If you are self-employed, this topic might be familiar to you. You’ve probably experienced the pain of taking on work, studying the client brief, doing the work, making all the changes and delivering the final product – only to be informed by the client that they won’t be paying you. Excuses can vary from “we didn’t use your work” or “we didn’t get the funding” to “it’s not what we wanted” or “the project was cancelled”.
As a freelancer, it can be very demoralising when this happens. If you are working in a creative field, chasing after clients for payment can be an especially unpleasant task, as creative people are often averse to “dealing with numbers” or confronting clients about financial matters.
Rule number 1 – set up a legally binding contract
The easiest way to ensure that you get paid for your work, is to have a contract in place. This contract should clearly outline all the terms of your agreement with the client. This includes deliverables, timelines – and the terms of payment, of course. Having a contract in place will ensure that you have legal recourse should the client refuse to pay you.
If there is a contract in place and the client refuses to pay you for whatever reason, they can be held legally accountable. Contracts protect both parties, so expect to negotiate with your client until you arrive at a version of the contract that is acceptable to you both.
A good contract contains clear definitions and clearly outlines the expectations and deliverables agreed to by both parties. The bottom line? The best way to protect yourself against non-payment, is never to start work without a contract in place.
There are also certain measures you can put in place before starting work, to safeguard you as a freelancer and minimise the chances of you not getting paid. These include:
- Research your client to ensure that they have an honourable industry reputation for working with – and fairly compensating – freelancers.
- Negotiate clear payment terms with your client upfront, and set these out clearly in a written agreement or contract.
- Ask for upfront payment for a percentage of your total fee before starting work, or request payment for each stage of the project. Should the client not pay you at any point during the process, stop all work until you have received payment.
- Offer the client a retainer option. If you do regular work for a client over a longer time period, paying you a monthly retainer will benefit the client, as it will help them with planning their budget more efficiently.
- Consider offering a small discount for early payment. Even a small, 2% discount off the total invoice amount might motivate a client to pay your invoice earlier.
- Penalise clients for late payment (e.g. add a 2% late fee for invoices not settled within 15 days).
- Keep to a regular invoicing schedule. Find out on what monthly dates the client processes their supplier invoices, and bill them accordingly.
- Give your client payment options, such as paying by cash transfer, cheque, credit card or online payment system.
- Be polite when invoicing clients. Adding the phrases “thank you for your business” or “we appreciate your timely payment” will positively impact your relationship with your client. A simple “please” and “thank you” should also go a long way to foster a positive working relationship with your client.
No contract? Tips for getting your client to pay you
Sometimes, things don’t go as planned. Let’s say you took on work without a legally binding contract in place between yourself and your client, and the client refuses to pay you for work delivered. Here are some things you could try in order to get them to pay up:
1. Stop working
This sounds obvious, but never do any more work for a client who is late in paying you, or owes you money from a previous job. Insist that they settle their outstanding payments before taking on any more work from them.
2. Send payment reminders
Often, clients forget to pay because they are extremely busy. Usually, payment reminders are sent 30, 45 or 60 days after the payment was due. But 30 days can be a long time for a self-employed person, and it is perfectly acceptable to start with a friendly email reminder 15 days after the payment was due.
At 30 days, it might be time to send a late payment reminder email, and to follow that email up with a phone call. It might also be more effective to deal directly with your client contact person, rather than going through a company’s accounts department.
3. Try various contact methods
If a client is ignoring your messages, do follow up with a telephone call. Try getting hold of someone else at the company, and explain your predicament to them. If possible, pay them a visit and have an in-person conversation. Consistent, daily calls to a few different people at the company might also annoy them into paying up.
4. Offer payment options
If you get the sense that a client is not paying you because they are financially unable to do so, you could consider offering them a payment plan. For example, a certain monthly amount over a number of months might be acceptable to both parties.
5. Spread the word – or threaten to!
Consider going public on social media – or just warning other freelancers on industry forums – about clients who refuse to – or invent reasons for not paying – freelance contractors. Companies are generally very concerned about their public reputations. Sometimes threatening them with going public is enough to do the trick!
6. Seek legal action
Legal assistance can be expensive, but see if you can find a small business lawyer who charges reasonable rates for sending letters for unpaid invoices. Sometimes just the threat of legal action can motivate a client to pay up. You can also consider taking your case to the small claims court.
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