When A Client Does Not Pay

As a freelance writer, eventually there will come a time when a client doesn’t pay, or is paying very late.  What to do about it can be a delicate dance.  You don’t want to anger a lucrative client who just hasn’t gotten to it yet, but on the other hand, you don’t want to be giving away free work.  After all, you have a mortgage payment and kids who need to eat too.

The Doctor’s Office Method

I have found it to be effective to use what I call the "doctor’s office" method in honor of the people who send me these kind of bills.

On your invoice put a row of boxes along the bottom which say Current, 30 Days Past Due, 60 Days Past Due, 90 Days Past Due.  Then, put on your invoice something about a late fee, either a percent or an amount.  The late fee shouldn’t start until 60 days (some companies only pay on cycles and it just might not fit in the 30 day).  Then, make sure you include the fee on the invoice. 

So, after 60 days have something like:

CONTRACT WRITING		$1200
60 DAYS PAST DUE (1.5%)		$18
BALANCE DUE		$1218

 

CURRENT	30 DAYS	60 DAYS	90 DAYS	180 DAYS
		$1218

 

I started doing this after noticing it makes me pay may doctor co-pays sooner.  I’m not a dead beat, things just get lost in the stack or whatever.  But, if I notice a number in that 90 Days box, I think, "Oh cripe!" and go get my checkbook.

The nice thing about doing it this way is that if your client is tight on money, this may motivate him to pay you this month and someone else next month instead of the other way around once he realizes how late his is on you.

Secondly, it shows that you know they are late and that you aren’t just "getting over it."

99% of the time, when the client pays they do not pay the late fee, and I don’t make an issue of it.  The point isn’t get the fee so much as to make a point.  If a client does it more than once or twice, then I would collect the fee or stop working with them (their choice).

Last, if you do take more work from the client, keep the amounts marching across that 30,60,90 row.  So that you have 90 Days Past Due $1236 (2 late fees) and Current $400. 

CURRENT	30 DAYS	60 DAYS	90 DAYS	180 DAYS
$400			$1236

 

That way they don’t get the impression that the clock starts over because there was new work.  Otherwise, they might be thinking, "Well it’s only been 30 days" when it has been a long time on the other payment.

Getting Paid + Burning Bridges

If you don’t get paid, then you have to decide if possible future work is worth "donating" this work.  If not, then it is time to send "The Letter". 

The Letter says that the invoice is 180 days past due and will be referred for "Further Collection Efforts".  If that doesn’t work, then 10 days later send them a Notice of Pending Legal Action in which you state that you will be filing a claim in court (you can find templates for this online).  After that, you have to decide if you are bluffing or not.  If not, file a claim. 

Lawyers for big money, small claims court for little money.

In any case, remember that "bad debts" are a tax deduction, so keep not only your original invoice, but all the attempts you have made to collect the debt.  Print out all the emails, keep copies of all the letters and invoices, and write down a log of all the phone calls you make.