It’s one of the toughest parts of running a business – getting clients to pay their invoices on time. There are fewer things more frustrating than doing a job for a client, who until that point has been nothing but friendly and accomodating, only to find they are diabolically slow at paying their bill. While there can be good reasons – there are times when everyone’s cashflow is impacted by some factor outside their control – some clients are just bad payers. So, what can you do about them?
Before starting a job or taking on a new client, ask about how they process payments and your invoicing terms.
When I first started freelancing, I took on a client who had, what I discovered, was the worst payment system imaginable. I won’t go into details but it was basically impossible to get paid any faster than about 75 days after invoicing. From that day, I made a point of asking about how payments are processed with every client.
It’s also worth knowing if the client runs their payments process on a schedule. One client I work with processes payments on all but the last Friday of each month – they do their month-end processing on the last Friday. Knowing that means I know to set my expected payment date to not be that day.
I also talk to the client abut what I expect. In general, I set payments at 14 days from the date of invoicing although I do extend 30 day terms in some cases.
And, of course, ensure the due date is clearly marked on the invoice.
For larger jobs, or ones that are likely to take a longer period, it can be worth discussing and negotiating a phased payment plan. For example, I did a large magazine production job recently and negotiated for a 25% deposit before starting the work, 50% payment at the end of the main deliverable and the balance once all the loose ends were sorted out. We had a project plan and schedule where the payments were clearly noted so there was no chance of anyone saying an unexpected payment was due.
The other advantage of this approach is that if the project is deferred, the client pulls out or there’s some unforeseen situation then you won’t have spent lots of time without any reward.
Avoid doing freebies
The amount you can charge a client for a job is a function of several factors. And one of those factors is how much you value your work.
You may feel that you’re being a nice person, offering up some free services, in the hope of garnering more work, but it’s important to charge appropriately for your time and skill.
Follow up late payers
Sometimes, people make mistakes and invoices are missed or lost. If a payment is overdue, follow up with an email or phone call. In my experience, a phone call is the best way (unless a face to face discussion is possible) as email can be easily ignored. One of my clients, who is extremely diligent at paying invoices on time, recently missed a payment. It turns out the invoice was simply missed during a staffing change. A quick call resolved the issue in minutes.
If you use a cloud-based accounts system to send invoices automatically, you may find your invoices land in the junk folder at your clients’ end depending on how their email gateways scan and categorise spam.
Be prepared to escalate
There are times when a client is recalcitrant. In one case, a few years ago, I travelled overseas and wrote a series of stories that were to be published over three issues of a magazine. Unfortunately, between the second and third stories I wrote, the publication hit financial difficulty and stopped paying.
The editor was stuck between a rock and a hard place as he wanted me and other contributors to be paid but couldn’t direct the accounts team to make the payment.
After nine months of calls and emails, I finally got through to the right person in the accounts department. In parallel, I contacted my union representative and they wrote a letter to the contact, letting them know that debt recovery operations would be undertaken if the invoice wasn’t paid.
Once the firm message reached the right person, I was paid within a couple of days.
What are your tips for being paid on time?