Great article, Lois! One way to prevent this from happening is to package your services and sell the packages like products, which means that payment is in advance. This has worked very well for me. But the main thing is really clear communications and clear, agreed upon requirements on both sides (what you’re paid and when you’re paid is a big part of that).
What To Do To Avoid Getting Ripped Off?
Posted June 23, 2008 in Business
There was a time when a handshake was a man’s bond. It was his signature of agreement to do the job or have the job done. There was no other commitment as strong nor as binding as a man’s word and a handshake on a deal.
But that was in the land before Internet and surfing the web and the fast paced business world all of us are trying to exist in. My problem is I grew up in the land of handshakes. Some days, you can go broke remembering the land of trust.
Most of us are honest, hardworking individuals just trying to put food on the table every week for our families. We don’t cheat on our taxes, and we put as much as we can in the Sunday offering plate.
But what happens when you take a job in good faith and get stiffed for the cash?
What recourse do you have and what steps can you take to avoid having it happen again?
I did some checking and came up with these suggestions for all of us.
What To Do When A Customer Is Slow To Pay Or Doesn’t Pay At All.
Find out if there is a problem. If there is, fix it. Here are some tips:
- Always send a formal invoice with a description of the work, the business being charged for the work and remittance information so they know exactly when and how to pay you. Don’t leave this to guesswork.
- Send a gentle reminder after 7-10 days. It may be a simple oversight. This happens in small offices quite a bit and truly is not intentional.
- If a second reminder is necessary, maintain diplomacy but state firmly the date of the work, the agreed amount to be paid, dates of contact and a definite timeframe that they need to remit the amount owed to you by. This is usually 15-30 days, depending on your location. Please remember the US Postal Service is not always the fastest way to send correspondence, but it is traceable if you pay a small fee.
If you have practiced patience and have still not received payment at this time, you have some choices to make.
- Take them to court. Small claims court has a cap of $3500 in the USA I believe. Please check as this amount may have changed since I used it last. It’s been awhile.
- File a grievance with the Better Business Bureau. This will probably not get your money any faster but goes a long way toward making sure the wayward client doesn’t rip off anyone else. The BBB operates in the USA as well as Canada. Anytime you feel a company is ripping you off, dealing in a fraudulent manner or taking advantage of a situation, contact the BBB for advice.
- Depending on the amount of money involved, you may decide it just isn’t worth the hassle and the aggravation.
What Do You Do To Avoid Getting Ripped Off?
Get it in writing!!!!
Before you ever start the job, detail exactly what you are going to do, the way you will be doing it and how you expect to be paid. Then get the client to read and approve it and then sign it and date it. This way, if you have to go to court later, you have proof you were hired and what the terms of the agreement were.
Require a retainer
I now require all new clients to pay a retainer equal to two shop hours per job. Once the retainer is paid, I can start work. This is then applied against the balance owed and the remainder is paid upon completion of the work.
Once a client has established themselves as trustworthy, I will waive the fees. For me, this takes three or four projects. If the client does not deal in an open and honest manner, the retainer is non-refundable and my time is not a total loss.
Deal With Your Clients The Same Way You Want Them To Treat You
Don’t expect to get paid if you’re busy trying to figure out how to rip them off for a little more. Most business people today are pretty savvy and they don’t take kindly to unethical business practices.
Communication Is Absolutely Key
Ignoring customer’s requests, not returning phone calls and emails, being openly rude will not get the prize you are looking for. And it may get you a whole lot of something you don’t want. Listen to what the customer wants then give it to them. I may not always agree with the choice a customer makes of the proofs I give them, but if they are happy you can bet I am. I know if they are happy, I stand a much better chance of getting paid.
Don’t ignore the red flags that go off in your head when something is not completely okay. Intuition can save you enormous amounts of stress.
Use Watermarks On Your Proofs
Most design programs like Adobe CS2 have watermarks available for your proofs. Use them. This debilitates anyone from using the proof and not paying you for the work you do. Microsoft Office also offers a watermark to use on word documents. Here’s how to create a watermark in Word.
- Go to Format>Background>Printed Watermark then select Insert
- Select any options such as Scale or Washout and click Apply.
- To View your document with the watermark, use the print layout view
The Bottom Line Is To Protect You
You have a vested interest in earning a decent living; your family. 99% of business people are just as honest and hardworking as you are, but it’s the 1% that makes the rest of us look bad.
They openly don’t pay for work they hire to be done, or delay it to the point of bankruptcy on the recipient’s part (you). All of us have had good customers run up on hard times unexpectedly and we have cut them some slack by giving a discount or just writing the bill off as paid.
I’m not talking about them at all other than to say take care of them. But the ones you are just getting acquainted with or the total stranger needs to be handled with caution. If you have had to take similar measures in your business practices share them with us. By discussing what works and what didn’t we all become stronger! :)
About the author: Lois Knight has been a freelance writer and graphic designer for the last two years. She designs predominantly for small start up companies and non profits in need of design services that could not afford them otherwise.
She has a background as an entrepreneur for over twenty years and has dedicated herself to educating people interested in graphics as a career. She also wrote an ebook titled: I’m Tired of Being Broke A Freelancer’s Guide to Working at Home
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June 23rd, 2008 at 2:42 pm
June 23rd, 2008 at 3:15 pm
Lois, a while ago I wrote an article here at FF on turning your process into a sales and branding tool, which you can use as a stepping stone to creating service package.
I have found that most of my clients are receptive to the idea because they know exactly what they’re getting and how much it costs up front. That also saves me time in that I almost never deal with unqualified prospects.
I also do custom projects that don’t fit into the packages I offer. But when this happens enough, I’ll turn it into a package. For some of these, the fees are higher than most small businesses are comfortable paying in advance, so then we do a typical 50% down and 50% upon completion.
I do not believe any freelancer should ever do work without getting paid at least a deposit up front, otherwise you’re just asking to get ripped off. If someone isn’t willing to put any money down at all, they aren’t serious (or they’re not ethical) and you don’t need to deal with them.
rubenJune 23rd, 2008 at 3:16 pm
Like you wrote an answer to my previous comment on the ugly dug article :-P
I will use these tips for the next client.
Thanks for the great advice
June 23rd, 2008 at 4:16 pm
Very nice article! I use quite a few of these tips myself!
June 23rd, 2008 at 7:11 pm
Great advice, Lois! I like the idea of putting a watermark on comp designs. Do you have any suggestions for once you’ve developed a site, though? I put all designs and in-progress web site development on my server, but there’s nothing from stopping someone from using the “save / complete web page” option (some work for them to re-structure files, but still, they can easily grab what they need if they are that determined…)
I always start off with a contract and detailed invoice, as well as requiring 50% deposit up front, and final balance is due before transfer of file to the client. In cases where a good chunk of the work must be done directly on the client’s server, I either go on a 50% deposit, 25% when it’s time to start work on their server and 25% upon completion – or if all work must be done on the client’s server, then I require full payment in advance.
It’s unfortunate that you have to be a stickler for the rules sometimes, but it’s absolutely necessary to ensure that you don’t get stuck with the raw end of the deal. I’ve seen this happen to so many people – by getting a contract and deposit, etc. you tend to weed out those clients who might not quite be on the up-and-up.
June 24th, 2008 at 10:30 am
Thanks Lois for the ideas. I’m a web developer *and* video producer. I’ve recently started asking for deposits – 10% of the value of web projects to get rolling. One of my colleagues sets milestones for payment – when X is finished, an additional 20% is payable etc..
However, I don’t do that – I really like the “big chunk-o-cash” at the end (in theory, anyway). I’m toying with the idea that when I’m finished and the final upload of the site has arrived, then payment is due, before the upload. That might work out.
In the video world, you get paid when you deliver the product, which is where I got the idea.
I think one of the issues businesses have is that they expect net 30,60,90 or even 120 – but for the small freelancer that can be a very serious problem.
Jorge Diaz TambleyAugust 2nd, 2008 at 10:21 pm
Great article, I’m a systems developer and one of my customers is ‘Pay Hard 4′… by now I decided not to do any more work with them, your article helped me see the importance of good communication
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