What to do when a client drags out payment

When you are a freelancer or consultant (solopro), there are worse things than having no work to do.

Number one on the list is working hard but not getting paid.

So here are some tips to solve the problem.

Structure payment to get as much as possible up front or at least along the way. After you solve their problem and deliver the goods, you are just another creditor on their list.

How to do it

One effective strategy is to require full payment up front. When asked why, practitioners of this approach say, “It is our policy.”

No debate, it’s just policy.

Obviously, for a single-person business, policy doesn’t require any vote or top-executive decision back at the office. An individual can change “policy” at will.

But calling it “policy” cuts off uncomfortable discussion.

Those who follow this path tend to be highly confident, ready to cut their losses and proceed to the next prospect.

They remind themselves it is better to have no work and to spend your time prospecting (for instance, telephoning) than it is to use up time, your most limited resource, to do work that doesn’t pay on time and may never pay.

Sometimes the largest companies are the worst

A prospect may say it’s not their policy to pay immediately. You see this most frequently in large companies with lots of rules and lots of prestige. Like U.S. auto manufacturers in the good old days.

Before the recession, big-company executives, when challenged by solopros awaiting payment, would laugh and say, “Well of course we’re good for the money.” Then freelancers would end up waiting 60 to 90 days to get paid. I’ve heard stories of big companies refusing to pay after the work is done and forcing the individual to settle for 50 cents on the dollar. Simply because they can.

Some solopros add a penalty percentage for late payments. Bad idea unless you want to function as a financing company.

If clients are agreeable towards paying a penalty, they recast you as a source of capital for which they are paying interest. You loan them your fees and they pay when they’re good and ready. Seems totally legit to them since they are allowing the additional fees. No rush to pay if they don’t mind 1.5% compound interest.

Postponing payment is now a financial decision, not theft. (Normally it is stealing when you take a service and don’t pay for it.)

Do you have a contract?

If so, make them pay up under the terms of the contract. No more work until they pay. That includes free phone advice.

If there’s no contract, demand money right now or turn your attention to work that will pay off.

Don’t start a new project with an unreliable client until the last project is paid in full. With the next project, demand at least 50% (100% is better), paid up front.

They need help immediately? That’s why Fed Ex offers overnight AM delivery.

They want to postdate the check? Doesn’t work because you deposit within an hour of the check arriving.

Let them know you are ready to walk. If they are desperate they will find the money. Let the other creditors wait.

You may be saying that if you get tough, it will ruin your relationship with them. A relationship where the client doesn’t pay reliably IS a ruined relationship. You don’t want to work for someone like that.

I once had a bad feeling about a client for which I had completed a project. I phoned them every single day until they put the check in the mail. They had more important creditors I’m sure but I was the biggest annoyance. In this case the squeaky wheel got the grease.

You may think that small claims court is the answer. I don’t know about that, I’ve never been to small claims court. I simply knew that what I was owed (perhaps $2500) would not be a big deal to the courts or to an attorney; legal fees could eat up the full amount. While I could perhaps learn to represent myself in small claims, the aggravation would consume too much of my energy and attention. So I aggravated them instead.

Much of what appears above in this article is theoretical. I’ve never had a slow paying client return to me for further work after I’ve objected.

I’m not sure whether it is their awkwardness or my proven irritability that closes down the relationship, but I’ve never cared enough to ask.

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4 responses to “What to do when a client drags out payment

  1. Lisa (lablady)

    Great cut-to-the-chase article, Diana! I’ve learned to ask for most, if not all payment, up front. And, I’ve also learned that if a client doesn’t respect me or my work, enough to pay for services (as per contract), then I would rather not continue working for them. I don’t mind if I lose an unappreciative (or scamming) client.

    And you’re right. When working for a large company, you can set payment due within 14 days but you’ll be lucky if they pay you in 30 or 60 days. Been there, done that. 😦

    I’m telling my husband about the “It is our policy.” statement. lol He’s a self-employed carpenter (LLC) and sometimes has to wait up to a month to get payment on a completed job when “payment is due upon completion”. Quite aggravating. It’s amazing what people try to get away with – it is stealing when you don’t pay for services rendered and just plain wrong.

  2. Bravissimo, Diana!

    Love your spirit and your spunk … and especially the way you handle getting your hands on your paycheck.

    This post has meaning to me since I’ve had the experience of what it’s like to be a novice solopro. Some time ago, a web developer connected with me through social media to share her plans for creating a web site all about my niche – “Birth”. In short, I was asked to be the primary writer. I submitted lots of work without asking for any payment up front. Ouch! Didn’t make a penny on that job. Lots of promises — No pennies. 🙂

  3. Melanie and Lisa,

    Thanks for your comments. Unfortunately, nonpayment or slow payment is a common problem!

    Melanie, if you’ve done a lot of writing, there’s still ways you can benefit from it.

    The first question is whether there is any contract or even oral agreement between you and the web developer that promises you payment. If you were told you would be paid for content and she hasn’t, get your work back. Tell her you own it and she must remove it from her site immediately. (Or pay you!)

    Whether she pays or not, there are many ways you can reuse your own content. Post it to your own website. Submit it to ezinearticles.com and other article databases. Use chunks of your writing in participating on the blogs of others. Use it to comment to Yahoo groups and increase your visibility. Claim it in your portfolio towards securing other freelance assignments. Use it as the starting point in creating an e-book or other information products to sell online. Use your writing to create informational materials to distribute when you present classes in hospitals or elsewhere. Submit articles (ideally for pay) to free parenting magazines found in doctors’ waiting rooms.

    There are two potentially tricky issues here. One is copyright–who owns it? The other is duplicate content — apparently if you submit the exact same copy to multiple websites that are indexed by Google, each does not get the maximum “Google juice” for an article that has already been tracked by Google.

    Since you wrote the article originally, the issue in changing the article for republication isn’t plagiarism (though there may be other problems). Start thinking about how you can easily rearrange content and tweak the wording so you can repurpose it for your own benefit.

    You may be sitting on a gold mine. Or at least a silver mine.

    -Diana

  4. Thanks so much, Diana, for all your great advice and for boosting my confidence and lifting my spirits. My story may have a happy ending after all. 🙂

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