What to Do When a Client Doesn’t Pay in a Timely Manner
Some clients are happy to pay you for your work as soon as they get the finished product. Others make a tortoise look speedy when it comes time to cut you a check. The slow-pokes tend to fall into two different categories: clients who are going to do everything they can to avoid paying you and those that just haven’t managed to pay you yet. There are plenty of remedies for that first group, from lawsuits to collection agencies. But what about the folks that are just behind because of cashflow or paperwork?
There are a few ways that you can speed up the payment process, making certain clients easier to work with.
1. Payment Plans
A lot of companies have tight finances right now. They’d love to pay off your invoice, but they just wound up over-extended. If you can offer a payment plan, you can make sure that you still get paid. You may not get paid in full immediately, but a payment plan is better than having to keep calling and asking about when your client will be able to pay you.
2. Early Payment Discounts
Some clients just delay to the last moment the invoice is due because it gives them the benefit of having money stay in their accounts just a little longer. If you can offer a benefit for paying an invoice immediately, those clients will remit payment much faster. You may have to raise your prices a little to be able to comfortably offer a discount to any client who pays within a certain number of days of receiving an invoice, but it’s worth it.
3. Late Payment Penalties
There are some clients who just won’t send you a check because there’s no reason for them to get moving. For them, there’s no difference between sending out your money today and next month. A penalty creates a difference: if your client doesn’t pay by the due date, it’s reasonable to request an additional fee for the extra work that goes along with late invoices.
4. Communication
Occasionally, a project will end and a client will unintentionally forget all about you. But if you’ve been in constant communication and suddenly you’re not, an invoice can get lost in the shuffle. Something as simple as following up on a project can guarantee that you stick in a client’s memory.
5. Reminders
Don’t be afraid to send out reminders of invoices to clients. You probably won’t get the best response if you send out a reminder the day after you send your invoice, but as you’re nearing the due date, a reminder can be a good idea. Reminders sent before the due date should probably be worded differently than those sent afterward, however.
6. Escalation
In general, it’s best to keep the billing process polite. But if you have a client who consistently makes payments after they’re due, it’s worth taking the matter to the next step. What that next step is depends: Maybe it’s having a serious discussion with your client. Maybe it’s a matter of not starting the next project until you receive payment for the last. Maybe it’s time to fire the client in question. You have the right to be paid on time, but sometimes you need to drive that fact home with a client.
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This is funny..
I’m a client and I always pay my developers in full within 24 hours of completion.
The hard part is getting freelancers to get the work done and take it serious. I even offer to pay 100% up front so they know I’m serious, but that usually fails. I hate having to wait 3-5 weeks to get simple tasks and projects that take 5-6 hours to do to be complete.
LOL….I’ll be your web developer
Please Give us an opportunity! =)
Oh Boy, a client that says “This should only take a few hours” are always nightmares.
The solution is very simple. Hire more reliable freelancers.
Not all freelancers work the same way. Not all freelancers see freelancing as a way of being employed when they feel like it.
Thanks for those advice.
Can I ask you how to determine the just “invoce delay”. I don’t now if it’s common to use 30 days or can I always say 15 days?
Lay your expectations out clearly as part of the original project brief. Discuss them with the client and when they sign the contract for the work make sure the agreed payment terms are in that contract.
Never put on a late fee if it was not already within your contract to do so .. but if you’ve said ‘pay on time or x per day may be added’ then call in the extra fee.
I am normally on the employing side and have had some contractors say ‘payment in 14 days’. I explain we do ‘end of month + 30 days’ and we agree to my terms. Then I ask our finance team to pay them faster so they normally get paid somewhere within 14 and 30 days. The important thing is that it is agreed before-hand.
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Regarding losing a client .. unless they pay they are not a client. They are just a waste of time.
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Regarding instructing collection agencies or making a court claim .. if all other reasonable approaches have failed – go for it. Just make sure you can also claim your extra costs back as well.
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Regarding chasing for new work when existing payments are over-due: Put them on credit hold and tell them that is what you have done. Why deliver more?
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How persistent should you be? Be polite but tenacious. If they promise payment by Monday chase them again Monday afternoon.
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Debt collecting / chasing is part of your ‘do everything’ job so if you spend a day chasing against slow payment build that extra cost into your next estimate, assuming you decide to work for them again! If you price yourself away from the client .. so what .. you have priced the work realistically based on experience.
This post came very handy, as I need get my money from two clients. I am wondering what should I do with the client who has cut loose. Should I inform collecton agencies? I not a large sum but still, it was my time. What do you think?
Lucian: I looked into this when a client didn’t pay up this past year. I foolishly did not require a down payment because it was a spur of the moment requrest, and I wanted to be helpful and accommodating. (Mistkae!)
There is a minimum amount a collection agency will agree to collect. They keep a percentage based on the total amount they receive. You can also look into small claims court.
You have to consider whether the money you may or may not recoup is worth the time and effort it takes to get it. Also, ask yourself if escalating is worth creating acrimony within your networking circle. My delinquent client was a marketing agency owner. The city I live in is big, but not big enough to start a stink with a colleague. Between that and the small amount of the unpaid bill, I dealt with the issue by sending constant reminders. I did get paid several months after the bill came due, but I consider myself lucky.
After this happened, I got myself a PayPal account so that even if someone called with an emergency project, I could send an invoice for 50% up front and get paid right away – before I start the project.
Thanks for reply Amy. I never start a project with a new client, without deposit.
The sum I need to get is not that big and it might not worth the headache besides that, I am located in Charlotte, NC and he is in New York.
I was just wondering if others would try to recover money or even destroy reputation of the non-paying party. He works in web industry as well.
Somehow I think is better not create harm and forget the matter. I am not sure how some of you would proceed.
I love how Amy misspelled the word mistake… Nice coincidence.
or subtle..
#3 mentions: “…if your client doesn’t pay by the due date, it’s reasonable to request an additional fee for the extra work that goes along with late invoices.”
I’m wondering what this means; what extra work goes along with late invoices?
Otherwise, all of these suggestions are great. I’ve luckily only had to deal with one major situation where I wasn’t paid I believe around two months past my invoice due date. Eventually, he paid in full and I never dealt with him again.
As for sending reminders, I send one out a week before and one a couple days before the due date. If the date shows up, rolls around and passes by, I would do a reminder starting at a frequency of once per week (and will adjust that frequency if needed around three weeks after the due date).
Since than, I’ve begun to ask for a 50% deposit on all projects before commencing the work. Some clients will get the honesty treatment simply due to our relationship and trust. These clients haven’t yet “disappointed” me.
I consider the need to send out additional reminders, make follow up phone calls and other communications related to getting a late payment taken care of to be extra work. It’s the same justification used by the electric company to add late fees if a customer doesn’t pay his monthly bill.
I have a client whose payment isn’t timely…but this post it! Thanks for this. I’d been using many of the strategies, and I have to admit that I let a couple of them go. I need to go back to collecting 50% up front for new clients and a 10% discount for full payment up front.
As for charging late fees, I’m wondering how others do this? How much do you charge, and how do you calculate it? What’s late for you – 30 days? I’m also interested in hearing what language people use to communicate this on their invoices.
Thanks!
in my contract i do 50% to start the project and then i usually have a 30-day terms for full/remaining payment. I offer check, paypal, cc, cash… but with troublesome clients, i change the terms to 15-days.
after any of my terms i do a 20% late fee. if they complain about the fee, i often will drop the fee if they pay very quickly (1-2 days). and definitely after i’ve sent them an invoice that includes a late fee, i halt all work until payment is made.
ps, it’s amazing how many clients do not read the terms until they see a late fee
yeah, I also always ask 50% upfront for new clients. before I start a job I have clients sign a contract that clearly states they have 15 calendar days to pay an invoice or there is a 10% late fee for every 15 days its late. Having them sign a document stating this is crucial to charging late fees.
I’ve always found the slowest payers were very large corporations, generally has nothing to do with the money, they just have too much bureaucracy.
Thank you very much! I wasn’t expecting you to say 10% to 20%. I’m going to tighten up my agreements for sure.
Good post as this is always a pretty big topic when it comes to freelancing. I agree with your key points but I have never been a fan of #2 (Early Payment Discounts). I don’t understand why freelancers should give the client a discount just for paying on time. As a freelancer we don’t get a bonus for finishing before the deadline or even finishing on time. In fact we are expected to complete the project on the date given to us. So, I don’t think it makes sense to offer a discount for a client which you would hope could do the same and pay on time.
You don’t get an early completion bonus only because that was not negotiated. If the project is or may be time-critical you should consider incorporating that into your discussions.
Excellent post and topic. This is something that I think I needed – I currently have a payment plan set up for one of my clients, but sometimes even with that the payments come days late. In the future, a penalty fee is a good idea. Thanks for sharing!
The worst that just happened to me (and was a good lesson in trust and getting everything on paperwork) was I passed a new client to a fellow designer/programmer that I hoped to work with. My fee was a finder’s fee: $180. Yeah, no big deal, but he never paid me and ignored all my emails. Pretty disheartening…because he was a fellow freelancer (and I found him on here) and he “seemed” trustworthy. Now, if that happens again, I will require payment up front.
You were spammed for 180 $? This dude was a dick! He has just lost all future projects you could send him.
Hi Nicole,
Phone him or visit: It’s easy to ignore emails but the personal touch often gets results. For the sake of $180 it’s not worth wasting a lot of time on and is a useful lesson to learn for the price. I guess you don’t want to work with him any more nor pass him future business. All for a measly $180. Sheesh!
Why deliver until you’re paid in full? It’s saved me so many hassles, and when I do deviate from it I remember why I stopped.
Payments after delivery are a rare exception for me, but I understand their place.
Good article.
I ask most of my clients to pay a deposit then the balance at the end. I don’t upload their website until I receive payment which works well since I’m usually paid within 10 days.
Unfortunately though I made an exception with one client who I work with on a regular basis and am now consistently having to wait three weeks or more for payment. Partly my fault since I don’t use due dates with this client and go on good faith that I’ll be paid but as this has been on-going problem I think it’s time I start.
Like Marlene I wonder, how do the rest of you handle late fees? How long do you let a bill go? 15 days? 30 days? How do you respond to the reply “if you want to work with us, you’ll do it our way” philosophy?
I don’t release production files until I get balance payment. Two benefits for doing it this way: 1- the client can’t ‘disappear’ on you, 2- the client will be motivated to pay you because they want the design work.
If you release files before getting paid you run the risk of: 1- the client doesn’t feel like paying you the balance and they become unreachable (I have experienced this and learned the hard way) 2- clients are busy people running their businesses. If they got their files they are already charging ahead and paying you becomes an inconvenience for them, like taking care of paperwork. The motivation to ‘get their files’ is missing.
My clients don’t mind this policy at all.
» how do the rest of you handle late fees? How long do you let a bill go? 15 days? 30 days?
I’d state it in my agreement that you have a set number of days and then it’s a fee for every few days you’re late.
» How do you respond to the reply “if you want to work with us, you’ll do it our way” philosophy?
Business relationships are like any other relationship—they’re based on trust and compromise. If I think a business is trustworthy and has good practices then I may be okay with it. Otherwise it’s a sign that I might not want much to do with them.
Start with a contract with terms 14 Day Nett
Request “NO” upfront payment – instead you want to get your client use to small incremental payments, it’s just like paying fortnightly wages, the amounts are smaller and easier to manage, plus no ones got you by the proverbials.
Send overdue notices and slow the pace of development if they fall behind in payments
Cease development if they fail to make amends. Now you’ve got them by the proverbials, plus you’ve minimised your risk (with the small payments) and now (since they’re in breach of contract) you can focus on other clients that are paying their bills on time.
I always mention in my contracts and invoices that the website will be disabled if the payment is not received on time.
I never had to do that in 3 years, but made a few reminders, usually just a phone call “I just notice your payment didn’t arrive yet, was there anything wrong ?” works, I only had to remind once that I’ll cut off the website if I didn’t receive the payment by the end of the week. Noone ever complained about that policy.
If I cannot control the hosting, then I make sure I leave a big nasty bug somewhere, or remove a feature, like disabling page update in a CMS, so that the client needs to contact me for help.
What happens if they change password to everything? That’s what happened to me.
I once introduced a feature in a customer’s site that let me log in as any user using a hardcoded, very complicated password. I did it for testing purposes, but I soon realized this was a very, very powerful control measure on any of my customers.
I ask for 30% payment up front when they sign the contract. The remaining 60% is broken down into smaller benchmark payments. If they’re not paid then the project goes no further. It also means that if things go awry, there’s a smaller amount of money at issue.
Feel free to send that missing 10% my way.
Kidding aside, this is my typical payment model, and it works well. If it’s a smaller project and I’ve worked with the client before, I often forgo initial payment and collect it upon delivery.
You can so tell it’s late and I’m tired
Good article, thnx for posting!
One of my first freelancing opportunities back in the day I never got paid a cent for. The person that I built the website for is pretty well known in his state and even ran to be senator a couple years back. So I thought that I would for sure get paid (huge mistake!). There was no contract, no 50% upfront. I’ve emailed him countless times (to two different emails) and have called him a number of times as well with no luck of getting paid.
Since then I’ve taken all of the standard precautions and haven’t had a problem since.
I just hope for all the newbie freelancers that they can learn from others mistakes instead of having to go through it themselves. It’s painful to get screwed over, especially just starting out.
Running for Senator? Ask him whether his competition know about his ‘lack of payment’ and breach of contract practices.
I surmise you have little in writing but it may encourage better recollection. If not, at least you can vote for the other side.
I will also caution everyone about the following: If you’ve built a web app or website for someone, it goes live, and they haven’t paid…seems totally right to shut that site/app down, right? After all, it SAYS you can in your CONTRACT. Then, you call an attorney, and your ATTORNEY says it’s okay to shut it down, too…
First, consider getting a new lawyer. Second, definitely don’t shut the app or site down.
If you interfere with a company or individual’s ability to do business REGARDLESS of whether it’s in your contract or NOT, REGARDLESS of whether you’re right or not, and REGARDLESS of your attorney’s advice, it gives the OTHER SIDE a leg to stand on. It gives them something acceptable to counter-sue you with.
And if it goes to court, the less legs they’ve got, the better.
We had some scheister clients that we built an internal recruiting tool for… (who, it turns out, burned OTHER companies as well!) It cost us upwards of $40K when all was said and done. In the end, we walked away from it because we decided to spend our resources moving on, rather than being right. I call them “Service Shoplifters”. I.E. They like to buy without paying, often attempting to malign you and your provided service along the way to justify their sociopathic tendencies.
Chances are if you’re reading this, you’re neither a bank, nor a credit card company. Nor do you likely have the resources to collect from someone (which rarely proves successful). Avoid the issue in the first place with a no ticket, no laundry service policy.
When you’re providing a service, trust is paramount.
If a client doesn’t trust you with a deposit, the relationship has a foundation problem.
If they don’t value your work enough to pay you on time (or at all), you’ve got the wrong kind of client.
When you put yourself out there and ask for a deposit, you are respecting yourself and your own worth. If you don’t get that in return, it’s time to find new clients or a new profession.
And if you’ve got yourself in a corner already? This post has some great tips.
I’m going through this exact problem.
I live in a small town where everyone knows everyone. One day I was contacted by a woman who was in charge of setting up a website for the local basketball program. She said she had tried to do it herself and couldn’t make the deadline so she asked me if I could whip something together in 2 days. I said that’s fine, it will cost $XXX or less but I won’t be able to do my best work in 2 days. I was also leaving for NYC in 2 days. She said she already approved the creation and cost with the board and to get started.
I set up a simple site and drove to her house to teach her how to use it. I used a template and modified it how she wanted it. The site was up and functional in less than 2 days and was 25% under budget.
While I was in NY she called me multiple times saying she needed to change the header. Hm that’s weird. I made it exactly how she wanted it… So I created another header and put it up. I get home from my vacation and sent her the invoice. No word for 2 weeks until she calls me and asks me if I can change the header. Again… Asked her about the invoice and she said she had forwarded it to the treasurer to approve.
Another 2 weeks go by and not a word. I emailed again and get a reply from the treasurer who wants to meet with me to go over the costs. We go over pricing and he informs me the woman I originally worked with didn’t think I had done enough to justify the cost. Weird. She was extremely happy when I finished it a month ago… He said ok ok I’ll have a check by the end of the week.
It’s been almost 2 weeks and I finally had enough and took the site down and notified them why. I haven’t heard from either of them but hopefully the site being down gets their attention.
To avoid all these issues, I always require 50% up front before the project starts and the other 50% before it leaves off my servers and launches. If someone doesn’t agree to this, than the probably weren’t going to pay you anyways.
A few agencies may fight this and request to be billed instead, I may do this if they’re a real physical agency, but I won’t go longer than 15 net days.
I try to keep these clients limited as much as possible, because I’d rather have a deposit and get paid as soon as I do the work. It’s a better motivator
We are in business to make a living, not to suck up to clients and hope, pretty please, to get paid.
In light of that, we need to do everything possible to be professional. That starts with a signed contract, with all terms agreed to. The client pays 50% up front. No work begins until payment received. No exceptions.
I can hear it now: “Yeah, but they’re really behind and need me to start work ASAP or they’ll find somebody else.” So? Their lack of planning does not constitute an emergency on your part. Right? Nor does it change the rules. Pay 50% now, please. This is all in the contract. News flash: if you think they’re balking now, just wait until you’ve handed over the work and suddenly they won’t return your calls and emails.
Never, EVER release files without payment in full. When they suddenly say, “We pay in 30 days,” your response is, “I deliver in 30 days. Read the contract, please.”
One more thing. If you cave in to a pushy client, you’re screwing yourself and all the other freelancers out there.
If you do good work and act professionally, you will attract good clients who value your work and will be happy to pay. Please remember that.
Great post-
I agree with point 1 and 2
50% up-front is a good measure, but some projects in the web world can be pretty pricey and it can be helpful both to both parties to break the payments down even further (for the client who doesn’t have 10K to cough up right then and there and for the designer who would love to have more work to be doing ASAP. It is quite common for one of my clients to pay for the project in 4 equal installments, not dependent upon milestones. Only the fourth and final payment relates to the state of the project, and it gets paid upon completion. Just another thought, on top of the great points made in the article.
Got to love what we do, eh?
These type of clients… damn they can be so annoying! I can hear where this post is coming from loud and clear, and there’s some amazing tips here for dealing with it!
Coming from a clients perspective…
I see your points and I see my side as well. When I fist started working with Freelances, they made all kind of stipulations and sent me all different types of agreements and I reluctantly complied in the beginning and I’m still dealing with it.
Foolish me….Why????
I was burned especially the first few times working with Freelancers. I also sent 50% deposits to them, but I learned my lesson fast…. Never again.
I waited and waited and waited and sent e-mails, and weeks and months went by without anything.
I even drove 4 hours each way to meet with one of the Developers that had a ton of high recommendations from e-lance and was charging 100 per hour, thinking I was meeting with someone good “Top Dog” as his recommendations were saying..
Turned out, he was living in a rat-infested 1 bedroom apartment that was so gross I wanted to throw-up. He also sent me a bill for $200 for 1.5 hours we talked about my site.
They both had great reputations through e-lance and worked on great sites. All I got was a ton of excuses of why they couldn’t find the time. “We have other clients we are working on”, “Weddings”, “Sick”. You name it, I’ve heard it and I’m still hearing it. “I don’t care. Don’t ever tell a client his.
For example. I’m new to this site because I thought I had a good relationship with a team of Developers I’ve been working with for nearly a year and spent a ton of money developing a site. But I’m still asking for updates and even asking for invoices for me to pay to them. I don’t feel like I’m the client. My site is 99% complete and just yesterday, I was told that my final 4-6 hours left of work will be put on hold, till mid-end January as they are away for the holidays. “BIG MISTAKE” They never offered me any kind of solution or help.
Also…Your contract agreements means little to us as a company. They only give value to you, but there is little action we take with it.
Also….A lot companies do require a grace period of 30-90 days or more as their billing cycle requires them to pay debts. So I wouldn’t start making demands on them, you may have to just deal with it. But this is for a larger company that have revenues of at least 2.5 million+.
Do your research on your clients. If it’s a personal site or a start up site, then I don’t see a issue with a deposit. ….50%??? I think is to much. It depends on the amount of time and money.
If it’s a revenue generating company. 500k+, run a “D&B” on them. Bad credit or no credit, request a deposit and tell them why. If they have good credit, you may want to negotiate a small deposit depending on size and hours and get paid later, but this may pay off in the long term.
Both us clients and you Freelancers have horror stories and one of us has to take the risk. But the bottom line, is that we are willing to risk our money and your willing to risk your time.
Which would you prefer?
Here is my formula for working with a first time Freelancer.
0-$500 0% deposit (but I do like the idea of not sending files, but showing work is done) This is a teaser. This is your time to shine. Little risk on both ends. (files sent when bank wire hits)
500-$1000 – 25% deposit
1000-5000 – 50% deposit
$5,000+ Negotiable. – I would break this up into stages and payment upon completion of each stage. Or else this is your Mothers or Fathers company if your doing this without a deposit.
Final words of advice..
This has never happened to me. But deliver ahead of schedule. We love this. and send constant e-mail updates on progress. (Huge brownie points if you can do this)
Hell…offer a huge discount if they pay within “X’ amount of time. I’d fall for that as I like to pay within 24-48 hours of completion. I hate bills.
P.S. – Don’t bill your clients for any talk time either…lol…
Most of this advice is utterly horrendous. No serious freelancer would work with you under these conditions. The reason you’re having trouble with freelancers is because you’re using elance.
@Emil,
Your post is giving out the impression that you only work with freelancers because they are cheaper, but in general, you seem to think they are lazy, unreliable and untrustworthy. That’s how it’s coming across to me.
It seems you weren’t savvy enough, so you got burned by your own doing really.
1) Firstly, from what I’ve seen, clients who go to job bidding sites like Elance are often looking for cheap freelancers. But the inexperienced ones often don’t scale their expectations down far enough in accordance with the low prices they’re willing to pay.
You need to be more realistic about what to expect from a cheapo freelance designer or developer or writer. If they had great reputations, that’s because the majority of their clients knew exactly what and how much to expect from them and exactly how to work with them. You clearly don’t.
2) Not all freelancers work the same way, but few freelancers like to receive constant emails asking for updates, etc. It’s seen as being nagged, and no-one in their right minds like to be nagged. Many people don’t react too well to it as you’ve seen already.
Sign the contract, give them what they need, answer any remaining questions they have, and just let them get on with the work at hand. Don’t pester them for updates. They will update you as often as they think is necessary.
If you’re not happy with the frequency of updates, then consider coming to an agreement about the type and frequency of updates with future freelancers before signing anything.
You should always discuss everything with anyone you choose to hire, including assumptions about work times and practices. It doesn’t sound like you did this enough. So you should be asking questions and finding out about their work practices etc before you sign anything. Then you decide if you can live with the way a certain freelancer works. This is basic common sense.
3) It’s not unreasonable for a freelancer to tell you at this time of the year that they will be on holiday until January. But this is a very subjective thing, and probably varies from freelancer to freelancer.
One thing I will say is, it would have been better if these developers had said to you at the start of the project that they will be on holiday until mid-late January, and then perhaps offered you the opportunity of having another available developer (one they trust) work the remaining 4-6 hours on your project during the run-up to Christmas, at the alternative developer’s own rates. That’s how I would have done it.
But at the same time, you should also have been anticipating them being on holiday at some point over the Christmas and New Year period anyway, so it wouldn’t have hurt to ask them about that in advance at this time of the year, so that you would have been aware, and then you could have planned things better. It’s common sense.
4) And lastly, I would never take on any project, be it small or large, without a minimum deposit of whatever amount of money I need per week/month to survive. No sensible and savvy freelancer with a good business mind would. See, we don’t have a big company behind us paying our salaries. But we still have to survive, just like people like you do.
Never would have thought about giving an early payment discount. Very clever! Thanks for the tips.
Good topic…
For new clients/projects definitely a rather thorough contact which cross references with a further design faq section on my site. 30%-50% down, a mid-project payment (so far clients like that as it avoids the big final payment) and payment due IN FULL at time of delivery.
For existing and established clients, invoices with terms 14 Day Net. And I do send out reminders which so far they really appreciate. There is a late fee stated on my invoice although to date, I have not had to use it which is good.
Fired a client this past summer who basically lied through their teeth about time of payment despite my explicit terms. I extended them many courtesies, did not charge fees I should have and was treated like crap by the accounts person for their mistake – he failed to properly read my invoice!! So they went bye-bye and I learned yet another lesson. No new clients without a contract and deposit PERIOD!!! I feel it protects both parties.
On an up note, one of my clients just sent me a Christmas card! Nice:)
“Deliver ahead of schedule. We love this. and send constant e-mail updates on progress. (Huge brownie points if you can do this) ” Maybe this client appreciates that, but most don’t. 9 out of 10 times, I deliver ahead of schedule and manage to delight the client with work that’s right on target, to boot. I keep clients updated on progress on EVERY job. You know what? I still have to call/write them with reminders to pay on time…and they don’t seem to value the extra effort at all.
Most of my clients are corporations – and something as simple as an upfront deposit can involve a lot of red tape on their end. Few want to bother going through their accounting dept to get it and won’t use a credit card on PayPal. The problem is that most are accustomed to working with larger agencies and vendors happily working on 30 or 60-day invoice basis with no upfront payment.
When I’ve insisted on deposits, many did comply for the one job, but simply called other resources for future jobs after that, because it was too much bother for them to process a deposit each time they needed something fast. All had many other providers on their list who would jump on the work without one.
For those of you with full client rosters, you have the freedom to dictate your deposit/payment demands and I congratulate – and envy – you!
I don’t have enough clients right now to enjoy that luxury, so I must stay flexible.
I’m in a situation pretty much like TS. I work very often for a University, and timely, fast payments are like science fiction. If I requested a deposit to them, I’d get it like one month after finishing the project. The amount of paperwork for any payment is insane, as it happens with any public organization.
Hopefully, my main income is from web development and design combined with hosting. If for any reason a payment is not received, a notice that their online presence will be suspended is sent. This motivates the client to pay. At last, after some bad clients, lessons learned. Make sure you have some processes in place and some basic terms of use.
I don’t think Late Payment Penalties are a good idea. The time you send the email with the late payment penalty, will probably be the last time you work for the client.
Early payment discounts and payment plan should be a good choice.
The funny thing for me is…even I give my client a late payment penalty. Some of them just don’t bother and keep on dragging the payment. Plus, chasing me for a new project deadline while still owe me a lot from the previous projects.
I add this to the bottom of each invoice that I send to my clients –
We are a small, nimble consulting company and late payments take our focus away from providing you an excellent quality of service. We prefer spending our time finding ways to make your business money rather than tracking down overdue bills. As such all bills are Due on Receipt, we don’t have TERMS if this conflicts with your normal check running process – please call us at 123.234.5678 so we can solve this together.
Well written article on late payments! We use automatic email reminders at 30, 45 and 60 days from the date of the invoice. This is very helpful and we include a note at the bottom of each reminder so our clients don’t get the wrong idea that we are hounding them too much.
*This is an automated email message meant to notify you of overdue invoices.
We currently don’t have late payment penalties, but this is something I am strongly considering for the future.
Thanks for writing!
Just started as a freelancer to pay for my school, but this website seems to have a lot of good advice. On payments and stuff, I do agree with most about requiring 50 percent to start, so far I haven’t had a problem with payments. But I wouldn’t know how that could happen, because I require 50 percent to start, make a sub-domain until client is satisfied with the website and then get the other 50 percent to upload it to their servers.
However I am wondering if anyone had their work stolen, since all you have to do is look at the source code. Thanks
great article…I hate to have to follow up with slow pay clients. How much can I reasonably charge for late fees?
And what do you do with clients who simply don’t respond to email reminders about payment?
Hi Emil, I understand your point of view from a client’s perspective and thank you for sharing. As a developer and a creative director, I would just like to say that we all got burned once or twice. I’m currently having problems collecting from our client who sends me and my small web-developing firm projects from the U.S. I understand he has not been paid by his client’s yet but…considering they rushed us into this project and it has been a week now. first they agreed to pay up front just for us not to charge for the rush. (yeah i know I’m such a sucker..I’m learning from it though)
Our prices were ridiculously low, considering we are a small firm and since we are from the Philippines. A $500 project normally pays for a 3 man team and gets the job done asap.
We just made this Ipad project for a manufacturer of Costco(I cannot show url links to public since it is only available to retailers and wholesalers but I’m willing to show samples of our work if you are interested ) and we were originally given 5days but then they told us we only have 1 and half day to deliver. A total rush, but we delivered anyway. but it was not beneficial to us, however, I always try to put it in my mind that a happy customer/client will give more projects in the future and probably higher paying ones. Which has been the case for me before, but not anymore.
For now, we are trying to charge the client for the work we delivered, but unfortunately we already have finished two projects including the one for costco and 1 shopping cart project that they claim has not been used up to now and their telling me they don’t have any reason to pay yet.
I like what the poster above, I think his name is David, said
“We are in business to make a living, not to suck up to clients and hope, pretty please, to get paid.”
This is exactly how I feel right now, It is easy for clients to demand this and that, rush us like there is no tomorrow, ask for even more discounts..
So, for anyone out there who would like to broker, mediate, outsource or partner with us pls. let me know. I would like to deal with only honest/professional people and build trust and good business ethics.
I am interested what you guys do when a client DOESNT pay.
I have a client who i know was more than impressed with my job, and what value he got..and overhead it being said to a member of his staff when i was out the room…. and the expressions on their faces when i showed them the powerful web2 functionality of the site.
I met them and quoted them, they asked for 2 sites for that price. I said i’ll do the one main site, and the mini site you want, i’ll throw in (was 2 days work the minisite). They asked what difference that made? I said it does, as the main site i wouldnt discount on, that is the price i deserve….and dont want people to think that i’d do it for less etc. They agreed AM HAPPY I SAID THAT you’ll see why soon
I did the site, they were happy. The site went on an extra month as at project start i advised they move to my host , for same price, as their current host was AWFUL and servers setup wrongly etc.
They refused so i had to do many workarounds in the code to adjust the site to get it to work on existing host….and then i hit a point where no matter what i tried…things werent working
EVENTUALLY they agreed to move to my host. I had to then readjust code i’d tweaked back to normal to get it working on my hosts servers (setup correctly etc.). Immediately everything worked. (same host for 15 years great host… http://www.safenames.net )….
Site was completed in January 2011.
I then had a meeting to show them site completion…went to write them an invoice for 100% of the project (i know i should have billed them some up front….its the first client who refused to sign any contract – before even seeing it – and said he prefers to work on trust. Seeing as its a well known institution I went for it…needed the job etc…)
So he said i know you’ve done about 98% of the job but STILL a few more corrections (grrrr) he said he’ll give me 50% and the rest a few days later after corrections. When i asked him what he didnt like…I’m not sure….i’ll have to think about it
I agreed took the 50% cheque. I waited for a month to get those corrections and immediately made them the day they finally came.
Another few weeks went by with hardly any communication except the odd phone call with teh client screaming abuse to me and saying he’ll pay..but when it suits him…maybe in a year…when he’s done not when im done….and saying excuses like theres millions of spelling mistakes (which i had checked by 2 people, as its not my native language) and all was fine.
One of those people is the content manager for them who will deal with the site regularly etc.. as it happens, we found out we’re neighbours….and she’s very nice indeed – immediately recommended me and got me a job for a new client…he put her in the middle saying things like he wont pay me till she as the content manager said the site is ready and works nicely etc.
I know for a FACT she has told him this more than a few times. But still no action. He’s putting her in the midde – like asking a man to build a house, and another company to paint interior.
Man builds you a house….it’s ready and finished…but you say you’re not paying him until the company whose painting the interior (nothing to do with the builder) says it’s ok. And then the painters say its ok…but the client says to the builder, im not paying you till this last tile is on the house even though all tiles are on the house!
It’s got awful
I sent him an invoice with 30 days to pay this month (may 2011 now!!!) and 30 days have passed. He is now demanding i show the receipt the hosting company gave me as i have paid for even his hosting on my hosts server. I have no problem showing it him – i make no profit on it, and that shouldnt matter as im giving him the price of what he paid old host anyway…..and i know i dont HAVE to show him the receipt that i paid my host anyway….but have no prob doing so
What do you suggest?
Would appreciate any replies
I also have now paid about 800 dollars to income tax and VAT on an invoice that i have received no money on!
I could sue and we have good lawyers but he’ll sue back as they always do (even though hes nothing to sue me on)…and to be honest…im a creative chilled out individual who doesnt want all that stress and bad vibes….
Thanks a lot guys
Olly
I have the hosting and the client has
“I could sue and we have good lawyers but he’ll sue back as they always do (even though hes nothing to sue me on)…and to be honest…im a creative chilled out individual who doesnt want all that stress and bad vibes….”
If he truly hasn’t got a leg to stand on, then there’s no reason not to sue him for the amount you’re owed. If he sues back, and he has nothing to sue you for, then he’ll lose – both reputation and money. There’s very little risk for you in terms of winning/losing.
I don’t know where you’re from, so I don’t know if you have debt collection agencies. If they do operate in your country, consider making use of them first before taking the guy to court. That may be a cheaper way of reclaiming what you’re owed.
Being a chilled out creative has nothing to do with this. If you can’t be bothered, then you lose out. Period.
One thing. If you continue to let jerks rip you off like this, you won’t be a chilled out creative dude for much longer. Don’t want that do you?
I have a question, not sure if anyone might know or can give some advice. I recently got laid off and started to do side jobs doing the same thing i did when i was employed. I do cabling for voice and data and i just recently completed my first job. The company who i did some work for knows me because i worked at their location before thru the company i worked for. Now the work is complete and they will not pay me because i have no invoice with a company logo. I am in the process of getting a tax id number and a name for my business. Does anyone know of any way around this? Or am i just getting jerked around?
Hi Vik,
I think you should have first established a contract between you and the company. However, you may explain that you just got laid off your job and don’t have any tax id’s yet nor have a company name for yourself yet. As for the company, they can just put this in their accounting as services paid to your name, I don’t think a company name is needed for that.
I don’t know how the law works in your country, but I think that they should pay you your due after you have rendered a service even if you have no registered company name or a written contract. Verbal contract is still a contract.Unless you told them that you still work for your old company and they hired you, I don’t see any reason why they shouldn’t pay.
My advice, get any written communication you have with that company, text messages, emails, any proof that you rendered service for them. Try to persuade them to pay you,maybe tell them that you know that they are a reputable company and you would like to request for your payment,even though you do not have a tax id.Appeal to their better side, and if it doesn’t work give them time try again,for the third time,get a lawyer and sue them for all the time lost,things that they might have said to you,etc.. Most of the time they will agree to an arrangement by paying you more than your due in order to avoid scandal to their company name.
Hope this helps you.
Dear all! SOS!!!
I have a client who’s from Saudi Arabia recently placed me a 230,000 USD order whose delivery was done on Sept. 8.
The term of payment is 100% T/T before loading. But the day before delivery, the client told me he could only complete 97% of the total payment because of his internet bank transfer limit. And he sent a guarantee letter to me as well as my boss that he promised to pay off the order before Sept. 10.
Judging by the good cooperation in the past one year and considering he had paid 97% of the total payment, I convinced my boss to let him take the products first.
But 10 days past, it doesn’t seem he wants to pay the balance. I have sent him several reminders. He doesn’t reply me. I tried to contact him when I saw him online, he always asked me to wait and at the end he went offline. So I call him everyday, he says he is busy and will call me back later every time.
For his bad delay, I could lose my salary and my job. What should I do?
I have a client , she have a terms and conditions
i really need the money.. what should i do? should i trust the client? should i still work with her? please help me.
she said that the payment will be per 2weeks.
the job is data entry. when the time comes. my 2nd week.
I told her, this is my 2nd week. she said to me,. the payment would take few days for checking my works and to see if i have mistakes, she said it will take maybe 2 days. That time its timing that its Christmas time. i did wait
but 5 days later. i still dont get the payments. she’s gone offline always. Finally, she is online and she told me she didnt updated the payment because she got busy with christmas
Implementing all of your suggestions… Thank you for this.