Ever struggle to get paid? Ever have to deal with a slow-paying client?
For some freelancers, this is a constant struggle. Cash flow is a problem. And the time they spend collecting money is time they can’t use for billable work. A double whammy!
Aside from picking good clients, there are simple things you can do to avoid these problems.
#1 – Put it down on paper. I’ve heard this issue debated over and over again in a number of blogs and newsletters. Arguing about it is senseless. At the end of the day, a simple written contract trumps a verbal agreement, should things go wrong. Period.
I’m not an attorney. And I didn’t sleep at a Holiday Inn Express last night. So seek legal counsel on these matters. Your attorney will tell you what you need to include and what factors you should consider.
#2 – Get a deposit from new clients. With new clients, always insist on a deposit of 30% to 50% of the total project value BEFORE starting work.
Asking for a deposit is a common industry practice. Your client should understand this and be willing to pay it. If you get resistance, that’s a clear sign that taking them on may be too risky.
#3 – Tie final payment to submission of INITIAL draft. Your final payment should be due within a specified period after the submission of your INITIAL draft or comp. Not the final version.
In other words, your payment shouldn’t be delayed just because the client is taking longer than usual to review your submission.
This is a very reasonable request, and I can’t overemphasize its importance. This strategy alone has saved me countless headaches and helped me avoid cash flow issues.
#4 – Use a “kill fee” provision. Should the client terminate the project midstream for whatever reason (budget constraints, change of direction, new priorities), you need to be protected. No reasonable client would expect you to eat those hours.
So make it clear in your written agreement that a “kill fee” will apply should the project be cancelled or put on hold before you submit a draft or comp. That fee should be based on the total number of hours you’ve put in and a predetermined hourly rate.
#5 – Follow up every time payment is late. Follow up on every invoice that’s more than 3 to 5 days past due. And don’t be shy. I’ve found that in most cases, past-due invoices are the result of oversight – not an unwillingness to pay. This is especially true in larger companies, where things can fall through the cracks more easily.
Good clients understand that your livelihood depends on getting paid on time. They won’t mind your follow-up. And they’ll respect you for your diligence.
What other measures or habits have helped you avoid the payment nightmare?
{ 4 comments… read them below or add one }
I’m very interested in #3.
I always assumed clients wouldn’t accept this. I figured they would ask “what incentive does that give you to complete my revisions?” How do you respond to that question? Just tell them that you’re a professional who follows through?
Hi Susan,
Thanks for your post. Ed Gandia, the author of this article, is away on vacation at the moment and will respond to your question, but in the meantime, allow me to share my thoughts with you too…
In most cases, clients won’t argue on point #3, so don’t worry too much about it. You can also include a statement in your contract that says “All revisions will be completed promptly following your review of the initial draft.” That way the client has a promise from you regarding revisions in writing.
The added bonus of putting Ed’s tips in place is that it will help you to weed out problematic clients in advance. So if you do encounter a client who has a big problem with this, this is actually a GOOD thing, because you can take it as a major red flag. In my experience, clients who nit-pick on issues relating to payment terms are the ones who end up taking forever to pay. They view freelancers as “suppliers” instead of as valuable partners. Better to avoid them in favour of reasonable clients who will honour reasonable payment policies like the ones Ed recommends.
You can also see more tips relating to getting paid in today’s article, “How to Get Paid Quickly on Every Project.”
Pete,
Thank you! That’s a great point about weeding out problem clients in advance.
I love the idea of asking for final payment on delivery of initial draft. No payment, no proofs!
We just resolved a nightmare from a new photography client. They gave vague guidelines and zero specifications beside a poorly done sample of images used in past labels. They accepted the first shot, said they would pay within a week. When she called about the second photo shoot, I asked about the payment. I was told she’d make sure it was in the mail. At the time, the potential of nailing a large corporate account seemed attractive so my partner did not want to pressure them for payment. He’d already chosen to waive our 50% deposit.
Suddenly, the client decided they didn’t like our photos and told us as much. We’d already done the work, delivered finals,and wasted precious time on extensive communications with this client. Our estimate was approved prior to commencing work. When I delivered the invoice for the second image, the client exclaimed that they have never paid that much and she wanted us to deal directly with her client for payment.
It’s a lot of BS – that screams of them trying to worm out of paying for services provided.
I can stand tall knowing that I resolved this with grace and dignity in tack. My choice to offer them an out by paying 60% of the second invoice was based on a desire to close this out before it became a legal issue. Now that we have in an email their agreement and their statement that both checks are in the mail, we do have stronger legal recourse if they fail to pay.
Thanks for the idea. I wish I’d been firmer from the start.
Another thing you might discuss is whether to do work for neighbors or friends. This person was a neighbor. (Note, I didn’t say friend. We barely know them)
Nancy Lamb