What You Should Say to Your Client When Their Payment Is Delinquent
Posted December 8, 2010 in Managing Clients, Productivity
Even 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.
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
- 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.
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- How to Keep a Mistake from Losing You a Client