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Michelle Nickolaisen

Dealing with nonpayment is one of the most stressful parts of being a freelancer; the feeling of helplessness, the worry about money coming in. If you find yourself in a situation with a non-paying client, there are things you can do.

 

 

Introduction

It’s every freelancer’s worst nightmare: You’ve worked hard to bring your A-game on this client project and then, billing time arrives…but the payment doesn’t come. What do you do next?

The best way to handle this when it happens? Create a to-do list for managing the money you’re owed. Here’s his system for getting paid on time:

 

Step One: Make sure your invoice clearly states when it is due.

If you have no agreement, it’s standard to make the invoice “Net 30,” which means 30 days after it is sent (not received, sent). If you have an agreement (and you should always have an agreement!), then it should say when the bills are due in the agreement — we recommend Net 7 or “payment on delivery” for freelancers. For ongoing work where there is no agreement, payment should be “on delivery,” so you can expect to be paid immediately.

 

Step Two: If the invoice isn’t paid upon the due date (whether that’s Net 30 or upon receipt), make a call to the client the next day, reminding them to pay the invoice.

Leave a message or talk to someone. During the call, set a date for payment. Figure out who is responsible for getting the invoice paid. Do not make your payment contingent on someone else paying them or some other outside factor. If the client won’t commit or gives you excuses, be polite but firm.

 

Step Three: Immediately after the call, write a short email confirming the date that was set for payment (“you will remit payment by _______”), or recapping the dispute (“you claim that you can’t make payment because X”).

If they levy a charge at you, deny it. Do not concede any mistakes in the project in writing. Your email should be very short. It should conclude by saying “if you disagree with anything in this email, please tell me.”

 

Step Four: About 5 days before the payment is due, call again to remind the client that payment is due and confirm that the payment is being processed.

Don’t worry about being a nuisance.

 

Step Five: If payment isn’t received by the date set or the client makes it clear they won’t pay, then send a formal demand letter by U.S. mail, preferably certified.

There are payment demand letters online — here’s an example.

 

Step Six: If no payment is forthcoming after the demand letter is sent, then you need to bring out the big guns.

Companies like Indepayment are one option — we have professionals who try to collect, as well as debt collectors and lawyers we work with if the client is being exceptionally difficult. Indepayment does no cost lawsuits, so you won’t have to pay any costs of the lawsuit.

If you don’t want to use a service like Indepayment, another option is to find a lawyer or engage a debt collector directly. The lawyers who do this type of work are called “commercial collection” lawyers. Jump on Google and search for one in your area. You can also bring a claim in the small claims court yourself.

  

Conclusion

Getting paid on time is part of being a business, and having a system to follow if a client doesn’t pay makes it easier to keep your cool in that situation. Most of the time, once it’s apparent you won’t take no for an answer, clients will do their due diligence and pay up — so make sure you know your steps ahead of time!

 

Resources:

 

This article was originally contributed by Jesse Strauss, who is a lawyer based in New York City. He runs Indepayment, a service to help freelancers reclaim outstanding debts from their clients.