How to Handle a Client's Refusal to Pay

Once burned by a nonpaying client, contractors will find ways to make sure the experience isn't repeated

July 08, 2016
Empty pockets client won't pay

Photo: Pixabay

If you’re a contractor who’s never been stiffed by a client for whom you’ve done work, pat yourself heartily on the back because, however infrequent, it happens. Two years ago the Utica, N.Y.-based website invited a discussion on this subject and was swamped with enraged commentary from contractors. One contributor made the point that while there were “blacklists” of dishonest contractors via online outlets such as the Better Business Bureau, Angie’s List, etc., there was no such public listing of chiseling homeowners—those who regularly defray service providers, dodge bills, help themselves to nonexistent bargains, etc. As “letshearit” posted: “There needs to be a list of homeowners that warns contractors to stay away from the deadbeat … that have a history of not paying for services.”  

Don’t Go Bonkers

In fact, several such lists have been created, among them the website, But many contractors seem to be unaware of them. If you don’t subscribe or have access to one, the best way not to have the problem of payment withheld is to learn to recognize the type and to simply refuse the job. But intuitive signals are frequently misleading and what contractor has time to thoroughly vet every single client? The human mind is programmed to go on trust, and something like this can happen. And if it does, you will, if you’re like most people, be overwhelmed with rage. You’ve been had. Someone is deliberately throwing out the rules at a key stage of the game in order to take advantage of you. You can react by doing what British contractor Nigel Gray did, which was to use a sledgehammer to demolish the work for which he was owed—15,000 British pounds.

In the U.S., for some unpaid contractors, a similar recourse might be to stalk the client into paying or, in extreme cases, to sabotage the client’s car—neither of these being a good option. Stalking takes time and you place yourself in legal jeopardy for trespassing and sundry other charges, and you still don’t have your money. As for sabotaging vehicles, don’t even go there. Calm down and think it through. Derek Halpern at points out that to be successful in collecting, you need to first figure out why the client isn’t paying. It may be that 1) they don’t have the money, 2) they’re dissatisfied, or 3) they simply chose to spend that money elsewhere. “Kill them with kindness,” Halpern advises. “You don’t want clients to slip into defensive mode.”

First Line of Defense

Deadbeats have left burn scars on the hands of many contractors. Once that’s happened, contractors find ways to ensure that the experience is not repeated. That involves building multiple lines of defense so that a client knows you have the will and the means (that is, documents), to collect if they choose for whatever reason to withhold payment.

First, get a deposit. How much is up to you, depending on your market, competitive conditions, average job size, etc. But the industry standard is one-third to a half of the job cost. State rules prevail here, so that in California, for instance, you can collect up to $1,000 before beginning work. It’s something. For larger jobs, collect progress payments as the work moves forward, that is, x amount of money paid when a certain stage of work is completed. Collecting deposits on every job and, for bigger projects, arranging progress payments, are standard industry practices. They’re especially important if your company is small, construction industry legal publisher Nolo says. “Progress payments … are helpful to contracting operations of all sizes, but especially [for] smaller businesses, to minimize the potential for a homeowner to refuse to pay after work has been done at your expense.”

These practices will ensure that you don’t place yourself in that most vulnerable of situations, that is, of having completed the work but having none of the money collected. Do that and you’re practically inviting the ethically challenged person to stiff you.

Second Line of Defense

But even deposits and progress payments are no guarantee that a client won’t pull a fast one and, at the end, suddenly decide not to pay what’s owed. You’ll figure that out when the check is past the payment-due date to the point where you’re forced to call and email, which is always unpleasant, especially when your calls aren’t returned and your email messages go ignored or are deleted. Sometimes this type of client will actually say, orally or in writing, that he or she is dissatisfied with the work and that’s the reason payment is being withheld. Or, as with Mr. Trump, will offer to “negotiate” for a lesser amount.

RELATED: Is Arbitration Right For You?

Whether or not that person has a history of stiffing service providers, they’ve likely calculated just how much hassle and expense is involved on your part in pursuing the matter. They’re betting that you’ll walk away, powerless to do anything. The next step will be legal action, and if it’s a small job without many details to bring into contention—a roof replacement, say—making two key documents part of your standard business practice and having these readily accessible will go far toward rendering a favorable judgment and collecting that unpaid balance, according to Entrepreneur. They are:

• A proposal with a detailed scope of work.

• A contract that includes the proviso stating that, in the event of a legal dispute, the homeowner, if found at fault, will pay all your legal fees.

So if your phone calls go unreturned and your emails are ignored, with these documents in hand, you will be able to “Send a certified letter, including the proposal, a copy of the original contract, and let them know that you are going to proceed with legal action,” says the article's author, Deborah Mitchell.

Not to Be Taken Lightly

According to free legal advice at, going to court, some kind of court, is probably the only way you’re going to get your money. You can do it even if you have only an oral agreement, provided you can bring some documentation (such as time sheets proving when you were at the house). But it’s time-consuming, and, unless you go to small claims court, where you can represent yourself, it’s also costly. Even if the court rules in your favor and the client is required to pay not only the invoice but your legal fees as well, you may end up shelling out money for an attorney up front. So carefully consider the merits of your case: “You need to weigh what you feel you are owed,” advises the website, “vs. the quality of evidence or proof and also whether and to what degree there may be significant issues with work, before deciding whether or not to sue.”

In many states, small claims court—a state court—may well be the way to go. How small is small? That will depend on the state and the amount owed or in dispute, but according to Nolo’s “50 State Chart of Small Claims Court Dollar Limits,” it won’t exceed $10,000, no matter where you live. (Also, Nolo advises, check your state’s website for any rules or exclusions.) The big advantage of small claims is that it encourages self-representation. And if the client loses and fails to pay, traditional claims collection measures kick in, such as filing a lien against the property or garnishing wages. A downside is that many small claims courts will leave the collecting up to you, even if the court rules in your favor.

What you don’t want to do is to waste a lot of time and money and get nowhere. So if worse comes to worst, know when to quit and write it off as what Halpern calls a “business lesson.” And, he adds, “hope karma gets them in the long run. Honest people always win in the end.”

About the Author

About the Author

Philadelphia-based writer Jim Cory is a senior contributing editor to Professional Remodeler who specializes in covering the remodeling and home improvement industry. Reach him at



This article doesn't mention construction liens, which may be an option in your state. Be sure to inform the client and file the lien in a timely fashion before the lien period expires.

A good proactive step is to "never leave the home without it"—the final payment that is. It's exponentially more difficult to collect once you've left the client's home ... and much more costly.

Another tip: We often "offer" to visit the client at their home to go through the job (one more time) to make sure they are satisfied. Call them. Tell them (don't ask) that you'll be stopping by at such and such a time on such and such a date (a time when they will likely be home) to pick up your final payment. "That time doesn't work? Let's find a mutually agreeable time. It is important that we receive final payment to avoid having to file a construction lien."

Have you ever taken a look at It is a review site for BUSINESS OWNER so they can finally write reviews on their customers. It is very well done and worth taking a look at

If the job is substantial enough, we file a lien on the job right from the beginning, with the customer's signature as a normal part of the contract. It's an admission of judgement, deleted once the final payment is made.

As a California General Contractor specializing in residential remodeling the law says 10% or $1,000.00 so I decided to get paid weekly or as needed. In other words I worked out of the client’s pocket. For materials it was cash and carry, no charge accounts, and no lien notices. Big items such as cabinets, I got a check for the deposit and another check the day of delivery.
I found the paperwork was less, statements rather than invoices, and no issues with collecting. And one last thing, at the end of every contract I added “owner may declare this project complete at any time”. No one ever did.

So you lost me right there in the first sentence... why do you make this a political thing. If you say it's not political, what have you been smoking?

Yet another snowflake who reads everything into RedBlue.

I'm wondering if people are going to seminars to learn how to renovate their homes cheap. I had two in a row almost identical. The first one I was stiffed 2750... This one less but the Cali's nature of this needs to be punished. I will spend more if I have to.

Both my Son and I owned Landscaping businesses. We both encountered customers who did not want to pay the final bill. Both of them stated the exact same things like they were reading it from a script. Unfortunately, we both lost money because the amount owed was less than what it would cost to file a lien and lawsuit (state of Florida) . I believe there is something out there (I couldnt find on internet) that is giving people this information. When will small business ever be protected under the law . If companies can obtain poor score on BBB why cant dishonest deplorable people?

I agree Chuck living in Florida these people know that the small claims court system is so expensive and time consuming we wont do it. The last 2 jobs I have been on the people told me the job was perfect, when I go to collect the job is terrible. Im not welcome in the house to fix concerns its like the people have a blueprint on how to screw my company out of money.

First off I agree that it was snarkey remark regarding Trump. Please....
I have been a Remodeling contractor just over 40 yrs. in OR. and here there are several forms the state requires the contractor to give to the client or you relinguish any rights especially if things go south. One of the forms is all about the owner's responsibility to pay or be placed in a lien situation with their property. I always have taken time up front to discuss what this means and provide lien releases for each sub/supplier for each progress payment. Make sure your contact payment schedule is clear and the client understands it. Another important detail is to make sure you use the language Payment due upon commencement not upon completion! I even have the final payment written as substantial completion for the same reason. Final is up to their interperation. If you are waiting on a product that they often took to long to decide or changed something towards the end, you don't want your final payment held up for something like that. Forget even thinking about using an attorney or in my opinion for small claims. The contractor sows ill will no matter how legit the issue is in the town where they work. It is up to you to be the professional to not only write an iron clad contract, but also to make sure it's clear and you have an understanding with your clients that you intend to get payed.

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