Can You Use Social Media to Collect on Bad Debt?

Social Media

You can do anything on social media. You can shop, order food, keep in touch with old friends, find advice, a job and even a date. But can you use social media to force a client to pay an overdue debt? We’ve all seen examples of problems being solved thanks to social media such as lost luggage, dogs and even relatives. We’ve also seen businesses forced to change their ways because of social media campaigns.

In 2014, a mom took to Facebook to complain that clothing retailer Lands End only made science-themed clothes for boys. A few months later, Lands End started making the clothing for girls. After the head of Barilla Pasta said they wouldn’t feature a gay couple in their advertising, a social media campaign to boycott the company started. Four years later, Guido Barilla had not only apologized twice, but the company has now earned a perfect rating on the Human Rights Campaigns’ Corporate Equality Index for their work on LGBTQ issues.

Is Trolling on Social Media Worth It?

Airing grievances on social media does not always work. We had a client who, following the advice of well-meaning but uninformed staff, tried to use Twitter to shame a late-paying client into paying. When that didn’t work and we were hired, our negotiations started on shaky ground. Not only was everyone angry, but because the other company threatened that if we went to court, they could sue for illegally interfering with their business. We were eventually able to reach a settlement, but it wasn’t as high as it would have been if the company had started by hiring a collection agency instead of trying to solve the problem on their own with dubious methods.

Don’t Attack Another Brand on Social Media

Even if your social media campaign doesn’t expose you to legal threats, social media wars can spiral out of control and hurt your reputation in other ways. Anytime you attack a brand, company or person on social media, you run the risk of backlash. You could try and publicly shame someone into paying you only to have them turn around and tell others that they haven’t paid because your work wasn’t good. Don’t forget that your other clients, and potential clients, don’t know the history of the disagreement. They may begin to worry that if they’re a day late with a payment, or do something you don’t like, you’ll come after them as well. So, what should you do instead of going to social media?

Solving Payment Problems Away from Social Media

The first step is obviously to try and avoid unpaid bills in the first place. Doing a credit and reputation check on potential clients and making sure your contracts are in good shape with clear payment terms are great first steps. If you do have a payment concern, make sure you contact the company through appropriate channels. Emails and phone calls serve separate purposes when going after money owed, and you should use both. Emails create a paper trail, but phone calls are often more effective and can reveal the reason behind a late payment.

We also always advise clients that if they are still working with a client with a severely overdue bill, they should stop immediately and explain that they cannot continue to work on projects without being paid. Many people are reluctant to do this because they fear it will hurt their chances of getting more work with the client.

However, do you want a client who doesn’t pay you?

If repeated attempts to contact the client and collect the money fail, it’s time to consider a collection agency. When collecting on debt, time is important. Once a receivable is three months past due, there is only a 74 percent chance it can be collected. After one year, the chances are reduced to 27 percent. This makes it even more important not to waste time with social media campaigns that are unlikely to succeed. Most agencies work on a contingency basis, so you won’t owe any money unless they can collect for you. Of course, you want to make sure that you hire a reputable agency who won’t cause your overdue client to complain on social media.

The Human Relationship Is Valuable

Although money is an important part of any client relationship, the human relationship is valuable, too. Even when a client owes you money, it’s important that you conduct yourself with integrity and honesty. It may be tempting to try and publicly shame someone who owes you money, but ultimately, it’s unlikely to help you recover the money and may hurt you instead.

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