What You Should Say to Your Client When Their Payment Is Delinquent

Clients and Delinquent PaymentEven if you have had a successful run with the most appreciative, responsible and compassionate clients in the history of freelancing, you will almost certainly eventually have a client who takes a payment to the point of Past Due. When this happens, it births a situation ripe with potential for all kinds of problems if not handled correctly. In this post, we will look at some ways to get that late payment into your hands without damaging the relationship with your client or short-changing yourself.


Preventative Measures

Before you ever run into the late payment situation, it is important to protect yourself in anticipation of the time that it does happen. This means making sure you have an agreement with your client in writing that clearly states what will happen if a payment is late. Whether it’s a contract, an email or a signature on a napkin from your lunch meeting, you should always have something in writing and signed by your client that outlines all of the steps. Get as detailed as you like.

  • Include a set amount of days that classifies a payment as late. This could mean your agreed upon grace period, or it could mean the day after the invoice due date.
  • Include consequences, such as, “Payment received after the due date will incur a 10% late fee that will be included with the late payment.” Be sure to make your consequences realistic yet formidable, in order to insure the client will do their best to avoid them.
  • Include more radical consequences for extremely late payments, such as taking your web design client’s site offline until they pay their balance if delayed past 30 days.

Whatever your situation and context, it is critical that you take all preventative measures beforehand. Everyone involved will be happier, and a clear understanding of processes in difficult situations will ease minds.

Communicate Clearly, Often and in Writing

The moment a client’s payment becomes past due, it is vital that you communicate the situation immediately to them, and that you do it in writing. A phone call does not hurt, but be sure to follow it up with a written recap via email so there is no confusion or misinterpretation between parties and you have records to review should it become necessary.

I believe in the old adage that you can catch more flies with honey than with vinegar, so I suggest refraining from any type of emotional communication and instead approaching the client with a gentle but firm and professional reminder that includes a refresher of what was agreed upon if payment is late. Be sure to ask if there is anything wrong or any specific reason that the payment has not been made on time. This will help your client feel your concern for the situation rather than for the money, and could help in future situations should they arise. It also may help you understand better if there are extenuating circumstances.

Once the initial communication has been completed, wait a few days (but no more than a week) before contacting the client again. It is a good idea to keep a constant reminder in their inbox and/or voicemail, but not to the point of escalating existing tension or frustration. Follow up with increasingly firm reminders, including due date, number of days late so far, and resulting consequences as agreed upon by both of you. Depending on your relationship with the client, you may even want to share how their late payment is negatively affecting your own financial situation and your ability to serve others, but I would only recommend this in certain situations, so use discernment in determining when and how.

Continue to follow up on a regular basis–at least once a week, but probably more like two to three times per week–until you reach a point that you believe payment may not actually be forthcoming. Usually 30 days past due is a reasonable line to draw in the sand, at which point you should strongly consider legal action, along with whatever other consequences you previously agreed upon. Still, it is not wise to start threatening your client with talk of lawyers, as that will only exacerbate the situation.

Be firm, be clear and be diligent. If you can manage to maintain your composure and treat the delinquent client with respect, you will usually benefit in the long-run as well.

Specific Things to Say or Not Say

Do say:

  • I am concerned about your payment as it is now (X) days late. As we agreed, the following will happen due to this delinquency…
  • Is there anything I can do to assist you in making this payment?
  • What can we do to speed up the payment process and keep the consequences to a minimum?

Do NOT say:

  • Had I known you were such a deadbeat, I never would have taken on your project in the first place.
  • I am going to be sure to tell everyone I know about this so they never get stuck working with you.
  • If you don’t pay by (date) I will be…
    • Taking you to court.
    • Calling my mafia friends to fit you with some nice cement shoes.
    • Bad-mouthing you on all my social networks.
    • Harassing you until you do pay.

Your Suggestions and Experiences?

These are just some of the ways I recommend for responding to this type of a situation. Perhaps you have already dealt with a client’s delinquent payment and have some of your own experiences and suggestions to share. Please leave your thoughts and tips in the comments below.

Comments

  1. says

    Great points (legal action after 30 days, though, is IMO a bit extreme); once in a while, though, it’s a good idea to make the phone call. It’s easy for clients to hide behind email, they can just hit “delete” and you will end up more frustrated because you aren’t getting any feedback. Sure, they might ignore your phone call too, but if you get a hold of them chances are you’ll be able to figure out the issue.

    I’d guess that 90% of the time there’s a communication problem or the client is just playing games with their receivables due to hard times. The other 10% is mal-intended and simply wants to take advantage of you. The nicer you are the more likely your invoice will float to the top of the pile.

    Re-attaching the invoice in your email is helpful, too, especially in emails from early on.

    Copy (CC:) yourself on all emails, so they realize you’re establishing a ‘paper trail.’ Fishing it out of your Sent folder so you can have a copy won’t convey the same message. I have a high response rate when I do this.

    If you aren’t getting response from the accounting department at the company, escalate: send the accounting contact an email and copy their boss, or their boss’s boss. However, be careful when doing this, because (and I know this from experience) when you call out an employee in front of their boss, there could be consequences for them, their career, etc. Not a very nice thing to do unless necessary.

  2. says

    Great post! I have had this happen twice. The first resolved itself as the client totally flipped out as a way to get out of paying, hoping to dissolve the relationship, insulting my work and demeanor. The check that she had already written bounced, naturally, so I had to just continue calling Chase until they could verify that the funds were in the account and I could redeposit the check. That was after having sent her two certified letters and various even-tempered emails. Good riddance to that one….

    The second is a current client. He was increasingly delinquent with every invoice, and it was getting to the point of where I would remind him twice before he would apologize for the delay and send the payment. I implemented a system of contacting him a week ahead of the due date with a friendly reminder (after having told him that I would do so, hoping to make him feel just embarrassed enough by having to be reminded).

    Sometimes I wish I could remind folks like these that I have bills to pay too, so if they can’t afford to hire a designer, I’ve heard Publisher is just the BEST program EVER.

  3. says

    Thanks Stephan. Great point about CC’ing yourself on all emails rather than fishing from the sent folder – I never thought of that. Regarding legal action: I literally have never taken it that far, but if I ever reached 30 days late on a payment without any viable explanation or reasonable communication, I would definitely go there. Of course, these are general guidelines and everything should be handled in its own specific context.

    I had a recent experience that pushed all of these boundaries and I tried everything to resolve, including emails, phone calls, etc. It didn’t end in the best way, but it truly was the exception from all my other experiences. So I guess I may be approaching this subject with the extreme in mind.

    I appreciate your input, Stephan!

  4. says

    you’re very welcome! I completely understand where you’re coming from with regard to the more extreme approach; I usually find myself writing new policies to post on my support site after having one of these “learning experiences.” Kills the whole day for me :)

  5. says

    Great tips Brian! Luckily I haven’t had too much trouble with late paying clients. I try to address all of these possible problems up front (like you said). By putting it writing on the proposal, invoice, contract, emails, etc – with also talking about it (phone/in person) to specifically point it out. Most people don’t read every little thing on the paper so it’s always better to make sure you point these important details out. If they have problems or concerns they will talk about them at that point. Doing this could also realize some possible red flags with the client. If they are honest, they will have no problem with the terms. If they are looking to do something underhanded, then they will more than likely make a fuss about the terms. I’ve heard a lot of horror stories about clients taking partially done with from one contractor then giving it to a cheaper one later and finishing it with them. Don’t let that happen to you and make sure that you are protected first.

    @ Stephan – I like your idea about CCing the invoices/emails to yourself. I will have to start doing that. Also good point about involving the boss because of the employee, you don’t really want to get anyone fired.

  6. says

    I think that this has a lot of valuable information in it for being such a short article. These are quesitons that often get overlooked by new creatives to freelance but none the less, when you are just starting out every payment is important.

    I agree with every said point except “threatening to take to court.” While I think you need to actually have the back up of an attorney when you approach a client with this and at the same time have a head on your shoulders, it is an invaluable tool when it comes to getting those accounts past 90 days. (collections or court, either one still fits reply).

    Thank you, keep up the great work!

  7. liqui.do says

    For me it was good to start calling the customer, as writing didn’t speed up paying. In person, it wasn’t comfy for them (as it wasn’t for me, having taxes or rents to be paid regularly ;) ) – even though, we had a very friendly and smiling talk. For the only customer who came late several times in a row. I cut his deadline from 1 month to 10 days and started calling even earlier. ;-) We also asked for payment politely, before starting the next “very urgent project”. Both worked fine. Still sometimes payment is delayed…

    Today for the first time I wrote a short reminder in advance – as I heard from a colleague of the customer, that invoice had gotten lost on someone’s desk… We’ll see how this turns out. (keep your fingers crossed)

    As we mostly always keep deadlines and rarely have to turn down customer’s preferred publishing dates, we can ask this value and accuracy from our customers as well. I wouldn’t dare to ask 3 days after deadline if I had gotten late a lot before.

    What also works fine is writing a reminder-email with seasonal humor. At the moment, it’s nice to ask, if Santa’s gotten late due to snow or reindeer-strike with the payment…

    And what motivated customers is a discount, if payed in the first week or 10 days. People go crazy on saving 2%, even with small invoices…

    I don’t want to embarrass my customers and I don’t take it personally, if a delay occurs. It’s not that I am the best in keeping such dates in mind. Although a friend told me, she immediately sets a timered payment via online-banking each time she receives an invoice… (I like this idea) and it could be also a nice advice for the customer…

  8. says

    thanks for sharing this useful article at the right time.
    one question, one client ask me for a demo whether i’ll do it or not. i’ve given the demo and this demo kills my 5 hours (almost) do all the work and now he says he will think about to hire me. what should i do on this case?? Any suggestion from your side??

  9. says

    @Vivek: I’m sorry to inform you that you most likely will never see a dime for your demo. I learned the hard way many years ago that there are people who will try to get a free mockup or demo or design on the premise that you MAY be hired should your work meet their approval, then once they get the work they never speak to you again. I have made that mistake a couple times in completely different contexts, only to find out that elements of my work or consultation were used in their final design and I never got any type of compensation, much less an explanation! I try to continue believing the best about people until proven otherwise, but there are definitely those who prey on the inexperienced. My advice: don’t EVER do anything for free up front. get some sort of deposit and written contract before putting your time into anything. Sorry for your situation, but you can chalk it up to a learning experience.

  10. says

    Something to keep in mind and to get info about up front is what your client’s payment schedule is. Some clients only cut checks once a week or only pay net 30 or net 45 even….so if you send an invoice that is due net 15, it’s going to look like they’re consistently paying you late. I don’t normally change my payment terms, but in some situations it’s worth it to work with the client’s schedule. You just have to be sure you have a buffer to fall back on when you have to wait longer periods for payment.

    I was also told at one point by an attorney and accountant that a 10% late fee was usury. Not sure why because credit card companies seem to charge that and more. So, check with your state laws to see what late fees are within legal limits.

    Great article!

  11. says

    Really appreciate your post, as I’ve been waiting for a large late payment from a good client of mine… I’m bald, but it still makes me want to pull out my hair!

    One thing that I will begin doing within the next month, for preventative measures, is to sign up with Quickbooks Online, with the capacity to process credit/debit card payments. This is especially helpful for repeat clients, as the secure system would already have their info, and I can charge the same card after a new project is done (with their consent, of course). This eliminates the whole, “it’s in the mail” line, and expedites the process rather nicely.

    Another thing I do, and I’ve seen elsewhere on FF, is to collect half your fees at the outset of a project, then collect the remainder after completion.

  12. says

    @Brian McDaniel: Very well said , same was the problem with me, instead of making some Demo for them, you can always show some samples of your work done previously.

  13. says

    Really appreciate your post, as I’ve been waiting for a large late payment from a good client of mine… I’m bald, but it still makes me want to pull out my hair!

    One thing that I will begin doing within the next month, for preventative measures, is to sign up with Quickbooks Online, with the capacity to process credit/debit card payments. This is especially helpful for repeat clients, as the secure system would already have their info, and I can charge the same card after a new project is done (with their consent, of course). This eliminates the whole, “it’s in the mail” line, and expedites the process rather nicely.

    Another thing I do, and I’ve seen elsewhere on FF, is to collect half the fees at the outset of a project, then collect the remainder after completion.

  14. says

    Luckily I have not had the problem of late payment. However a good tip is, lets say you charge a late fee after 30 days, send an email on the 23rd day and tell your client that in a weeks time a late fee will be applied.

    This way they have time to issue your payment in the event that they forgotten or got to busy with their affairs.

  15. says

    For some reason, about half of my clients did not pay their invoices by the due date. I work on retainer for the most part, so that meant half of my income didn’t show up that month. I fretted until there was nothing to do but pick up the phone and call them one at a time to ask why I hadn’t been paid.

    Each one of them apologized profusely and most of them paid their October and November invoices together. Having those conversations was so much easier than I expected it to be, plus, I finally got to pay my bills.

  16. says

    It seems so easy for those who work virtually to be the one’s left holding the bag open waiting on payment.

    I usually invoice on the 1st of the month. I have one client that pays 15 days on invoice and is generally on time. One time he was late because he had gone on vacation and realized while away that the 15th day fell when he was in the midst of his trip.

    The other has only just begun – first invoice out – Late! I’ve sent a couple of reminders and get an apology each time with a “I’ll issue payment asap”

    I’m thinking our definitions of asap are completely different.

    I have cc’d myself on all communications – I learned to do that when invoicing a long time ago.

    Next step will be to issue an invoice through Paypal with a little – “I thought this might be helpful to expedite the process making it easy for you to make a couple of clicks and get me out of your hair” style email.

    I’m obsessively organized and cannot imagine owing someone money – especially during the holiday season when things are a little stressful to begin with – I was always one to pay immediately on invoice just because I know how it feels to wait.

    Great post! I happened to see a Retweet of it and though what perfect timing that is!

  17. Holly says

    Any thoughts on hiring a collection agency after a certain point of not being paid? I know you say in your article, do not threaten to start harassing if they don’t pay by a certain date, but is it ok to warn that if you don’t receive payment by a certain date you will turn their account over to a collection agency on that date (especially if they are several months late)?

  18. says

    It happened to me with one of my established clients. Actually he donated a site to a non-profit and kind of warned me there will be some financial delays.

    After three months, with the site almost done and no down-payment, I told him I will stop working on the other projects. I received the payment immediately.
    I never start working without a deposit, but I’ve made that exception as I trusted the client.

    Like in this post advice, I tried to follow up and and be respectful but firm.

  19. says

    @Holly: A collection agency sounds like a good idea, but I cannot comment on it since I’ve never had to use one. Just to be clear, when I said to not threaten the client with certain things I was primarily giving examples to explain that threatening in certain ways can damage the communication process and possibly drive the client even further away. It’s still very important to stand firm and be diligent in the pursuit of payment you are rightfully owed. I just don’t believe threatening a client with certain things will benefit the process.

  20. says

    These are some great tips. We are lucky to have not encountered any problems with late payments, but we definitely take measures to protect ourselves. We include a clause in our contract that adds a late fee to payments that are past due, and we also never deliver any website files until the final payment is made. We like to be very clear in our contracts so that our clients know exactly what to expect when working with us. I would definitely recommend going over your contracts and making sure that everything regarding payments, ownership and deliverables at each stage of your process (from initial design conception to final coding and implementation) is easy to understand from the client’s perspective.

    And of course, threatening clients into paying is never a good idea because it is an unpleasant experience for both parties. But, this is why it should be included in the contract that ownership of all work done by you will not be transferred until final payment is made. That way, you don’t have to worry about the client infringing on your rights and using your work without compensating you fully.

  21. says

    I always bill with a two week due date. In my opinion, if the company I am doing work for can pay their employees every two weeks, they can do the same for me. I also stipulate that the files files are not delivered or made live on the server before receiving final payment. Seems to make clients pay faster.

  22. TLC says

    Had a client whose work was almost finished — a florist, single, with a small shop. Right when the work wrapped up, he broke his glasses, his laptop fried, and he had to have foot surgery. I had the resources to wait it out, and we settled the account 3 months later. He is still a friend and client.

    If you can afford it, be patient when clients CAN’T pay, as in this case, because you’d want the same consideration too. If they WON’T pay, then take down their Web site, hold on to your original files, and don’t give them anything — it’s your property until they pay for it. And check out small claims court — it can get the message across. If they’re served a summons at work during an important meeting (if you can arrange it) this will get the message across.

  23. says

    I think the best way to prevent late payments of clients is to have a website broker especially if you are into buying and selling websites. For me, having a broker means on time payments and everyone is happy with that. Buying and selling websites is really a good way to make money. I recommend a site where you can post your designs and templates for free with the assurance of best clients and buyers. Check it out. The name of the site is Bidstornado. Thanks.

  24. Tabish says

    I run a freelance marketing & web development company. Recently completed a 38 page web design which took a month due too several change requests. I made the website exactly as they wanted the mock-up and when I walked into there office the person in charge goes off on me within a few minutes “we should have this website for free” then he invited me to take him to court, which I am doing.

  25. says

    Who on Earth would say anything in the “Do NOT say” list? Ever?
    You do it once, you’re going to do it twice. Sooner or later you’re going to do that with clients that love and pay you in advance.

  26. says

    @Vivek Parmar: a 5-hour demo is too much, but don’t worry you’ve got your lesson and other might say hi to karma. Sometimes, things like this happen especially if you are desperate to make it happen. Not all things are meant for you, just wait for the better ones.

    Another great post Brian. Very helpful and informative. I think traditional means always apply to deal with delinquent clients.

  27. says

    Oh the joys of our profession!
    Yip getting clients to pay can sometimes be a real pain the in the butt.

    One thing that has helped us is we started using FreshBooks for our billing and given their automatic reminders etc. we saw a drop in the length of time it took for clients to make payments.

    However there are still those few who tend to frustrate all the goodness out of us.
    It comes with the territory I suppose.

    Nice post :)

  28. says

    Good article! From my own experience dealing with clients that have run a little late on their payments, I’ve found that using a net 15 due date instead of net 30 on my projects has for the most part eliminated troubles with collecting on what I’m owed. From what I can tell, giving the client a shorter amount of time to make payment(s) on a project may keep that higher on their list of things to do. Who wants – or should – wait 30+ days to receive payment on a project anyway?

    Also, if you’re not already doing it already, collect a project deposit before any work begins. Not only is it a great indicator of a client that intends to pay you for your work, it also gives you something to work with between payments.

  29. says

    Great read and these are things we all know we should be doing but sometimes don’t.

    I’m fortunate to have an accountant and collections on retainer. But even with this being done for me, sometimes my client says they didn’t get an invoice or they’ve sent out payment and didn’t. Luckily it gets sorted out.

    Unfortunately I had a client for over 10 years that was alllowed net 60 because of how their payments came in. So about 3 years ago they just stopped paying. We knew the client was having medical problems so we continued to do their work and set up a different payment schedule to help catch them up. Then we had to do it again. Finally we decided to just stop the work after being over $25,000 in arrears. The reason we kept going is because we had heard the company was being bought out. After hanging in there for longer than we should have, there was no buy-out.

    Eventually our client offered us their company and this is a high-profile client too. We spoke with our attorney who advised against it due to legal ramifications from other contractors who were not being paid.

    My point to this story is that sometimes sueing a business isn’t as easy as it appears; with or without a lawyer. We aren’t able to sue this corporation because they don’t have any capital or assets for us to get paid from. And the owners are protected by the corporation so we can’t legally sue them.

    So when you go past 3 months for a client who has been paying for over 10 years, I suggest finding out if it’s really worth continuing. I look back and realize what a huge mistake and the only mistake I feel I’ve ever made.

  30. says

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  31. says

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  32. JK says

    Help! I think I have the worst scenario except maybe the person whose site was lifted! My freelance work is in addition to my full-time job so I don’t depend on it to live (I eventually hope to switch to full-time freelancing) but one client, a one-person start-up magazine, still owes me $2k for work done over a year ago! As it was a start-up dependent on ad revenue, I got paid a bit late for the first issue, but the money did come in, so I had no reason to expect I wouldn’t get paid for the second issue (which is what I am waiting on now for work I did in Summer and Fall ’11. This entrepreneur bit off more than she can chew and owes a bunch of people a couple hundred here or there, but as editor of this project, I was the biggest invoice. I’ve been getting dribs and drabs from her – a couple hundred every few months- but nothing lately, and I want it resolved. I’ve sent several firm communications but not have mentioned legal. How can you get money from someone who claims they don’t have it, which might well be true ? Thank you!!

  33. says

    I’m working as a third party web designer for a company and finished a project for one of their clients. Every time I ask for the final payment they always told me that their client has not paid them yet. What should I do or say next time I ask for their payments?

  34. shery says

    @Tabash – sorry, but I have to say it: if you don’t know the grammatical difference between “their” and “there” and “to” and “too” and you are in the communication and design business, it’s no wonder you are going to have issues with your clients.

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  1. [...] Que vous syez une agence, un studio ou un indépendant / freelance, il est évident que vous avez déjà rencontré un client qui ne vous paie pas, lorsuqe cela se produit pour espèrer voir votre argent il faut alors trouver les bons mots pour optenir un réglement de la part de votre client, cela sans endommager la relation avec votre client. Lire l’article original [...]

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