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debtAn unfortunate problem with working for yourself is dealing with clients who are unable or unwilling to pay for your work. While it’s impossible to become immune to non-payment, you can position yourself to be more likely to get paid and less likely to have to collect on bad debts.


Some things you can do to put yourself in a more favorable position include using a contract and checking the client out before doing business with them. There are a number of reasons to use contracts, one of which is to help ensure you get paid. Your contract should:

  • Clarify payment terms
  • Outline non-payment penalties
  • Identify your invoicing schedule and methods of payment accepted
  • Explain payment due dates

Be sure you explain the vital sections of your contract and take time to answers any questions or concerns the client has. This will help get you on the same page in terms of payment and there will be less chance of big surprises later.

Pay attention to signals or potential red flags when it comes time to enter into an agreement with a new client. Do they seem non-committal when you discuss payment? Are they unwilling to sign your contract? Listen to your gut.

You may also want to check out the client’s credit in a more formal way before doing business with them. You can sign up for credit reporting services, such as Experian Business Credit Risk, and get vital business information to help you make an informed decision about the risk involved with the client. For as little as $15/month you can see a report detailing:

  • Contact information
  • Sales figures
  • Credit summary
  • Fictitious business names
  • Payment and collections history

How to Collect On Your Own

If you are not getting paid for the work you’ve done, your first step is to attempt to get payment yourself. You can do this by:

  • Regularly following up
  • Sending certified letters
  • Making calls
  • Charging late fees outlined in your contract
  • Resending the invoice

The best case for non-payment is that you will have a discussion directly with the client, they will acknowledge the debt and agree to pay. It may be a situation of financial hardship, and you may want to consider allowing the client to pay on a mutually agreeable payment plan. In most cases, you will be able to reach some kind of agreement with the client as most clients want to pay, they may just be unable. However, I would suggest you cease all work while you are negotiating payment on an unpaid account.

Third-Party Debt Collection

If you are not successful collecting on your own and the amount of the debt makes it worth your time, energy and expense, it’s time to look into debt collection. Here are some ways of collecting that you can consider:

  • Have a Third-Party Make Contact – This can be another representative from your company, an investigator, or someone else who can express the severity of the situation to entice action.
  • Hire an Attorney – Sometimes just the threat of legal action in the form of a letter from an attorney will be enough to generate payment.
  • Hire a Collection Agency – If the debt is significant enough, this may a good option for getting payment. Keep in mind that there are all kind of collection agencies, and you’ll want to choose one that uses tactics you agree with.

Have you faced non-payment by a client? What did you do to collect?

Image credit: Steve Woods

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  • lindizzle82

    Great post, Alyssa. I hope this helpful information will make “trial and error” learning less prevalent! :)

  • Great post Alyssa. I just wish, back in my freelancing days, that I was better at identifying bad clients earlier on, to avoid this situation in the first place.

  • Anonymous

    This is one facet of Web Developing / Designing that I was very naieve too as I initially had the whole “Trust everyone” attitude…that was until I got stung BIG TIME! Especially to anyone new into this industry, articles like this are of absolute value and definately should not be taken with a grain of salt and never use the infamous words of “It’ll never happen to me” because I can almost guarentee that once you say that…”OUCH!” you will get stung and it can hurt.

  • Okay,

    Here is the deal. Although this is sad to say, I have lost more revenue this year then collected. almost 18k. The sad part also is that as a small business owner(sole prop really), Clients generally from the start of a contract think we (as a community) charge too much, or at the end of the contract feel our work is not worth it. Having the option to sue is good but doesnt do much good. I think I will take a look into that credit report service and see if I can use it

  • nachenko

    I also lost some renevue (not nearly as much as luciddreamsdev, or I’d be broke), and I’m starting to give much more detailed docs and reports before and after projects. I also split invoices by milestones so they can be claimed through something similar to what some people here call “small claims”.

    Times are getting tougher, and I’m becoming tougher too. The nice guy I was has a personal crisis.

  • To get paid:
    1) the customer must get what they expect
    2) they will only pay for the value that they expect from the website.

    The best way to do this? Learn sales skills! I did cold calling and sold Canon copiers/multifunctions for a while, and I learned that the most important thing is to manage customer expectations. If you can give examples of your work then they will know what to expect in terms of workmanship. If you explain the benefits that they will get from your product, and how they will get this value (i.e. having a website is like a 24 hour a day salesperson for their product / service / image) then they will know what value the product has.

    If you tell them up front how much you expect the project to cost based on a detailed breakdown of work to be done, AND update them as soon as possible if the budget changes, then they will know what to expect when they see the bill.

    A website is worth $0 to anyone, unless it creates value… even if you spend $50,000 worth of resources making the website for them. This is where sales skills is very handy.

    You can ask the customer if they think it is worth the money you plan to charge them. If they do not think it is worth it, then either show them why it is that valuable, or see if there are alternative products in their price range. If that fails, tell them “sorry, my product has value for (insert benefits here). If you do not want to pay for those benefits, then I can’t do anything for you. Thanks for your interest.”

    So as a summary:
    1) manage expectations
    2) create value (even if it is “perceived” value)