Despite giving you a great first impression, some clients can become problematic later on, causing you tons of day-to-day stress.
Letting go of difficult clients, whether due to pickiness, communication issues, late payments, or misaligned working habits, is often in your best interest. It not only frees up your time for other clients but also opens the door to new clients who might be a better fit.
Writing a client termination letter (or client disengagement letter) is an important part of formalizing the end of your business relationship in a professional way. In this post, we’ll discuss what to include in your letter and share a client termination letter template you can use to save time.
Just want the template to copy and paste? Skip ahead to it here.
Key takeaways
- Your client termination letter should be clear about your intention to end your professional relationship, express gratitude for the opportunity to work together and confirm any outstanding fees and outstanding work left to do.
- When you write your client disengagement letter, you should avoid going into detail on the reasons for ending the client relationship and avoid placing any blame.
- We don’t recommend slapping your toxic client with a surprise termination letter out of the blue. The letter should come as a last step to terminating the agreement after an in-person conversation has taken place.
- Outlining client expectations in your onboarding process is one way to avoid firing additional toxic clients in the future.
When is it time to end a client relationship?
Whether you run a creative services business, a digital agency, or an accounting firm, it may be time to seriously consider parting ways if you repeatedly run into any of these situations (or worse, a combination of them). Here’s how you can identify a toxic client:
- They consistently pay late.
- They take forever to get back to you or ghost you completely.
- They expect you to solve problems that are outside your line of work/ project scope.
- They micromanage everything that you do.
- They’re never happy with your work.
- They have unreasonable demands.
- They’re aggressive, abusive, or disrespectful towards you and your team members.
- They don’t respect your boundaries (e.g. always calling you after hours).
- You can’t help but notice that you feel a sense of resentment towards them!
Related: Know when and how to fire a client.
When do I send my client the termination letter?
This part is important. We don’t recommend slapping your client with a termination letter out of the blue. Here are the ideal steps to take:
1. Give them a last chance to correct their behavior
If you value the client’s business and feel like the client relationship is salvageable if the client can change their ways, then it’s worth having a few chats to let them know what’s not working for you and outline the changes you’d like to see for the collaboration to continue.
Things like late payments and slow approvals should be easy behaviors for the client to correct once they know the trouble it’s causing for you. We always recommend that you give them a chance to change first.
2. Have the talk in-person first
If you’ve already followed step 1 and asked for your client to change their ways multiple times only to see no change, then it’s time to call it quits. We still don’t recommend firing off your letter though as it can still catch them very off-guard.
A best practice for terminating your business relationship respectfully is to have the conversation in person (or through your typical communication method with the client) first.
3. Send the letter as a final step
Now that you’ve plucked up the courage to have the difficult conversation in person, sending the termination letter should be a walk in the park. The news would have already sunk in for them and they'd almost be expecting the letter.
Related: Client offboarding checklist: Say goodbye with style
What should I say in my client termination letter?
Even if you’ve spent countless nights wide awake brewing about what you want to say, the best thing to do is keep your letter as succinct.
1. Clearly state the purpose of the letter at the start
There’s no need to beat around the bush. After your greeting, the first sentence of your letter should get to the point and inform the client that you’ve decided to part ways.
2. Share the reason for termination (optional)
It’s not necessary to give a reason for terminating your working relationship, but it’s up to you if you prefer to do that. We recommend that you keep the reason as high-level as you can and avoid being accusatory.
If you’re needing an excuse, here are a few common and totally acceptable reasons for breaking up with a client that you can get some inspiration from:
- Not the right fit
- Can no longer meet the needs of the client’s project/business
- Misalignment of values /ways of working
- Change in strategic direction
- Re-valuation of client portfolio
3. Express your appreciation for their business
Whether you’ve worked with your client for a matter of weeks or years, you can always leave things on a good note by expressing your appreciation for choosing your business to work with.
4. Confirm outstanding work, outstanding fees, and your termination date
Your client disengagement letter is an opportunity to tie up any loose ends and confirm the agreed-on work you have left to finish, and what payments you’re still expecting from the client to wrap up your projects.
5. Offer a recommendation (optional)
This isn’t necessary either, but should you wish to, you can offer your client some recommendations for other service providers they can reach out to that might be a better fit so they don’t feel like you’re leaving them hanging.
What should I avoid saying in my letter?
Our biggest word of advice is to resist any temptation to get into details of what has happened, revisit any past situations, place blame, or point the finger in any way. Doing any of this risks opening up a can of worms that can damage the relationship further. It also risks the client asking for another opportunity to improve, and you don’t want to go backwards.
Remember that you shouldn’t write your letter until you’re certain you’re ready to call it quits and have already made the decision for yourself.
Client termination letter for professional services
Dear (CLIENT NAME),
We are writing to inform you that after careful consideration, (MY COMPANY) has made the difficult decision to terminate its agreement as a service provider for (CLIENT NAME) effective (TERMINATION DATE).
Current circumstances have caused the need for (MY COMPANY) to re-evaluate our client portfolio. Unfortunately, it has become apparent that (MY COMPANY) is no longer able to support (CLIENT NAME) to the best of its needs.
We apologize for any inconvenience that this may cause you. To ensure a smooth transition, we’ve outlined all outstanding work and expected payments as agreed upon in our contract below.
PROJECT 1
DELIVERABLES
DEADLINE
REMAINING PAYMENTPROJECT 2
DELIVERABLES
DEADLINE
REMAINING PAYMENTPROJECT 3
DELIVERABLES
DEADLINE
REMAINING PAYMENTTo make sure you are in good hands, we’re happy to refer you to our talented friends at (RECOMMENDED COMPANY NAME) who might be a good fit for supporting the needs of (CLIENT COMPANY NAME).
We’d like to take this opportunity to thank you for your business and express our gratitude for having the chance to spend valuable time collaborating with you.
We’re grateful for all that we have accomplished together and wish (CLIENT BUSINESS) nothing but success as it works to (CLIENT BUSINESS GOALS).
Thank you again for your understanding and please keep in touch,
Sincerely,
(YOUR NAME)
How can I avoid having to fire more bad clients in the future?
Working with bad clients is something you will undoubtedly experience if you’re running a professional services business, and it’s not your fault! Like we said at the beginning, you never really know what clients are like to work with until you’re already deep into the process.
The good news is that there are some things you can do to manage expectations and build successful client relationships. Your client onboarding process is the perfect time to set a communication cadence, communicate expectations, set timelines for things like payments and approvals, and start collecting two-way feedback. The sooner you start doing this, the more successful you’ll be at ironing out the kinks of working together.
We cover this in our post 5 client onboarding best practices for making a lasting first impression.
Don’t let toxic clients take away attention from other clients any longer!
If you’ve ended up here because you were searching up how to fire a toxic client, you’ve probably already reached your wit’s end! We can almost guarantee that you’ll feel relieved after you follow our recommended steps and send off that letter.
We hope this post has given you the final push you need to end the relationships that aren’t working for you, so you can focus on those other great clients that need you!
