Your Legal Rights When a Client Won’t Pay

Contracts 101, When Working with Clients

You’ve worked hard completing a project for your client. The work has been done and you now find yourself chasing down your client to pay the balance owed for your services or to reimburse you for agreed upon expenses.

Situations like these are why it’s  imperative to have a written contract before you begin working with a client. Not only does a contract help clarify expectations between you and your client, but in the event of a disagreement, a judge is more likely to uphold an agreement if it is in writing.

Here are a few terms that should be included in your contracts:


It is important to make your payment processes and expectations clear in your contract. Some people require an initial deposit before commencing any work, but then have trouble collecting the outstanding balance upon completion of the job.  One solution is to not only request the initial deposit, but to outline a billing schedule in the contract. Instead of billing the entire balance at the end of the project, divide your fees into a payment schedule and distribute the payments into several invoices, with the final payment of your fees due before the work is delivered. For each portion of the work you provide, send an invoice and indicate to the client that you will move forward with the work only if the invoice is paid in full.

Also, your contract and your invoices should clearly indicate the deadline for when invoices must be paid (for example, within 15 business days of receipt

Be diligent about sending your invoices at the predetermined schedule and implement a process to streamline this for you. Sending timely invoices and following up on overdue payments communicates that you are a professional and you expect to be paid in a timely manner for your services.


One method for incentivizing timely payments is to include a late fees clause in the contract. Although the maximum interest rate that is permitted varies by state, this clause may encourage a client from paying you on time so as to avoid the interest charge or late fee. Another option for incentivizing payment on an outstanding invoice is to offer a discount for paying on time. For example, the client can receive 1.5% discount if the invoice is paid within 10 business days. Again, indicate that all work will cease until outstanding payments, including any late fees, are received.


If you anticipate incurring out-of-pocket expenses related to the work  that are not already accounted for in your fees, make sure your contract clearly outlines what specific expenses will be reimbursed by the client. As in the case of your service fees, indicate how those expenses will be invoiced and when such reimbursements will be due.

Despite having reimbursable expenses identified in your contract, it’s also a good practice to run all purchases by your client before personally incurring the cost. Better yet, have your client pay for the expense directly so you can avoid invoicing and waiting for reimbursement.


If you’re having trouble collecting your fees from a client even though you have a solid contract in place, here are few more tips on how to address the situation with your client:

  • Periodically send copies of outstanding invoices to the client via email and U.S. mail and follow up with a phone call if necessary.
  • Send your client a cordial, but firm letter outlining the terms of your contract and their responsibility to pay you. Enclose copies of your contract, invoices, receipts, and other supporting documents and state a deadline for receiving payment.
  • Sometimes a client withholds payment because they are dissatisfied with your service in some way. Use this as an opportunity to address their concerns and to provide better customer service.
  • If you’re making little progress, then work with a lawyer who can send a strongly worded demand letter to the client and/or help you pursue other remedies.

Client breakups are A-W-K-W-A-R-D!!! Avoid those uncomfortable situations by thinking through the “breakup” before it happens. Cause, hey - it’s not you, it’s me, right? Your Legal BFF contract templates include step-by-step explanations (in Plain English - no legal mumbo jumbo here) walking you through how to customize each clause of your contract with confidence. So you’ll be prepared next time you have to say bye-bye-bye to your client.

Kickstart your contracts here.