3 Red Flags To Watch For When Dealing With Problem Clients

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If you’ve ever had clients who were more trouble than they were worth, you know how stressful such toxic relationships can be. Yet, it can be difficult to drop a client, especially if your business is just getting off the ground or cash is tight. That said, when dealing with certain problem clients, sometimes the best thing you can do is end the relationship.

Keep in mind, not every client is actually worth working with. In the worst cases, you’d be better off having never done business with some clients at all. With this in mind, if you’ve experienced one or more of the following issues with your clients, that’s a serious red flag that you should seriously consider letting them go.

1. Consistently Late Payments

In most instances, having a client make one or two late payments is a simple oversight, rather than a blatant attempt to avoid paying you. In such situations, a quick email or phone call should be enough to resolve the issue.

But if failing to pay on time becomes more than the occasional slip-up, you should consider ending the relationship. Just think about what would happen if you paid your team a few weeks, or months, late. They’d probably quit—and with good reason.

One way to avoid late-payment issues is to include specific terms in your sales agreements outlining your payment schedule and detailing penalties and/or other methods of recourse for delayed payments. Or you might want to require clients to pay upfront or put down a deposit before starting work. No matter what you choose, you must require ALL clients to sign a sales agreement, including specific terms for payment, before you do any work.

As your Family Business Lawyer™, we can assist you in creating solid agreements to help ensure that late payments never become anything more than a minor oversight.

2. Getting Paid Too Little

It’s absolutely crucial to get the appropriate compensation for your work. Yet far too many business owners have an unhealthy relationship with money. This can lead you to undervalue your own time, energy, and attention when it comes to making money. As a result, you may feel uncomfortable, or even guilty, for charging clients the rates you actually deserve.

Much of this “money dysmorphia” can be traced back to ingrained fears and beliefs that have negatively conditioned your views about the role that money plays in your life. If you don’t face these false beliefs, it can wreck your health, business, and relationships—and this is particularly true with your client relationships.

By appropriately valuing your work, you project confidence in both your business and yourself, which clients will respect. Not only that, but keeping even a few low-paying clients can not only impact your bottom line, it can also wreak havoc on your self-esteem. This can cause your passion to dwindle, your quality of work to suffer, and eventually manifest in professional and personal burnout.

As your Family Business Lawyer® firm, we have been specially trained to help you develop a healthy relationship with money. Using the highly successful Money Map to Freedom program, we’ll show you how you can take back your non-renewable resources of time, energy, and attention and create all the money you need to live a life of true freedom—a life in which you’ll never feel uncomfortable asking clients to pay you what you’re truly worth.

3. Scope Creep

You’ve undoubtedly had clients who want you to go above and beyond the amount of work outlined in your agreement. At first, they might ask for small changes every now and then. But before you know it, you’re doing all kinds of extra work on every one of their projects, which is not only unfair to you, but to all of your other clients.

You should seriously reconsider your relationship with such clients—but don’t break things off right away. Clients who ask you to do extra work aren’t always bad actors. For one, if you set a precedent that you’re willing to do more work than you’re getting paid for and never say anything, what reason do they have to stop? They’re getting an incredible bargain!

Recognize your clients’ need for additional work, and ask them to pay for it. If you’ve ever done any remodeling to your house and decided to add anything on to your build, you know all about “change orders,” and if you aren’t using them yourself when scope creeps in your own business, you should start now. In the end, if you end the relationship without ever asking for more money, you could needlessly lose a loyal client, who would be more than happy to pay you whatever you request. Of course, if they’re not willing to pay for the extra work—or at least stick to what’s in the agreement—it’s time to end things.

Establish Healthy Relationships With Your Clients

While it can be stressful to sever ties with problem clients, as with ending any dysfunctional relationship, you’ll be better off in the long run by ending things—and the sooner the better. You can always find new clients, but you can never recover the time, energy, and attention wasted by staying with a lousy client longer than you should have.

As your Family Business Lawyer™, we will support you when dealing with dysfunctional business relationships. Whether it’s creating airtight sales agreements, assisting you in overcoming your subconscious hang-ups over money, or helping convince late-paying clients to pay you what they’ve agreed upon, you can count on us to have your back. Schedule a visit with us, your local Family Business Lawyer™ today to get started.

This article is a service of Deloso Penacho Law, PC, Business Strategy and Estate Advisor. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule. CLICK HERE TO SCHEDULE!

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