John Belchamber
John Belchamber Owner & Senior Consultant at Invoke Results

How do you handle small bad debts in your business?

What do you do with a client who after 90 days still hasn't settled a $209 invoice they keep saying they will?

Top voted answer
Phil Joel

Phil Joel, Director at SavvySME

This website ( gives very useful advice on steps you should take but to be honest you'll get a much faster response if a lawyer send the letter of demand.

I went online and found that Somerville is offering to do this for $38.50. 

Bridget Holland

Bridget Holland, Director at

Top 10% Advertising

I assume you have had enough contact with them that there is no doubt this amount is neither overlooked nor disputed.  So it depends on the commercial value of the client to you:

1. This is the only invoice.  Send a letter advising legal action if not paid within 7 days.  They will either pay or not.  If they don't, write the debt off and move on.  Spending more time and money on a small, slow-paying client is just not worth it.

2. You have ongoing business for a reasonable amount with them.  Send a letter / email advising that your policy is to do no further work for clients with bills 90+ days overdue so their account has been suspended.  They need to pay within 7 days.  All future work will require a deposit in advance / be on a 7 day payment term.

3. You have no business at present but hope for some in the future.  Build it into the pricing for the future work and make sure the payment terms on that future work are cast-iron including an advance payment, and that they sign for the work before you start doing anything.

Including a clear statement of payment terms in your T&C is also a good idea.

BTW I once had a client who only ever paid on receipt of a 7 day warning letter.  Non-payment was clearly a cashflow management issue for them and the 7 day letter acted as a warning to them that it was time to stop resisting and pay up.  Once I knew the pattern I just made sure they got 7 day letters at 60 days when other clients didn't get them till 90 days.

Phil Khor

Phil Khor, Founder at

Awesome response, Bridget. I found it very methodical and useful for future reference. Thanks for sharing.

James Norquay

James Norquay, SEO Director at

Send a letter of demand regarding the money owed, or keep emailing and calling them.

I had some one owe me 4,000 for around 4 months, eventually after a few calls and emails they paid =)

I wouldn't get legal involved as its only 209. 


Matthew Waring

Matthew Waring, Managing Director at

for $209, the best way is to send a letter of demand. If the letter from the company does not work, generally a solicitor can write a letter for a small fee on a one off basis to see if that changes their mind. A simple letter will not cost more than $50.

Wendy Huang

Wendy Huang, Full Time Blogger and YouTuber at A Custom Blog in 4 Minutes

Top 10% Marketing

Wow that's really disappointing :(! I would ask them if they had any trouble getting the money and when they say no, then ask them why it's taken that long to get it to you. Hopefully they will shape up with a response and pay - sometimes giving them the benefit of the doubt might stir some action - but again every client is different. 

Otherwise get your accountant to write a scary note of demand if all else fails haha.

Samson Patrick

Samson Patrick, Principal at The Diligent Group - Small Business Specialists in Accounting, Taxation, Planning, Legal & Marketing

Speaking as a non scary accountant:) the old 'cost vs benefit' is always a consideration & usually this is a deterrent for most service providers in chasing small debts:( However, a fee agreement with clients outlining payment terms from the outset can make a world of difference; usually, legal costs can also be recovered in case of non payment outside the terms of the agreement. Getting a reputable collection agency on board can also help as they take away the pain of chasing small debts and can be more cost effective than formal legal action.

James Norquay

James Norquay, SEO Director at

If you have a friend or family member who works at a legal office, probably better to get them to send a letter head letter vs an Accountant. I don't think any one is scared of an accountant hehe..

View all replies