Show Me the Freelance Money: How To Handle Late-Paying Clients
January 6, 2009 by Jenny Cromie
Filed under Freelancing
As freelancers, we’re expected to hit our story and assignment deadlines so that editors, clients, and publications can hit theirs. So why is it that some clients can’t seem to hit their deadlines when it comes to paying for our work on time?
Fortunately, I’ve never been stiffed by a client (knock on wood). But many clients are taking longer to pay for work that I’ve taken pains to turn in on time. And I have to say that I still enjoy working for all of my clients. I also want to stress that they’re all still paying (thank you!). But the payment process is definitely taking longer than it was a few months ago. And fellow freelancers, you and I both know that you can’t pay bills or quarterly taxes with outstanding invoices or accounts receivable. Here’s the reality: As a small business owner, if you run out of cash, you’re out of business. It’s just that simple.
I certainly understand cash flow problems (what freelancer hasn’t had firsthand experience with this at least once?). But there are certain business practices that clients pull sometimes that can insert an element of distrust into an otherwise good business relationship. These include: lying about the fact that a check is on its way, “forgetting” to turn in an invoice, claiming to lose your invoice, arbitrarily stretching out the payment period after assignments are turned in, blaming slow payment on accounts payable or someone/something else, and the list goes on and on unfortunately.
If clients were more upfront about money woes and just used a little bit of honesty (what a concept!) about why payment is late, then they still show some degree of integrity in the way they’re conducting their business. And I don’t know about you, but I prefer to do business with people who model integrity. But if I suspect that a client is lying to me about the reasons for slow payment or a disturbing payment pattern emerges, then I have some decisions to make from a business standpoint. Because let’s face it: most of us are not hobbyists, and we’re relying on those checks to make ends meet.
Certainly, you can’t control a client’s cash flow issues, but there are some things you can do to protect yourself so that you have the money to keep your lights on, pay your mortgage, and fork over money to Uncle Sam every quarter.
Here are some ways to protect yourself and your business if clients start getting lackadaisical about paying you on time:
1) You’re fired! As freelancers, we sometimes get stuck in the mindset that we have to accept every assignment and project that comes along—especially in this economy. But one thing we never have to accept is shoddy treatment. If you’re working for a client and you’re always having to hound them for payment, think about all the time and energy you’ll save when you fire them and start working for someone else who actually pays you on time. One successful business owner told me that he routinely fires a few of his low-performing or PITA (Pain-In-The-Arse) clients every year. Companies and publications are cutting their budgets to better position themselves for the lean times ahead. As freelancers, we have to follow the same strategy when it comes to problem clients and publications. Having said all this, in most cases there’s no need to tell a client you’re firing them unless you’re really looking to burn a bridge (not recommended). Just don’t accept work from them anymore and put your energy toward finding better, more reliable clients who treat you and other freelancers right.
2) Ask for money up front. If you’re doing regular work for a client, it might be a good idea to ask them to put you on retainer so that you’re getting a set fee. In the agreement, make sure that you establish (in writing) when the payment is expected. In some cases, it also might make sense to ask for a percentage up front before you start any work. And if you’re doing a long-term project, ask for a percentage up front before you start the work, a second installment at an agreed-upon milestone or date, and the final percentage at the end of the project before you deliver the final draft. In these cases, you’ll want to set some boundaries around the number of revisions you’ll allow for the agreed-upon price.
3) Tack on a late fee. In some cases—particularly with new-to-me clients—I include language at the bottom of my invoice stating that a late fee will be applied to any balance that is 30 or more days overdue. Here’s the language I use: Payment for services rendered are due within 30 days of receipt. After 30 days, a 1.5 percent late fee will be applied to the original balance for each week the amount is past due. Having said all this, I’ve never applied the late fee. But that’s going to change this week.
4) Befriend accounts payable. I know that some freelancers feel funny about contacting accounts payable directly, but you really shouldn’t. If your payment is late or if you simply want to know when a check is on its way, place the call. In a couple of instances, I call the accounts payable person every month to find out the date that the check will be cut and mailed out. And in both of those cases, they expect my call and it’s no big deal. In both cases, they know that I am calling for financial planning purposes. And in this climate, everyone understands that.
5) Send your invoice right away. I used to wait for a few days after submitting a story or an assignment before submitting an invoice on the theory that I’d give the editor or client time to review the work. I have recently stopped doing this because some clients will take advantage of this goodwill gesture—especially in this economic environment by claiming that your good work is subpar (as a way to get out of paying the full amount). So turn in your invoice when you turn in your assignment. That way, they can’t claim that they lost your invoice if they also received your story. And you’re not handing them an excuse to attempt to discount your work.
5) Get squeaky. I just completed a story yesterday that talks about strategies that business owners can use to weather the recession. One longtime business owner said something very wise that I’ll pass along here: People tend to pay those who pester them. I’m not suggesting that you start employing any guerilla collection tactics. But I also don’t think that freelancers should be shy about asking for money that is owed to them. In some instances, I call editors and/or accounts receivable in advance of when payment is expected to find out when it might be coming. It’s for financial planning purposes—I need to know for cash flow and budgeting purposes when I can expect payment. As much as possible, I try to nail down all the particulars I can about payment schedules. Freelancers need to plan ahead too, so don’t be shy about trying to take charge of your finances.
Tomorrow, I’ll continue the discussion about how to make sure you get paid on time. In the meantime, please tell me about your strategies—what do you do to ensure timely payment from clients and publications? And what measures have you taken when clients or publications have missed their on-time payment deadline?
-Jenny
Photo credit: Simon Davison (Flickr)
Hey, Jenny. I was turned on to your website by Darlene over at InterviewChatter. Great advice. I agree with the late fee at the bottom of the invoice. Some writers I know never knew to include a pay-by date on the invoice (oops).
I’ve only been in the game full time for a few months, but at the very least, I always send a confirmation email stating the terms, payment amount, and payment date.
I’ve already been able to use said email as ammunition to get full payment when a client tried to reduce my rate.
Yes: pester away! Those who are assertive and sometimes aggressive get paid.
Hi Jenny,
Thank you so much for writing this post. There are some great tips in here, and I’m taking them to heart. I got into freelance writing last February, and so far have only had one client give me the old runaround when it comes to payment. Luckily, like you, I eventually prevailed in the end. But let me tell you, before that last check finally arrived in my mail box, I was really sweating.
I just wanted to share one lesson I’ve learned in my meager eleven months of freelancing: Don’t make assumptions when it comes to getting paid on time! I had one client who started out very professional, then became cagey and uncommunicative. I was sure something was wrong and I wasn’t going to get my payment. But he paid just as soon as he received the invoice.
Conversely, the client who gave me so much grief worked in the corporate HQ of a household name company with offices all over the US. That’s not to say that you shouldn’t rely on your instincts, but in my experience, be prepared for all kinds of surprises when it comes to clients and paychecks.
Jenny, very timely and useful post! Yesterday I discovered a new word that should be in every freelancer’s vocabulary “official check.” According to the bank, that means that the funds are guaranteed for the check’s intended recipient. If you’re having trouble with bounced checks (as I just did), ask for an official check.
A few more ideas I’ve picked up from other freelancers… If your client is not paying due to cash flow issues, then you could ask them to pay by credit card (thank you, Michael Stelzner) if you’re able to accept CCs or set up a payment plan so at least you’re getting PART of the money you’re owed.
And if the client or editor goes MIA, I’ve found that a registered letter almost always gets their attention. If they’re dodging phone calls or emails, you should ask them to reimburse you for postage, because registered letters are not cheap. Always, always get the person’s contact details before starting a project. These days with so much business conducted over email, sometimes a physical address can be hard to track down.
Thank you everyone, and thanks for your words of wisdom here too.
Susan, I know what you went through recently—so thank you very much for this information. I’ve never heard of an official check, so now I know.
Jennifer, you are correct about the fallacy of making assumptions. In this business, assumptions can get you into really big trouble—especially right now.
Thanks Zach and Nicole for dropping by too. Zach, the due by date is crucial. Contracts and assignment letters—also important tools.
I’m learning to hash out potential issues before I start writing. Recently, I’ve had two very pleasant telephone conversations with editors which were concluded by my saying I would email a contract recapping our discussion.
Obviously, the contracts included more than info about the assignment; they also included information about rights, plus timing and methods of acceptable payment, as well as penalty clauses lat payment and possible revocation of rights for severely late payments.
Never heard another word from either editor. Won’t answer emails. Won’t answer the phone.
These are the types of scenarios (with names of guilty parties and pubs) which are being posted more and more frequently on writers’ discussion boards and inside industry chatrooms.
Info like this won’t MAKE you any money, but it sure can save a lot of time and potential headaches.
This is a very interesting post, Jenny (as are most of your articles), and I thought I might offer a little insight from the ‘other’ side. From a writer’s end, I know how a delay in payment can come across as excuses and lies. Dealing directly with accounts payable is an excellent recommendation in some instances, because these folks are — in fact — the ones processing invoices and ultimately cutting the checks. My other advice? Befriend the managing editor (my position) or other editorial person who you’re dealing with on the most regular basis. More often than not, I assure you these folks are going to bat to get you paid. Because if you’re good, we want to use you again! And that’s not likely if you aren’t being paid. But be forewarned: pestering these folks will backfire. Because organizing invoices is our least favorite part of the job. And since we don’t have the ability to write checks, we are totally powerless to get you paid, other than nagging accounts payable ourselves (which we do — often). If a writer bombards me incessantly about getting paid, and an issue hasn’t even gone to print yet, I probably won’t use them again, no matter how good they are, because I don’t have time to answer all the emails/phone calls which I am pretty much powerless to act on. My final advice is, keep the m.e. posted — “Hope you’re well. Wanted to let you know I hadn’t seen a check yet. Any updates?” See if you can figure out what the holdup is. And be aware: you’re not the only freelancer pounding on the door to get paid. Hope this helps!
Rebecca, I think you’re right—the key is to try to sniff out problems before you sign on for any work. But this can be difficult to do sometimes … good clients sometimes go “bad” (meaning can’t pay or slow in paying).
Thanks H.C. Yes, I completely agree. There *is* a danger in being too persistent. As someone who has also sat in the editor’s chair, I know what you’re talking about. The PITA factor can definitely go the other way. The key is hitting that balance and having the right approach. Because as with most everything else in business, it all boils down to relationships and building/maintaining them. Your suggested note and wording is a good one … and an approach I’ve used successfully. Thanks for the perspective from the other side. :-)
I struggled with this issue in the beginning. After I started sending requiring part of my fee up-front and including the invoice with my completed work, most problems stopped. I have made the occassional call to the person in charge of remitting payment, but I haven’t had anyone stiff me on what is rightfully mine. That’s the way we must look at non-payment; the client is holding our property hostage.
Thanks for another great post.