Does a business have the right to charge a card on file?

If a once-loyal customer stops paying, investigate before charging

Your Business Credit columnist 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, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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Question Dear Your Business Credit, 
I have a customer that I have been serving for about six months. The customer has paid about four invoices, but as of two months ago, stopped paying outstanding invoices. The customer keeps dodging us. This customer saved credit card information online through our processor. I’m wondering if I have the legal right to charge these invoices to the card that the customer has saved on file? – Joshua 

Answer Dear Joshua,
I would suggest proceeding cautiously and with compassion, given that this was once a good customer.

It’s not clear what you mean when you say the customer is dodging you. Is the customer simply ignoring your calls and emails or actually responding to you with excuses – but no payment?

If you’re getting the silent treatment, don’t assume you are being dodged. It could be that a customer is MIA for another reason, such as a death in the family, sickness or an accident.

When a client has gone silent, your first line of defense should be using some new means of getting in touch. For instance, if the customer is not responding to emailed invoices or phone calls, you might send a letter by snail mail saying, “Hi Joe. This is Joshua from Acme. Are you still at the same email address? You’ve always paid on time and your last two invoices went unpaid, so I am not sure they’re coming through. In any event, here are copies. We’d appreciate prompt payment.”

Invoices sent electronically may not be making it through the client’s email system, so if that’s the case, you’ll need to figure out a workaround. Some of my invoices have been buried in reliable clients’ spam filters over the years or simply lost in their inboxes. These clients are typically very apologetic when I check in with them to see if the invoice went astray.

If this client is a business, you might also try contacting another person you know at the company. Your contact may have left the firm.

If you are actually reaching the client and getting excuses, perhaps you could ask if the customer needs a payment plan to get caught up on invoices. In the meantime, I’d inform the customer that you must suspend service temporarily until the account is current. There is no reason to put yourself at further financial risk.

After you’ve exhausted these options, I would ask your processor for guidance on whether you can run the card on file. The processor likely has written rules that apply to situations like yours. Find out what your processor’s rules are before running the card.

Bear in mind that when you make charges on a customer’s credit card that he is not expecting, he could complain to the credit card company and trigger a chargeback. Proving it was not an unauthorized charge could take time. If the charges are relatively small, your time may be more valuable than the money you would make by collecting on the unpaid invoices.

In the future, it might be worth having new customers sign a contract that says the service will not be delivered if their payments do not arrive within 30 days or something to that effect, to protect yourself. It will motivate clients who want your service to pay on time – and help you get rid of those clients who have no intention of paying before they do much damage.

Good luck! 

See related: Can you run a card on file for payment without approval?

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Updated: 08-15-2018