How to Handle Non-Paying Clients or Customers (Without Losing Your Mind)
It’s frustrating when clients of your services or students of your course default on payment plans, especially when you’ve gone out of your way to offer flexible options to make your courses more accessible. But don’t worry — you’re not powerless here. With a solid contract in place and a clear plan of action, you can handle these situations confidently.
Here’s how to manage non-paying clients or customers while protecting both your business and your peace of mind:
1. Start with a Friendly Reminder
Before jumping to conclusions, send a polite reminder email to the client. Life happens, and sometimes there’s an honest mistake behind a missed payment:
‣ Their credit card might have expired or been replaced.
‣ They may have miscalculated how many payments were left.
‣ Or perhaps they lost their card and reported it, which paused automatic payments.
A gentle nudge can often resolve the issue without further action. Something as simple as:
"Hi [Name], I noticed your most recent payment didn’t go through. Just a heads-up in case there’s been a mix-up with your payment method. Let me know if you need any help getting it sorted!”
2. Send a Formal Notice if Needed
If the friendly reminder doesn’t do the trick, it’s time for a more formal approach. Send an email communication outlining the overdue balance, reference the specific section of your contract/Terms & Conditions they agreed to, and set a clear deadline for payment. This lets them know you’re serious but still gives them a chance to make things right.
3. Consider Offering an Extended Payment Plan
If a client reaches out and expresses genuine hardship, you might choose to offer an extended payment plan to help them catch up on what they owe. This can be a good way to maintain the relationship and give them a chance to fulfill their commitment without too much strain.
However, while it’s generous to offer flexibility, keep in mind that the longer the payment timeline, the higher the chance of default. So, if you do offer an extension, make sure the terms are clear, with deadlines and expectations outlined in writing.
4. Collections or Legal Action
If there’s still no response after your reminders and offers, you might consider hiring a collections agency or consulting with an attorney in your jurisdiction.
You can also explore filing a claim in small claims court, based on the jurisdiction listed in your contract. If you have a solid contract in place, you’re in a strong position to enforce it legally if needed.
A Note on Structuring Payment Plans
While offering payment plans can make your courses more accessible, they also introduce more risk to your business. When deciding to offer a payment plan in the first place, try to keep it to no more than three payments over 90 days.
From my experience working with clients, I’ve found that the longer the payment plan they offered to their own clients, the higher the odds of default. The longer the plan — think six- or twelve-month payment schedules — the higher the likelihood of defaults.
You’ll end up spending more time and resources chasing down payments and managing the process, which takes focus away from running your business. Keeping your original payment plans shorter helps reduce these risks while still offering flexibility. In the long run, you’ll likely find it’s a happier, smoother process for both you and your clients.
Another option to consider is using a financing company like Sezzle, Afterpay, or Klarna to offer payment plans. These companies pay you upfront, and they handle collecting payments from your customers — for a small fee. This way, you can still offer flexible payment options without the hassle of managing defaults.
How do I deal when clients don’t pay?
Non-payment situations are never fun, but with the right approach — and airtight contracts — you can navigate them smoothly without letting it derail your business.
Disclaimer: This post is for informational purposes only and isn’t legal advice. For specific legal guidance, consult with a licensed attorney in your area.
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About the Author
Yasmine Salem Hamdan is an intellectual property attorney, digital strategy consultant, startup advisor, and award-winning entrepreneur based in Dallas, Texas. She is the founder of Coachesandcompany.com, a platform offering accessible legal solutions for online service providers and digital product-based businesses.
Yasmine is dedicated to empowering entrepreneurs to protect their ventures and secure their financial futures. She also hosts The Business of Doing Business Podcast available on YouTube and all podcast players. Follow along with Yasmine for more insights on building a Protected & Profitable business.
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*The information presented in this blog post is for educational & informational purposes only. This should not be a substitute for customized legal advice from a licensed professional in a private setting. If you need legal advice, please consult with an attorney. This is not a law firm.