Struggling with Late Payments? Stop Blaming Your Clients
Updated: October 27, 2015
Have you ever been stiffed by a client? You convinced them to hire you, everyone was eager to get stared, and everything seemed to be going great. You finished the work on time and sent the last (or only) invoice for the project. Then you waited, and waited, and waited… nothing.
The client either paid you late or never paid you at all.
The law is not the answer
Freelancers Union, an online community of over 300,000 freelancers, recently conducted surveys which indicated that over 77% of freelancers struggle with late or non-paying clients and lose an average of $6,000 per year.
They seem to think that the solution is political advocacy for new laws to protect freelancers from situations like this. In other words, it’s the clients fault for not paying and legal protection is the solution.
I don’t see it this way. Freelancers are each their own business and it’s not the government’s job to put laws in place to protect them more than any other business. Freelancers have a right to create the rules they operate under (such as when and how to request payments) and it’s their job to ensure they get paid for their work just like any other business.
Contracts are not the answer
I used to think that contracts were the answer. I downloaded some templates from the internet, customized them to fit my business, and forced my clients to sign a single document before starting the project. This makeshift contract contained lots of pseudo-legal jargon I thought would protect me from late or non-paying clients.
But even if you have a signed contract in place, we all know that tracking down a late or non-paying client is costly, time-intensive, and incredibly frustrating. You’ll often lose more money tracking down the missing payment than it was worth to begin with. Most freelancers can’t afford to pursue legal action and are left unpaid.
Collecting payment upfront is the answer
Here are the titles of the top non-payment stories on the Freelancers Union blog:
- “This freelancer waited months to get paid…”
- “She waited 120 days to get paid…”
- “You won’t believe how long this freelancer waited…”
- “This freelancer settled for half of what they were owed…”
Can you see what they all have in common? Asking for payment after the work was already completed. I’m here to tell you that if you’re struggling with collecting payments from clients, it’s your own fault.
If you want to make sure you always get paid, collect payment upfront.
When you do this, the money becomes the contract. Some freelancers won’t even put a client on their calendar until a payment has cleared their bank first. Then, instead of delivering a contract, you can present your client with a proposal which focuses on setting the right expectations instead of on legal jargon to make sure you get paid.
I shortened my proposals by a full 3 pages after removing all the cumbersome terms and conditions. More importantly, I removed a huge barrier between myself and prospective clients, making it easier to close the deal.
When you collect payment upfront, you no longer have to worry about:
- The number of revisions
- Getting paid on time
- Getting paid at all
- Legal contracts
- Project abandonment
Overcoming client objections
Upfront payment might sound like a dream come true for freelancers, but why would clients ever agree to this? It might seem like a huge risk for them, but it actually establishes trust in the best way possible.
I tell my clients that I require upfront payment in order to schedule the project into my calendar. That way, everyone is committed. I know that the client has the money and isn’t going to walk away halfway through the project. Likewise, they know that time for their project is completely reserved in my calendar.
If your prospective client is still skeptical, you can offer them testimonials from past clients, your work history, portfolio, or experience, and a mutually-signed proposal. This is usually enough to comfortably collect upfront payment.
Some freelancers like to ask for 100% payment upfront, but that may not work for every project or client. To normalize how you invoice your clients, you might consider using a payment structure like this:
- $0 – $5,000 = 1 payment (100%)
- $5,000 – $10,000 = 2 payments (50% + 50%)
- $10,000 – $20,000 = 3 payments (50% + 25% + 25%)
When a client isn’t comfortable providing full payment upfront, it’s ok to divide the total cost into multiple installments. The important thing is that you always receive payment before starting the next part of the project.
It’s also wise to connect each payment to a date on the calendar instead of a deliverable. That way, there is no room for lengthy revision cycles before payment is made and even if a client decides to cancel the project, you aren’t missing out on any income (although you may have a gap to fill in your calendar).
So, freelancers, stop blaming your clients and start controlling when you get paid. It’s as simple as asking for payment upfront.
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