3 Red Flags To Watch For When Dealing With Problem Clients

By Pantea I. Fozouni

March 7, 2022

As a business owner, I am sure you have had your fair share of clients who were more trouble than they were worth, right? You know just how toxic those relationships can be.

 Yet, it can be difficult, and even scary, to drop a client, especially if your business is just getting started or cashflow is tight. Despite that, when dealing with certain problematic clients, sometimes the best thing you can do for your sanity and your business is end the toxic relationship.

From business owner to business owner, not every client is worth working with and there are at least three red flags to watch out for (and consider firing clients who exhibit them): 

1. Consistently Late Payments

In most cases, having a client make one or two late payments is a simple oversight, rather than an obvious attempt to avoid paying you. When this happens, a quick email or telephone call is usually enough to resolve the issue. 

But if failing to pay on time becomes more than just the occasional slip-up, consider ending the relationship. Why? Because you have ongoing responsibilities to your team, vendors, and other creditors. Just think about what would happen if you paid your team a few days, weeks, or even months, late. They’d probably quit—and for 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.

 I can help you create solid agreements, if you don’t already have them in place, to make sure that late payments do not become anything more than a minor oversight.

2. Getting Paid Too Little

It’s crucial to get paid fairly and adequately for your work. Yet far too many business owners have an unhealthy relationship with money, often leading them to undervalue their time, energy, and attention when it comes to making money. As a result, they may feel uncomfortable, or even guilty, for charging clients the rates they actually deserve.

Much of this “money dysmorphia” can be traced back to ingrained fears and beliefs that have negatively conditioned our views about the role that money plays in our lives. If you don’t face these false beliefs, it can damage 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. 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.

3. Scope Creep

You have 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 your other clients, too.

You should seriously reconsider your relationship with such clients—but you don’t necessarily need to break things off right away. Clients who ask you to do extra work aren’t necessarily bad actors or trying to take advantage of you. 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? To them, they see that they’re getting an incredible bargain! They may also not realize that the extra work they are asking for takes a significant amount of time—to them, they may think they’re just asking for “quick” alterations.

Recognize your clients’ need for additional work, and simply ask them to pay for it. If you’ve ever done any remodeling to your home 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 may have been more than happy to pay you whatever you requested. That’s why you should always communicate this need before just cutting off ties. Of course, if they’re unwilling 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 problematic clients, you’ll be better off in the long run by ending things—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 lawyer, I would love to 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. When you’re ready, schedule a Lift Your Life and Business Session to get started.

Call Us Today at 760.674.7175
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Palm Desert Law Group, APC

74-710 Highway 111, Suite 102

Palm Desert, CA 92260

Tel: 760.674.7175

Fax: 760.610.6641


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