Dealing with Non-Paying Clients: How Can I Secure Payment and Prevent Future Issues?

We have recruited the employees to a client company as per mutually agreed terms. However, my client paid a partial amount of the invoice after many reminders. He is not paying the agreed total invoice amount yet and simply ignoring our calls and mails intentionally. This makes me and my team suffer a lot.

Please advise me on how to get the payment from them and I want to teach him a lesson to not repeat it again with anybody. Please advise.

As per your information, you mentioned "as per mutually agreed terms." Are these terms written? If yes, then you may have some leverage regarding payment terms. If there's no agreement letter, this may be a lesson for you that in the future any transactions that involve money must always have an agreement paper signed by both parties.

Just my suggestion, since they belong to the worst client, and if in your agreement letter you have mentioned you have the right to cancel the terms anytime it deems necessary, then you may cancel this agreement and inform them that in the future there will be no support to be provided.

For the pending payment, use your agreement letter terms and conditions to sue them. I'm just not sure how the system works in your country. Though this may take some financials, there are penalties, I guess, in which they call "indemnification." It is a part of an agreement that provides for one party to bear the monetary costs, either directly or by reimbursement, for losses incurred by a second party (What is indemnification? - Definition from WhatIs.com). In the future, you might consider including this in your agreement clause with the % cost of losses. But best ask a lawyer prior to finalizing any agreements.

As Shallohal has brought to the fore, "mutually agreed terms" is a vague term. These mutually agreed terms must be converted into a contract agreement. Under the provisions of this agreement, the purchaser has to issue a Purchase Order (PO) to provide the material or services, as applicable. Upon the rendition of the services, the service provider is expected to raise his invoice. Upon completion of the credit period or even before completion, the service provider may approach for the clearance of his invoice.

Did you follow the above-mentioned universal procedure? If not, then please confirm what was missing from the above procedure.

Thanks,

Dinesh Divekar