.
I was like, oh, okay. You know, let's have a chat.
And she basically said loads of things that I didn't feel were true. Instead of, in a sense, like, a very gentle threaten of, you know, I need answers and I want my money back.
So at that time, I took it to my third party. We have a lawyer that we work with. There was nothing in there that really felt true. So that happened. She was like, okay, fine. And all went silent.
And then about a year after that, she came back and apologised. She said
I’ve been doing loads of work on myself, and I realised that was a really unfair thing to do. I wasn't ready to be coached at the time. And, actually, I realised that a lot of things that you were saying were true and blah blah blah blah blah.
So, just an opportunity for you to understand. And had I had made that mean something about me, and let that sway me in the decisions that I therefore made in how I wanted to serve and the growth of the business, it would have been the wrong thing to do. Right?
Because, actually, this was all about what this particular person was going through.
It was nothing to do with me.
And so, that's why when I say don't make it mean anything that it doesn't need to mean, the reality is that this does just happen.
People change, people's circumstances change, people go through stuff. Right? We go through stuff. And sometimes, we project that shit, that stuff, onto somebody else.
And in time, we potentially then realise that, actually, that that wasn't the nicest thing to do, or that wasn't the kindest thing to do. But it's okay that we do that, because we were growing through the stuff.
And so, first up, do not make it mean anything that it doesn't need to mean. Not about you and not about your business.
Now, what I would say as part of this is, what I do find, certainly within my industry of the coaching space,
even though there are contracts in place, because it's a service, it's really easy for people to think that it doesn't matter or that it matters less.
Let me give you an example.
I drive my car. I love my car. And every month, I pay for my car. If I don't drive that car for the month, let's say I'm on holiday or I just decide that, you know, I'm not really going anywhere. I don't contact Volkswagen and say, yes. Sorry. I didn't I didn't use my car this month, so I want a refund on what I've paid.
Because it doesn't work like that. Right?
I've paid a contract and I'm contracted to spend that money every month by direct debit. Whether I use that service or not, I am contracted to pay that amount.
And this is how I relate it to the service industry. Just because something changes and you don't have the capacity to use that service, it doesn't mean that you shouldn't pay for it. Okay?
Now, of course, there are variations and nuances in all of this. So we do have people who don't show up for anything and still pay. And despite us reaching out and checking in, oh, yep. Sorry. I've just been really busy. And then they don't show up again. And we have a rule that we reach out to people three times. And once we've reached out to them three times, I feel like that's our integrity as a business. And then, you know, it's safe really for us to let that person go.
And what I mean by this is, it's really on that person and not us. Yeah? If someone decides that they want to invest and you continue the service and you're giving the service and, you know, everyone else in that group is using that service and and one person doesn't, as long as you have done what you felt that you needed to do to make sure that that person felt held and supported, and you've inquired as to why they're not using the service, is there resistance, can I support you in any way? You've done your bit. You have done your bit.
The reason why I say this is that I believe that it does matter, especially in situations where spaces are limited or let's say it's an open and closed program. Right?
I'm gonna give you an example. We had a scholarship in place last year for all of my Masterminds. And someone took a scholarship. And then we start, we closed. So it was back in the day when The Expansion Accelerator was an open and closed. So, you would start for six months. There would be a set number of people. We wouldn't let anyone else in within that six month period, and then we would launch again. And this person, two months in, just decides actually yeah, I just don't feel like I want coaching anymore. It's a really great space, but, you know, I don't really feel like I want it anymore.
And I was like, well, you know, it's not really the way that this works. You've taken a scholarship place, which means that you get it at a discount. And there's only one space, and I now can't fill that space. So, the whole thing felt really frustrating and really, really disrespectful. Okay? And I think it's really important to voice and sound out that frustration because it is frustrating.
So, at this particular time, we then realised that said person hadn't signed a contract. So contractually, we could do nothing. And the lesson learned here for us was from now on and from that point, actually, no one gets access to anything until they have signed the contract.
So what to do when clients don't pay?
The first thing for you to be aware of is what terms and conditions, what contracts do you have in place. And you, as a business, get to decide what that looks like.
We've definitely worked our contracts over the years to make sure that it feels safe for me, but it also feels safe for the client. You know, we put contracts in place, not just to protect me, but to protect them. You know, if something happened to me, I want my clients to know what the process would look like. What happens if something, god forbid, touch wood, (hasn't happened yet) - but if something happened to me, what would happen in that instance? And because we know that circumstances change we do want to allow some some form of flexibility within the contract.
So first things first, make sure you have a contract.
Second thing,
be open to having the hard conversations.
When clients don't pay, there are typically variations of things that are going on for them. Okay? We are so open with our clients in terms of, you know, if they need to have a longer term payment plan, or if they need to take a pause because something's happening in their life.
We really do accommodate for all of the different variations of what might be happening.
But what really has to happen first is me having that hard conversation with them. Yeah. We, as business owners, as entrepreneurs, as leaders, you know, sometimes we gotta do the hard thing. Like, hey, I'm noticing that you're not checking in with our calls. You haven't, you know, sent anything in for copy review for a month. You know, is everything okay?
And that conversation might be, actually, I'm feeling really, really overwhelmed. And I'm really struggling with the payment. And I just feel, like, really small in this big group.
Okay. We go in. We fix those problems. Right?
We have to have the hard conversation.
Sometimes you have to have the hard conversations because nine times out of ten, people will think it's acceptable to not pay you if they're not seeing results. And, actually, that's not just on them. It really is about you saying why. Why are you not getting results in my space, and what can we do to support that? So, it's really often being the bigger person stepping in, you know, really showing your clients, your peoples how you can support them even in their times of need.
And I feel like this is such a priority. You know, it's such a priority for us in the business and such a requirement because I have had a lot of clients come to me saying, I just got so burnt with a coach.
And I don't ever want to be that person.
And so, for me, stepping in, having those hard conversations, going above and beyond is often the thing that really supports them and is the exact thing that they need to overcome the challenges that they are facing right now.
I think that this lends itself really well to speaking about integrity too.
So I know that I go all in with clients.
Some of my clients see results straight away, and others, it takes longer.
And that's not all on my shoulders because, of course, there's so many other factors at play here. And just because the client that doesn't see results straight away, you know, doesn't see them, it doesn't mean that they won't see them at all.
And on the flip side, I've had someone who I've tried to keep on a strategy. I've tried to keep on a plan, who kept going off and doing her own thing and, you know, no results, then suddenly stop paying and stop responding to the team's emails. And it's frustrating.
But yet again, I know I've done my bit.
And this integrity piece is is a really powerful thing for us as coaches, as service providers, to tune into.
If a client of mine stopped paying, and stopped responding to the team, but really, I knew that I haven't given my all. I hadn't showed up fully. I hadn't been there to support her through those times that she needed me or, you know, I just was being a bad coach, a flaky coach, (which would never happen, but still) - that's on me. That's on me.
And so, that integrity piece is, as long as you know that you have done your bit, then it's okay. It's okay.
I believe that if we know the quality of our service is impeccable, we always have that to stand on even then when it feels hard. And it makes it so much easier when these things do happen because you know that hand on heart, you know, pinky promise, you have done your bit.
First step, contracts.
Second step, have the hard conversations, try to make it right.
You know, be a good but boundaried business owner. Yeah?
And what I mean by good is understanding, compassionate, but equally with boundaries in place.
And the third is to then give those options - be flexible within what feels right.
And I say within what feels right because something that I've seen some of my clients go through when it comes to clients not paying is long term payment plans that go beyond the timeline of the services rendered.
So, let's say there's a three month group coaching experience, but you offer a twelve part payment plan. That's nine payments outside of the work that has been done. And what can happen there is it's really easy for people to stop paying because they've got what they needed, and people are gonna do that because that's just human beings. We can do weird things sometimes.
So, give options, be flexible, but do it within what feels right. It has to feel like a fair exchange, and you really get to own that as a business owner.
You really get to own, like, what are my terms and conditions? What feels right for me?
And then finally, know when it's either time to pass it over or let it go.
Yeah? Pass it over, i.e. Get a third party involved who can take, the brunt of that work, who is better equipped to deal with what is coming through, the challenges that you're facing, or just let it go.
Sometimes, we do simply need to let it go.
I'm gonna give you an example of something that happened to me a few years ago now. A client who just basically ghosted me, was a one to one client three months, and then came back and wanted a refund. And we tried to work on, you know, flexibility, variations of what could work for her, and I kind of got cornered. Basically, you're a heart-led business. You talk about being a heart-led business. It's not a heart-led business. And I'm a journalist. And I'm gonna go to the newspapers. Not the nicest situation to be in, but it did happen.
And in that moment, I just thought, you know what? Fine. Take your money.
I didn't want to run the risk of what she might do. And equally, I really felt into it. Like, is this worth my time and my energy? Or is it worth me just passing over that money? And I've definitely been in situations where I've come to that conclusion of, like, you know what? I actually don't want your money. I don't want your money because I wanna cut the ties and keep the energy clean.
And I've done that even when I have coached a client for six months, and they haven't paid.
You know, the services have been rendered, and they still haven't paid.
And you know what? Sometimes it's safe for you to take that authority and say, you know what? I'm gonna let this go.
Other times, I've really felt like I wanna stand my ground, and I've passed that over to our lawyer, and our lawyer has done what she needs to do.
I think one of the key pieces here is really tuning into the variations.
It's a really big difference if someone comes into your space for a month and then decides that they wanna part ways, to someone who's had you in their corner for six months, you know, you've done the work.
You've reviewed every part of their strategy.
You've reviewed their sales pages and landing pages.
You've written some of their copy for them,
and then they don't pay.
Two very different extremes. Right?
So you get to take authority to know what is right for you.
And I think the final piece is really, like,
don't let it get in the way of you bettering yourself, of you bettering your leadership, of you bettering your service.
Every time something like this happens, I see it as a gift. Like, can we better our systems here? Can we better our processes? Can we better our checking in strategy? You know?
We have something now (we have had this for the last year), where I literally, like a teacher, check people in.
It's like, great. Julie was on the call. Laura was on the call. Pandora was on the call. So I know that if I've noticed in my little checking in that someone hasn't showed up for a couple of calls, I'll reach out to them.
That for me feels like being a coach with integrity.
And so, see it as a gift.
You know, can you better your onboarding? Can you better your messaging so that people can be can understand and feel really clear in what's required of them as much as, you know, what's required of you as the service provider.
I've recently been playing with working with ambitious, conscious, mature women, because that's really who I want in my space.
I want you ambitious.
I want you conscious.
And I want you mature.
Because having those harder conversations with you is gonna be so much easier.
Don’t take it personally. We have to get to see this as a way to optimise our businesses.
It's not about being wrong.
There's always a gift in every situation that we face in our businesses.
Whether that is in our leadership and having those hard conversations, or whether it's bettering the system so it doesn't happen again.
It's really important, and it's part of growth, and it's part of the evolution of our service and our leadership, and who we get to be in our businesses.
So finally, trust yourself.
You know, I think if I were really honest with myself, not all, but some of the women who have done this to me (of which it's been few, but it does happen), I've had a sense that something wasn't quite right.
And this says so much about the power of our intuition as business owners.
And that intuition is your greatest compass.
It's really safe for you to leave money on the table if something doesn't feel quite right.
It's really safe for you to leave money on the table if the person who is interested in joining your Mastermind is not your ideal client.
You know, Dreamboat client, not dreamboat client.
If it's a no, it's a no.
If it's a yes, it's a yes.
And if it's a maybe, it's a no.
So really, really trust yourself in this process and know that you're not alone.
It happens. It happens to us all. It's part of business. We get to normalise it.
I hope that this episode has helped you today. If you have any questions, please do come and find me at @PandoraPaloma_ on Instagram. I always love hearing from my community.
And as always, remember, you are magnetic.
Everything gets to be possible for you.
Even in the challenges, there are gifts. And I am sending you big love from my corner of the world to yours.
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