How to get payment if a customer’s credit card is declined


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Your small business has options to recover the money that is owed

Your Business Credit with Elaine Pofeldt

Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes “Your Business Credit,” a weekly column about small business and credit, for

Ask Elaine a question, or see if your question has already been answered in the Your Business Credit answer archive.

Dear Your Business Credit, 
I run a tree service. I had a customer give me a credit card
but couldn’t run the card – no one was at my office – so I ran it two hours
later and the card was declined. What can I do? – Alan 

Dear Alan,
That’s really frustrating. I assume you have already
performed your services and were not simply processing a deposit or you would
not be writing to me.

I ran your question past Leslie Tayne, an attorney in
Melville, New York, who advises small-business owners on credit and debt and is the
author of “Life & Debt.”

“I would suggest you contact the cardholder and let them
know it was declined and request either another form of payment or see if you
can re-run it,” she suggested.

Send a certified letter

If you can’t get in touch with the client, either phone or
by mail, says Tayne, you might send a certified letter to the client stating
that you have been trying to contact him or her but cannot get in touch. Request that
the client call to resolve the matter and be sure to make clear what’s owed.

What if the client still doesn’t respond? “Then it is
decision time” as to whether you want to sue or send the matter to an attorney,
says Tayne.

Contact an attorney

Whether you sue or take the matter to an attorney depends on a number of factors.
For instance, if you have worked with this client before and the customer has always
paid you, then the client may have simply given you the number of a credit card he or she didn’t mean to use, or one that had been turned off because fraudsters had stolen the card numbers. In that case, repeated follow-ups might be enough to
resolve things.

However, if you have never worked with the customer before,
you have less information to go on. You might still try simply contacting them,
but if there is no response, I’d suggest you give more consideration to the
options Tayne suggests.

Charge a deposit in the future

Where I live in New Jersey, hiring a tree service can be a
costly endeavor, so I imagine you may be talking about a substantial invoice.
To avoid similar scenarios happening in the future, I would suggest
asking for a deposit before you take on a project. It’ll help your cash flow,

Tip: By charging a deposit, you can protect yourself from future scams and help your cash flow, too. 

If, say, you’re charging $1,000 to take down a tree, you’ll be better off
asking for $500 upfront than if you wait until the end to invoice for the full
$1,000. And if a dishonest customer tries to cheat you out of your payment,
you’ll be out $500 rather than $1,000. That’s not great, but it’s better than
losing the whole amount.

In a business like a tree service that serves the local
community, it can be very disappointing when someone in town takes advantage of
your trust. I’ve seen how hard tree services in my area worked after the recent nor’easters on the East Coast and how important they are to creating a safe
environment after a storm.

Unfortunately, even when you perform a vital
service, you have to prepare for people who try to get away with not paying
you. By putting a system in place to protect yourself, you’ll build a stronger,
more sustainable business.

See related: Get authorization from customer’s card before delivering services, Card updater services keep customers’ autopayments flowing

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