Freelance Issues: Dealing With Deadbeat Clients
“Take chances. When rowing forward, the boat may rock.” -Chinese Proverb
If most freelancers were honest, they would tell you that they got into this game without much of an idea about how to run, grow, or market a business.
No business can survive without revenue, and getting clients to pay (on time and in full) is one of the hardest elements of self-employment. You are just you, but you are also a business. Freelancers deserve no less respect than giant companies. Unfortunately, there are lots of skeezy clients out there who will try to convince you otherwise.
According to a December 2010 poll of 1,600+ independent professionals by Freelance Switch, a whopping 48.8 percent of freelancers have had a client refuse to pay, and never recovered a penny. Thirty-three percent eventually managed to get their money, and 18 percent are still waiting.
Deadbeat clients are a reality of freelancing, and it’s ESSENTIAL that you have a plan for dealing with them. Under no circumstances should you surrender payment just because you don’t want to rock the boat (see kick-ass Chinese proverb above).
Basic Strategies For Dealing With Deadbeat Clients
1. Use A Freaking Contract
Never, never, NEVER start a project without a contract. These documents are your first and sometimes only line of defense against a deadbeat client. A contract can never be too detailed, especially when it comes to payment rate and terms. Make sure it states due dates for payment explicitly. If it’s an ongoing project, make sure it includes details about how long the client has to pay after an invoice is issued, and how you will handle it if payments are late. When dealing with a brand new client, it may also be advisable to require a certain percentage to be paid upfront.
Cohere Perk! Local Attorney Kevin Houchin now holds a FREE open office hour in the Cohere conference room twice a month so members can come in and get business/legal advice at no charge. Kevin can review your contracts, help you learn better negotiation skills and more.
1st Tuesday of the month at 9:30am
3rd Wednesday of the month at 2:00pm
Always deliver work on time. This leaves no room for excuses when it comes time to get paid. Issue invoices within three days of finishing a project, or on the same day of the month for ongoing work. If you’ve got a Net 15 in your contract, make sure you have a system in place to notify the client of their delinquency on the morning of day 16.
3. Cease and Desist
Don’t keep working for free. If a project has an outstanding invoice and the client keeps piling on more work, refuse (politely) and be frank about the reason. If the client appreciates your work, they’ll pay to keep you. If they don’t, do you really want to keep them as a client? Also, know that in some cases, it is permissible to repossess work for which the client has not paid.
4. Drop The “L” Word
Every freelancer should have someone they can turn to for solid legal advice. In most cases, the mere mention of involving a lawyer will scare deadbeat clients into quick payment. But don’t issue empty threats. If they continue to resist, commission a lawyer to write an official letter citing “breach of contract” and any other terrifying legal jargon they find appropriate. Lawyers will usually do this for a percentage of the recovered funds, and if you’re owed more than a couple hundred dollars, it’s usually worth it.
- Know your rights, and take steps to protect yourself by using a solid contract.
- Keep it professional, but don’t be a pushover. Clients are clients, even when they’re friends.
- Don’t wait too long to take action. If you don’t stay on top of payments, who will?
- If you’re unsure, ask for help sooner rather than later.
Have you ever had a deadbeat client? How did you deal with it? Share your experience in a comment!
Image Credit: Flickr – steven depolo
This entry was posted on Monday, July 25th, 2011 at 8:36 am and is filed under Advice/Tips, Coworking, entrepreneurship. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.