Getting Delinquent Clients To Pay - RD256

Have you ever had to chase delinquent clients for money? The life of a home-based designer, a freelancer, is a precarious one. You spent a lot of time learning your craft. Whether you went to school or learned on your own, you invested a lot in yourself to get you to where you are today. Now clients hire you to design wonderful and functional things for them. You spend hours, if not days working on and perfecting each project until you and the client are satisfied. After doing all of that, you expect to be compensated accordingly. So you send your invoice to the client feeling good about your accomplishment. And then you wait and wait, and wait some more, but no payment is forthcoming. Has the client stiffed you? Have they simply forgotten to send your payment? Are they purposely delaying things? Did they even get your invoice, to begin with? These are all things that go through your mind when a client fails to pay your invoice within the allotted time. Luckily this is the exception to the norm. 99.99% of clients will pay you for your work. But it's almost inevitable that at some point in your design career, you'll have to deal with a delinquent client. In the 16 years I've been running my design business, there have only been three invoices I was unable to collect. The first was a local embroidery shop. It was in my first or second year of business, and the owner of the shop hired me to vectorize images for his embroidery machine. We had an agreement where he would send me images throughout the month, and I would keep a tally and invoice him at the end of each month. It was an easy and well-paying gig. Then one day, the owner called and asked me to hold off depositing his $300 cheque. He told me there was a mixup at the bank and needed to wait until the following week to deposit the cheque. He was a good client, so I thought nothing of it. The following week I called to see if It was OK for me to bring his cheque to the bank, and he informed me that he had declared bankruptcy. The cheque I had was no longer any good, and he would not be paying my last invoice. What could I do? He had declared bankruptcy, and I was out $300. The second time I was unable to collect on an invoice is a bit of a mystery. The client was a chef who owned a local restaurant. His 10-year-old son had died a few years prior, and he asked if I could photoshop his son's head onto an image of a young boy in a chef outfit. He wanted to frame and display the photo in his restaurant. We agreed to a price of $100, and once done, I emailed him the digital file and an invoice. A few days later, he called to say I could drop by the restaurant any time, and he would write me a cheque. However, when I stopped by a couple of days later, the restaurant was closed. I tried several more times over the next couple of weeks, but it was never open. One day as I was driving by, I noticed someone inside, so I stopped and knocked on the door. The woman who answered told me the chef was her brother and he had disappeared a few weeks earlier and nobody has seen him since. They found his wallet and keys in his apartment, and the police were investigating. I saw the framed photo of the chef's son on the wall, but there was no way I was going to ask his sister to pay the past due invoice. I never found out what happened to him. The third delinquent client was the owner of a paintball field my son frequented. While talking to the owner, I mentioned in passing that I was a graphic and web designer. He asked me if I would offer suggestions for his old, outdated website. I took a look and offered to build him a new one for $600. This was back around 2007-08 when I was charging low prices for websites. He agreed to the price, and I got to work. I transferred his domain to my registrar and moved his old website to my hosting server. A couple of weeks later, I presented him with a brand new website. He loved it, and everything seemed fine. But when it came time to pay, he kept delaying things and giving me excuses as to why he hadn't sent the money yet. This went on for a few months to the point where I took down the website and told him I would put it back up once I received payment. I even threatened legal action if he didn't pay my invoice. He called my bluff and told me to go ahead and take him to court. I mentioned this to my accountant, and he told me $600 wasn't worth the time and effort to go after, and I was better to write it off. It was this third instance that convinced me to start using contracts for design projects. The point of telling you these three stories is to say some clients won't pay their bills for some reason or another. I was lucky that I only lost $1,000 between these three clients. And all three of them occurred within the first three years of my business. They taught me a lesson, and I'm happy to say that I've never failed to collect an invoice since then. But that doesn't mean I haven't spent time chasing down payments over the years. I hope you're never in that situation. But in case you ever are, I want to share ways to get delinquent clients to pay. First, let me emphasize that different clients, especially larger ones, have their own internal payment policies. This doesn't mean they are not paying, just that they have a longer than normal payment window they work in. When I did work for our local shopping mall, I learned to expect a 90 day wait until I received payment. My local municipal government has a 60-day payment policy. Some companies send out payments at the end of the month. So if you invoice them on the 25th, you'll get your payment in five or six days. But if you invoice them on the 1st, you can expect to wait the full month for your money. These are not delinquent clients, just clients with longer than normal payment policies that you'll have to learn to live with. But what if payment policies are not the issue? Protect yourself in advance. The best way to deal with delinquent clients is not to have delinquent clients to begin with. Lay out some groundwork to protect yourself from situations like these. Make sure you have every client sign a contract. Make sure your clients understand your payment schedule. Make it easy for clients to pay you by using an online payment portal. Whenever possible, get paid upfront. Don't Assume Anything. When payment doesn't arrive as expected, it's easy to jump to the conclusion that the client is delaying payment for some reason. But until you know the situation, don't assume anything. Just because you sent an invoice doesn't mean your client received it. Even billing software that tracks when a client opens an invoice sometimes registers a false positive. It's also possible the client did receive your invoice but didn't see it. Have you ever clicked on an email, realized it's not the one you were looking for and clicked on another without giving it a second thought. That first email is now marked as "Read," even though you never looked at it. Maybe that's what happened with your client. Before jumping to conclusions, send a reminder message saying you just wanted to make sure they received your invoice. Confirm the recipient. If you've emailed the client and haven't heard back, try picking up the phone and calling them. Don't feel bad about checking up on a past due invoice. You never know. Maybe the person you emailed it to is on vacation or maternity leave and didn't set up an out-of-office response. Or maybe your contact is no longer at the company, and nobody is checking their email. Any time you call a company about a past due invoice, always ask for accounts payable. This gets puts you in contact with the person in charge of sending out payments. Be understanding but firm when you explain the situation, and hopefully, it can all be handled right there. Decide if it's worth pursuing. At some point in this process, you need to ask yourself if going after the money is worth the hassle. Yes, what you do is valuable, and you deserve to be compensated for your work. However, sometimes you could end up spending more time chasing the money than it's worth. Figure out if the amount owed to you is worth pursuing. Offer a payment plan. If, for some reason, your client is hesitant or straight out tells you they are unable to pay. Before getting angry or threatening them, perhaps you can offer a payment plan. A client who wants to maintain a good relationship with you might agree to an option of paying by installment. This is a great way to build client loyalty. They'll remember your understanding once they're back on their feet. Offer a discount. Depending on the situation, you may want to offer a discount. If it sounds like the client is hesitating, you may want to offer them a deal if they pay their invoice immediately or within the next couple of days. A limited-time discount may entice a strapped-for-cash client to pay the bill now to save some money. It's better to lose a little of what's owed than risk losing all of it should the client not pay at all. Seek a legal solution. Before starting legal action, send a letter warning of legal action. This will inform the client you plan on seeking legal action without actually starting...