7 Tactics for Handling Late and Non-Payment

7 Tactics for Handling Late and Non-Payment

7 Tactics for Handling Non-PaymentIt’s perhaps the worst feeling when freelancing.

You’ve worked your little freelancer heart out, invoiced a client, and they suddenly disappear.

Often, thoughts swirl through your over-caffeinated brain: “They’re probably just out of town…they wouldn’t outright ignore me…are they trying to stiff me?...I do not want to deal with this.”

Non-payment is a bitter pill to swallow for any freelancer, and yet the industry has been plagued with the issue for years.

According to a report published by the Freelancers Union in 2015, one in every two freelancers in the United States had trouble getting paid in 2014, while 71 per cent of freelancers struggled to collect payment for work at least once during their career.

Part of the problem is that companies increasingly rely on freelancers for work, yet federal employment laws often don’t keep pace with the changing workforce.

Freelancers Union estimates that the average unpaid freelancer in the U.S. loses almost $6,000 annually – that’s 13 per cent of their total income. And a UK study by FreeAgent found that almost 18 per cent of designers and developers polled had written off as much as £1,001 to £5,000 due to non-payment.

While it can feel like you have no recourse when a client is slow to pay, or worse, outright refuses to cough up the cash, there are ways to mitigate this problem.

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A word about perceived ‘rudeness’

Before we delve into tactics for getting your clients to pay overdue bills, we need to address all you overly polite freelancers.

It’s tough confronting clients with payment issues – money is a taboo topic that some of us have been taught not to discuss openly. Too often, freelancers avoid chasing non-payers simply because they don’t want to come across as rude, or feel embarrassed.

When you’re a professional and you hold up your end of the deal, it’s not only important, but vital for you to have similar expectations of your clients.

When you’re a professional and you hold up your end of the deal, it’s not only important, but vital for you to have similar expectations of your clients.

Before chasing down your runaway client, ask yourself the following:

  • Have you completed the work you agreed on with your client?
  • Was your client aware that they would need to pay for said work?
  • Are you asking for more than you are due?
  • Would your client consider not paying a large company or corporation for similar services?

Your answers to these questions should indicate that you are simply being professional and your expectations of payment are valid. Of course, I’m not advocating that you burst into a client’s office, arms waving and insults blazing. But you can be firm and remain professional even in these awkward situations.

The point is, if anyone should be embarrassed or feel concerned about being rude, it’s your non-paying client.

Here are seven tips on what to do when dealing with a late payment.

You might also like: 8 Quick Tips for a Bulletproof Freelance Contract

1. Have proper documentation to support your claims

  • There’s some debate about how useful contracts are for small businesses, but if you’re looking for a straightforward way to protect yourself and to set clear expectations early in your working relationship, a contract could be the right solution for you.

    Want to learn how to build a killer long-term contract?
    Check out our Grow chapter on creating contracts for clients on retainer.

    In order to make a solid freelance contract, set out terms and answer key questions:

    • Who is the contract between?
    • What are their respective obligations in terms of service delivery and payment?
    • Who will own the final work product? Will you continue to own some of it and pass the rest to the client? If the client wants 100 per cent ownership, will this be a different (higher) price than if you kept your pre-existing intellectual property?
    • What happens in the event of a dispute?

    Be sure to clearly set out and verbally communicate your payment terms, deadlines, invoicing schedule, and whether you charge fees for late payments.

    Here are a few additional clauses to think about including when drafting your contract:

    Accrued penalties

    Consider including clauses that clearly indicate you take payment seriously. An accrued penalty fee clause is a good example of this — every week that goes past your payment deadline means another penalty fee of $25, for example. Sending a client a weekly invoice with a small but increasing sum of money owed is sure to catch their attention.

    Your design, your property

    For designers working on branding assets like logos, don’t be afraid to write a clause in your contract that states your work is your intellectual property until full payment is received. Make sure that you repeat this fact when you’re showing the initial concepts. It will help your clients understand that you are a professional whose work must be respected. It will also make them think twice about using your work without payment.

    2. Keep your promises

    Whatever dates you’ve laid out in a contract, or that have been agreed on verbally with a client,  should be consistently and promptly kept.

    If you said you would invoice on X date, do not invoice on Y date. If you know the payment due date is coming up, don’t be shy about sending an email a week early, with a gentle reminder. Here’s a sample of what that email could look like:

    Hi __,

    I hope this email finds you well. I’m emailing today with a gentle reminder that next week, [insert date], your payment for [insert project name] will be due. I’ll be sending an invoice in the following days but thought a friendly reminder might help us both stay organized!

    If you have any concerns or questions, don’t hesitate to reach out.

    Thank you for your time,

    Don’t forget: nine out of ten clients aren’t purposely trying to stiff you, they’re just normal humans who might not be as organized as you are. Help them out by gently guiding them towards payment, before the payment is actually due.

    3. Consider multiple deposits

    A 50 per cent deposit up-front is a tough ask, but if a client believes you will provide them with a solid and valuable service, you shouldn't shy away from asking for it.

    Lots of freelancers will ask for a certain percentage before they start any work. If you know the client well, or have worked with them before with no incident, consider only asking for 30 per cent up front.

    If the client is small, consider asking for a small percentage at the start, but requesting a second payment after the first deliverable (like a prototype of the site) is complete. Some freelancers consider it to be good business to consistently ask for a second payment halfway through a project.

    That way, if your client randomly decides not to pay you at the end of a project, you’ll only be owed a fraction of the project’s total cost. It’s not the best case scenario, but it’s better than being owed 100 per cent.

    4. Invoice like a pro

    If you’re not as well-organized as you’d like to be, look for solid invoicing tools to help. Some good accounting software includes FreshBooks, QuickBooks, or FreeAgent.

    Not only will these tools render a professional-looking invoice, but they will remind you when payment is overdue.

    If you’re feeling particularly awful about having to hustle your clients into paying (which you shouldn’t...remember that note on rudeness?), many invoicing tools will allow you to write an unpaid invoice reminder email well in advance of your payment due date. That way, you’ve written your email before any mixed emotions or bashfulness kicks in, and the invoice email can be sent automatically to clients if a payment is missed. This gives you less opportunity to hesitate or avoid confronting the issue head on.

    5. Communicate

    It’s already passed the due date for payment, an invoice has been sent, and you are hearing nothing but crickets from your client. It’s time to communicate loud and proud that you will not stand for it. Try using the following set of communication guidelines — each one a step up in intensity — that will gradually help your client get the point that they’ve got to pay up.

    Friendly reminder email

    Don’t be shy with email reminders. There are literally hundreds of possible explanations for why your client is not responding to you. If you’ve already emailed an invoice and have received no response back, wait a few days and send an email to confirm they have received the invoice.

    Hi __,

    I hope this email finds you well. I’m emailing to confirm that you received the invoice for [insert project name]. I sent it the other day and want to confirm that everything is in order.

    A reminder that my payment terms are 7 days [or whatever you agreed on] and your payment will be due on [enter due date].

    Thank you for your time,

    Invoice follow-up email

    If your client answers you and says they will get around to your invoice soon, without giving you a concrete payment date, follow up instantly with an email that reiterates your payment terms, and the date of payment or payment period you agreed on.

    Hi __,

    Glad to hear you received my invoice. A reminder that my payment terms are 7 days after invoicing, and that you are now overdue.

    If you’re pressed for time, I’d be happy to swing by your office this week [or a more specific date] and pick up the check*. If there’s anything else I can do to make the payment process easier, please don’t hesitate to let me know.

    Thank you for your time,

    *Dealing with an international client? Skip the suggestion to pop by the office and instead focus on offering to answer any questions or concerns your client might have about the invoice.

    The phone call

    If you’re still getting radio silence, try calling your contact person — but make sure you know what you want to say beforehand, especially about when and how you want to receive payment.

    Hi __,

    It’s [name]. I was just calling to see when I can come by the office and pick up my check?

    Or,

    Hi __,

    It’s [name]. I noticed that payment hasn’t come through yet. Do you have an idea of when I can expect payment?

    Try a new point of contact

    If you haven’t heard from your client after a few weeks, another good tactic is to try another point of contact within the company.

    Hi __,

    I hope this email finds you well. As you know, I’ve been working on [insert project name] for the past few months and I invoiced [client’s name] a few weeks back. I’m wondering if he/she is away on business or perhaps caught up in another project?

    I know you guys are busy, so I wanted to check in and see if you had any information for me on how best to proceed in order to get paid.

    Thank you in advance for your help,

    6. Social shaming

    This is where we will tell you what not to do. Do not take to Twitter or Facebook and air your client grievances. Some might advise you to tag your clients and blast them online, but when you stoop to unprofessional behavior, it ultimately reflects poorly on you both (which is the last thing you want).

    By contrast, when it comes to other freelancers or a close-knit community of creative professionals, feel free to warn others about bad clients.

    7. Bring out the big guns

    Some web developers have discussed the benefits of using a CSS kill switch when dealing with clients who outright refuse to pay. This tool essentially works as a CSS fail-safe, and lets web developers blackout a website, even if a client has changed passwords or locked you out of the backend.

    This is a bit of a controversial option, and we suggest making sure that your client is made aware that it’s a possible repercussion for non-payment in a contract clause.

    A milder option than the kill switch is to use maintenance mode. This will give freelancers some leverage with volatile clients, but is not as harsh as blacking out a client’s entire website. Unlike the kill switch, maintenance mode is easier to install, but you will still need login information and access to your client’s web page.

    Again, it should be clearly stated in your contract with a client that this course of action could be taken after several months on non-payment.

    It’s important to keep in mind that more web-savvy clients can figure out how to disable both the kill switch and maintenance mode, so be sure you’re ready for any repercussions and possibly losing any leverage you previously had.

    Be your own advocate

    Overall, as a freelancer you should be working to create strong client relationships from the very beginning, so that money issues like slow and non-payment don’t arise.

    But in the event that you’ve taken on that one jerk of a client, don’t be afraid to be your own advocate. This is your business, your time, and your skills being used up by someone else. It’s vital that you have the confidence to stand up for yourself and communicate clearly and professionally that non-payment is not okay.

    Have you had a client payment issue in the past? Tell us how you dealt with it in the comments section below.

    You might also like: Why You Should Bill 100% Up-Front

    About the Author

    Anastasia is the Editor of Shopify's Web Design and Development Blog. She’s a former journalist and freelancer, and loves chocolate stout beer.

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