If the current economic condition isn’t tough for you, remember that some of your clients may be suffering. That said, we all have clients who are slow to pay no matter how well they’re faring. If you’re new to freelancing, you’ll soon understand the importance of cashflow. On the other hand, you’ll also understand the importance of keeping customers happy.
I hope you never find yourself in the position of chasing payment but, remember, you are in the right (assuming you supplied what was agreed). Here are five tips to help reduce the stress caused by non-paying clients…
1. Be Proactive and Have a Process
Even if you’re a one-person company, there’s no excuse for not having a clearly defined processes and policies for dealing with late payments. Chasing money is time-consuming; having a process in-place will help your sanity and profitability.
2. Contact the Client Immediately
Contact the client directly on the day payment becomes overdue. Try not to use email — a telephone call or face-to-face meeting is far more effective. During your conversation:
- Ask whether there have been any problems with the work you supplied.
- State you have not received payment and ask whether they had problems paying.
- Ask when the payment will be made and agree a date. If they don’t know, state that you will call the following day once they’ve had a chance to investigate.
Be polite and don’t make unreasonable demands. In many cases, the client may simply have been away or has forgotten — you’ll be paid immediately.
3. Nudge the Client Harder
If you remain unpaid, contact the person directly responsible for paying invoices. This is fairly easy for larger companies — simply call the reception and ask. It’ll also give you a chance to build a relationship with another person in the company. In some cases, the organization may simply have a payment schedule which is different to yours.
It’s a little more difficult for smaller or one-person companies, but keep persisting. They’ll soon be dreading the embarrassment of your regular calls.
If payment is considerably delayed, write a formal letter stating a date when late fees and interest will start to accrue. Check the legal situation for your country; most have a statutory interest rates for overdue payments. US states vary between 6% and 10% per annum. It’s 8% in the UK.
4. Accept the Inevitable
If negotiations break down, write a letter stating that the client is in breach of contract (verbal agreements are still legally-binding in most countries) and you have no choice but to withdraw your services.
By all means, state that you will be instigating legal action on a specific date and they will be responsible for all debt recovery costs. But don’t make empty threats; be prepared to start legal proceedings on the understanding it may cost you more in time and money than the original payment — with no guarantee of success.
5. What NOT to do…
Never complain about a non-paying client to others — especially on social networks. It’s not professional and is unlikely to result in a positive outcome.
If you’ve delivered a web project where you’ve supplied the hosting, it’s tempting to flick the off switch or use a system such as CSS Killswitch to black-out their site. Be wary. While you may bathe in the warm glow of moralistic justification, it’s an antagonistic move which may ultimately end the relationship and won’t necessarily resolve the payment issue. In some cases, it may put you in breach of contract.
If you want to use a technical solution, provide the client with a written warning. It’s even better if you can give the impression that the whole process is automated or beyond your control in some way.
Alternatively, you could be a little more subtle. If a ‘bug’ caused, say, a security error message or shop payments to fail, the client may have no choice but to contact you. But I wouldn’t suggest you should ever be that sneaky…
BONUS TIP: Prevention is Better Than Cure
In my next post we’ll discuss how you can avoid payment problems from the start.
How did you deal with a non-paying client? Would you do the same again?
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