Steps to Take When Clients Don’t Pay

Life as a freelancer can sometimes be precarious. You don’t have the safety net of a regular monthly salary, so when clients are late paying, or worst case scenario, they don’t pay at all, you have a problem. Sometimes, there is a genuine reason why they haven’t sent a check, but unless you know them very well, you might not be aware of this, so what should you do?

We’ve all been there. Invoice reminders are ignored and emails go unanswered. You make a polite call but you put the phone down feeling rebuffed. The person on the other end of the line is evasive, hard to pin down, and you end up being given the run-around.

When you work for a credit control department, this is your bread and butter. You are paid to chase up debtors. Difficult clients and problem accounts won’t bother you in the slightest. However, when you are a freelancer and your talents lie elsewhere, chasing up people for money is surprisingly difficult.

The problem for many freelancers – particularly women – is that they are too polite. We are afraid of offending trusted clients, important clients. It’s even harder if you know this person on a personal level. Yes, they owe you money, but you had dinner with them last weekend, so surely there is a good reason why they aren’t acknowledging your email, right?

Slow paying or non-paying clients are a nightmare for a freelancer. You probably live from one payment to the next, so you can’t afford not to get paid. You need that money to pay your rent, buy food, and settle your own invoices. Being too nice about unpaid invoices is not good business practice, so if you have a problem client, here’s how to handle it.

Avoid Problem Clients

You can’t always avoid late payments, but you can practice due diligence and save yourself a lot of pain by avoiding problem clients. Always perform a few simple checks before agreeing to do a large contract for one client. Ask around and see if the client has a good reputation.

Don’t commit to work without having some simple payment protection terms in place. If this is a substantial amount of work that will tie you up for weeks or months, ask for some payment up front and include stage payments based on agreed deliverables.

Have a Contact

It’s very hard to chase money when you don’t know who to ask. Larger companies have specific departments to deal with invoice queries, but in smaller companies, there might only be one person in charge of the accounts. Find out who this person is and don’t be afraid of copying other, more important, people in on your communications. If a director authorized the work, copy them in on your correspondence. They need to know if you haven’t been paid.

Stop Work

Once a payment is overdue, stop work on the project until the issue is sorted. Do not continue accumulating billable hours until you have resolved the issue. All that does is create an even bigger problem.

Credit Control

Don’t let unpaid invoices slip through the cracks. As soon as an invoice becomes overdue, send out a reminder, along with a copy of the original email, via email or post, and back it up with a telephone call to find out why there is a delay.

If a reminder doesn’t do the trick, follow up with a second – and final – demand for payment. Keep the tone of your communication polite but firm. Let the client know you aren’t messing around and that if payment is not forthcoming by a specified date, you will have no choice but to take the matter further and add on further late-payment charges.

Taking Further Action

Chasing debt through the courts is an expensive and time consuming exercise. If your unpaid invoices are significant, this time and effort is worth your while, but do the math before you engage a lawyer. For slow payers, it may be worth using an invoice factoring company instead. This will free up cash flow until you are paid. Alternatively, sell on the debt to a credit collection agency. For a fee, they will take the unpaid invoice off your books and you can then forget about it.

It’s not unusual for freelancers to lose track of whether clients have paid their invoices. They are too busy working to worry about bookkeeping and credit control. However, keeping on top of unpaid invoices is never a waste of time. Cash flow matters to the business, so have a system in place that identifies when invoices are overdue.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.