I recently worked with a freelancer who did not pay the invoice I sent. It’s now been more than 60 days. After several emails and some gentle shaming on social media, I received an email promising that the check would be sent soon.
This is not an isolated incident. For the last year, I’ve had to deal with a number of freelancers and businesses who have been months late in paying their invoices to me. And I’ve heard from a few of my entrepreneurial friends that this also happens frequently with them.
My boyfriend had a client a couple years ago that didn’t pay an invoice and it almost bankrupted his company. He had to borrow money from family and friends in order to pay his employees. In the end, the client never paid.
As remote workers, many of us are freelancers or sole proprietors that work for a number of different clients. Yes, we have the freedom to work where and when we want. But we are also in an very vulnerable position when our invoices are paid late – or not at all. Going after the money can be a time consuming and expensive process… sometimes not worth the effort depending on the amount of the invoice.
There are many ways to break trust in a professional relationship. Not paying an invoice might be one of the most severe and lasting ways of doing that.
Some say that this is the price of freedom, but to me, it’s simply unethical.
So what can we do? When I asked my network for help, here were the suggestions:
- To start, put the agreements in writing so the terms and conditions are clearly understood by both sides. Then, when a payment is (over)due, you’re just marching to the orders of the agreement
- Get a retainer, an advance or get paid biweekly, so it doesn’t get out of hand
- Draw up a payment plan
- “Harass” the client when they don’t pay: call daily
- Publicly expose/shame the client via social media
- There are a lot of self-help resources for small claims court (in the US). The first step is sending a form letter requesting payment through certified mail. Be sure to let the client know that they are liable for all court fees, your fees, interest on amount owed. If it gets to the point of having to go to small claims court they will set up a payment plan. In my previous experience, people who won’t pay you still won’t pay you when you get a payment plan. They will just make you wait around months, if not years longer.
- Don’t be afraid to ‘outsource’ late invoices. Let a specialized company deal with the legal hassle. Have your contracts stipulate that these additional costs are paid by the client. This is something you have to agree upon up front, of course.
- Pay Me… Or Else! Free ebook “how to avoid and deal with clients who don’t pay”
Are you a freelancer or sole proprietor and been faced with this situation? What did you do?
Hi Lisette!
Few weeks ago I was wondering the same questions and I’m studying different options.
I got friends working on an independent escrow service which apparently we can set milestone and the money is release once the milestone is completed. I don’t how it will work but it looks promising because both parties can be protected.
Have you ever considered once of these escrow services?
Elance.com operates very similarly (with an escrow service)… and I love the idea. I didn’t realize there were independent escrow services available for freelance workers. I think it’s brilliant and will definitely use it in the future.
If you have any you can recommend, please let me know!
With StarterSquad we operate with a strict up front payment policy. The freelance industry, like the restaurant business is quite unique in its trust of clients. If misplaced, good clients pay the costs of the bad. I find this unacceptable.
The supermarket model is safe and fair and does not have these problems.
Interesting! Have you ever lost a client because of the up front payment policy?