By Andrew Neitlich

Dealing with the slow payers

By Andrew Neitlich

A client just set the record for taking longest to pay in my career: About six months.

This was a public University, and so had specific bureaucratic rules. Plus they made a bit of an exception for me up front, which caused problems later.

I would never have gotten paid at all if I hadn’t followed up correctly.


If you have late or slow-paying clients, here are some tips:

1. Be polite but firm.

2. Let them know you have completed the work and expect prompt payment.

3. Find out the process to get paid, and set a timeline. That way, you can follow up and put the ball back in their court.

4. If the client misses a deadline, or disappears for a while, contact them again. Be polite. Explain that they missed the deadline and that you are concerned about getting paid promptly. I love this line: “I depend on prompt payments to feed my family and pay bills.”

5. Keep following up. Ask if you can do anything to help speed up the process. I send brief emails that say: “Just checking in on the status of payment. Is there anything further I can do to expedite payment?”

6. Don’t make any threats or nasty comments. Never threaten legal action unless you are prepared to make the investment in time, hassle, and money required.

7. Touch base with a variety of decision makers. In my case, the payables department of this university was awful. But once I copied my sponsor (a Vice Chancellor) and a professor who loved my work, things got moving.

What else?

  • Those are good points. The only thing I have to add would be to, wherever possible, prevent this from happening through the use of signed contracts. For example divide a project into stages and request payment at the completion of each stage before moving on to the next.

    Obviously each situation is different and this approach doesn’t always work. In which case Andrew’s tips are invaluable. It’s very easy to forget that you are dealing with another person and jump to the wrong conclusion; remaining calm, being polite yet being firm will do wonders for your own stress level if nothing else.

  • I love this line: “I depend on prompt payments to feed my family and pay bills.”

    Whilst in some cases this may in fact be true, you should never rely on the sympathy vote for anything in life. It’s a sign of weakness and submission in business. And puts the power immediately back into your correspondants hands.

    Agree with everything else you said though ;)

  • I agree with Octal. With new clients there should be defined payment stages, where eventually around 20% is left to be paid after completition even if the client is someone like public University.

  • aneitlich

    In this case I had worked with the client before and we needed to move fast on a project. There was no time for anything other than a verbal agreement and good faith, which I was willing to do as this was a large and good client.

    Alas, I didn’t know I had “tripped an alarm” by billing more than I could within a year as a sole source vendor.

    If we had waited to do what jelena and Octal are saying, the project never would have happened and I never would have been paid a thing.

    Thus the delay.

    So in effect, my approach got the University to break their rules, which is amazing in and of itself.

    Normally I agree 100% with what jelena and Octal say. But I don’t mind gambling, especially with a great client and a tight deadline.

  • Spencer F.

    It’s not as easy as these 7 steps. Let me assure you.

    /me grumbles

  • I have used a section in the development contract which the client signs at the start of the project.

    The section contains various clauses about payment non-payment, and one that states that interest will be charged on the outstanding ammount at x% per day, commencing the day after the payment date on the invoice.

    Have only had to use this once, but when we told their accounts department that they were a week late on payment they now owed us more (with reference to the contract and the new ammount owed) but we would let them off if they paid us immediatly. Funnily enough the payment hit our account the same day as the phone call.

  • You can also use software licenses, our clients never get a grant of license or proof of rights to use until payment has been recieved in full. Therefore any use of the software (website) prior to full payment is illegal.

    The software is also never delivered to a server that is not under our direct contol until payment has been made in full. This enables us to ‘turn-off’ the site, should payment not be forthcoming.

  • True, often long contracts are not a suitable solution. Either the project is rather small, so writing a contact for that specific project take almost as long as completing the project, or a project has to be completet so quickly that writing a project specific contract would cause the project to be delayed longer than accepted by the client. For those occations we use a simple standard contract which the client has to sign, or atleast accept via e-mail, before we start a project. The contract simply states that the client has requested our services, that they are aware of our hourly rate, and that they accept our terms of payment and any other terms of business. This way clients can’t come afterwards and say “oh, I didn’t know…”. Ofcourse this doesn’t guarentee that the client will pay on time.

    Here’s a tip, that often work for us: Contact the client a day before the payment is due, and remind them, that the payment is due. It sounds simple, but often we experience that invoices are misplaced by clients, or maybe the person who recieved the invoice haven’t passed the invoice to the payables department. Being a little bit proactive often gives better results than waiting for the client to be late before contacting them.

  • Here are a few strategies that may or may not work depending on what it is your selling and your business model:

    1) Don’t give them the final product or deliverable until all money has been paid.

    2) If you already know that they take a long time to pay due to beurocratic reasons, bill them 30 days in advance so that by the time you expect the money, it’s already gone through the system.

    3) Try to get paid upfront wherever possible.

  • I had a professor in college that is an acclaimed professional Illustrator. He taught a class about the business end of freelance design work, and one repeated piece of advice that we heard was to hire a lawyer.

    He told an story about a friend of his, also an Illustrator, that was hired by a well-known beer brewery here in the States. This company always failed to pay this Illustrator for his work, and he had to take them to court to finally get paid. The incredible part was that the company continued to hire this Illustrator, and continued to not pay, then they would once again go to court. It sort of became an unsaid, but understood aspect to the work engagement. It’s mind boggling.

    I personally would not endure the hassle of agreeing to do work with the understanding that I would have to go to court to get paid, but this was a consistent message in my professor’s teachings — get a lawyer!

  • GG66

    Alas, all these tips are well considered and if follwed should avoid the worst case scenario. We always insist on 1/3rd up front, stage payments and final payment before any rights are handed over.

    Unfortunately even if you follow all this advice, some clients never intend paying. If it’s a large enough sum it goes to court. My advice if it goes this far is to settle early (if it’s a decent offer) rather than take it all the way, it just takes so long causes so much stress and in the end you most likely get a judgement against them but it doesn’t mean you get paid.

    There’a always room for creativity though, I was owed by a hotel for over 6 months for some web work so I booked in my girlfriend and her mother for a spa weekend, placed in on account. They paid my bill promptly when they wanted me to pay them :-) Felt Good

  • Dr Livingston

    Well I just make the one phone call, and the heavies are sent around… :D

    But on a more serious note, I would suggest that the payment quoted is broken down into variable stages and that is in the contract.

    Also make sure that what happens on failure of those payments is in the contract as well. At the end of the day, you need a good lawyer to help fight your part – don’t be afraid to get them involved, and another thing – get them involved early on as well.

    The longer you delay, the more it’s costing you, as your client is earning interest on your money – that’s not on, at all.

  • I’ve always found the best way to get them moving, and this applies to anything, slow payment, not supplying the required items, etc, is that you ask them how you can help them. This way you continue to present a professional attitude in that you are always there to help them, not to suck the money out of them. It could just be the item slipped their minds (they do have their own worries and concerns after all), and asking them a simple question like “is there anything I can help you with to get this done on time” could be the trigger to get them to think about the item in more detail. Most of the time they will say no there isn’t anything you can help with, but at least its forced them to think and realise its their fault and not yours and they are the ones holding up the project/payment, etc

  • flameboy

    I started a project just with a signed contract. As it was quite an urgent project, i didnt’ wait for the deposit. 3 weeks into it, it got cancelled!
    Caution is my top priority now. Sucks that it has to be this way though.

  • Did you have a cancellation clause in the contract, something stating that if the project was cancelled that you would be paid for “work done”?

  • shadowbox

    Not sure about the ‘I depend on prompt payments to feed my family…” bit.

    I’ve been lucky to never been at the point where I’m resorting to threats or sympathy votes – well, it’s not luck, it’s down to a solid contract for all jobs with a clearly defined non-payment procedure and structured payments including meaty deposits and interim payments.

    Payment is due imediately upon receipt of invoice, with reminder email after 7 days and phone call after 14 days. It’s never gone any further than that (unless the company I deal with operate a strict 30 day payment cycle and we agree that this is acceptable)

  • What Andrew has to say may hold best for an individual or someone running their own business but when working in a firm there’s more to it. You know the client will pay up, sooner or later, even if he doesn’t you’re not the one suffering, you’ll still get your salary. In this case instead of talking about food for family and bills, you adopt a more diplomatic stand. You need to bend the client around factors such as your resources. Something you’d say to get the middle payment out “We might not have the resources to assign to your project if there is any further delay in corresspondence OR payment. Kindly get back to us at your earliest convenience.” Everytime I say this to the chap (said it only twice) he expedites things. Correct me if this is a hit-or-miss tatic!

    Oh btw Andrew, that sales pitching in the middle of the project tactic really works, atleast it has on the past 2 projects. The clients were convinced that there was no one as sound as me about web dev and business on the web, and it incresed the project budget just like that. Thanks!

Get the latest in Entrepreneur, once a week, for free.