It’s a freelancer’s worst nightmare: a client who refuses to pay.
You’ve put in the hours, you have your own bills to pay, and you’re suddenly out of pocket. It’s stressful and a lot of freelancers have been there.
Sometimes it’s a client trying their luck to see if they can get away with not making the final payment on a project. They don’t pay, and then they stop communicating when you chase them.
Or they might invent a reason not to pay, or say they’re dissatisfied with the standard of work.
In other cases, the client feels they have a genuine reason not to pay. Their beef with the freelancer might be that the project has been delivered later than agreed, or doesn’t have the requested features.
Picture credit – Jonas Leupe on Unsplash
If you’re dealing with a client who hasn’t paid and won’t communicate with you about why they haven’t paid, there’s a simple approach that proves effective in most cases. It’s essentially Credit Control 101 – except most of us haven’t worked as a credit controller, so we don’t know this stuff.
Credit Control 101
Step one – Send a reminder
The important thing here is the tone of voice of your email. You’re not saying, “Hi, is it ok if I get paid now?” You want your email to be more forceful than that. “This is now overdue. Please make payment within 14 days.” If you’d like to see the email scripts I recommend using, please get in touch.
Step two – Debt recovery and add interest
The next email you send should be slightly more aggressive, threatening to start debt recovery proceedings. You also attach an invoice with interest added, and let them know that the longer they don’t pay, the more they’ll owe you. And you give them another 14 days to respond.
Step three – Letter before action
If 14 days pass without payment, that’s when you issue a Letter Before Action. This is a letter that says if they don’t pay within X days, you will begin legal proceedings to recover the debt.
Most clients will pay at some point during this process.
But what if they don’t pay, or if they say they’re not paying you because they don’t feel you’ve delivered what was agreed?
If you have delivered what was agreed, then the first step is to stand your ground. Just like with the credit control process, you need to get business-like and straight to the point. Send a simple email stating what was agreed and what you delivered, ideally with your contract or terms and conditions attached.
Then send regular follow-up emails to remind them of what they owe you. Some clients will pay at this point – they were hoping you would roll over, but when it comes down to it they’re not keen to fight.
Some clients will dig their heels in. This is where having insurance can make a huge difference, especially if you’re reliant on your income for rent or mortgage payments, bills and food.
It’s common for people to be unsure of how insurance protects you in this situation, so let’s look at a recent claim.
A client refused to pay the freelancer’s invoice because he felt the product lacked the features he’d asked for. In fact, there’d been a lot of scope creep on the project, which is why the freelancer and the client weren’t on the same page. Because the client’s refusal to pay was accompanied by a threat of legal action, the insurer paid the freelancer’s unpaid invoice, which totalled £9,000. The legal fees reached £20,000+ because there was a lot of negotiation involved with the client. The client in this case was a bit of a bully. The freelancer could relax about the legal fees, as the insurer paid them.
But that freelancer would’ve been hugely out of pocket without the backup of their insurance.
Even when you pride yourself on doing a great job for every client, disputes can still arise. Before I started With Jack I worked as a freelance photographer, so I’ve been in this situation myself. It can easily happen that you’ve put in the work, but the client is still unhappy.
Good communication from the very start of a project can help prevent payment disputes, but most freelancers have a story to tell about the time they didn’t get paid. If your business is insured, it’s more likely to be a story about the time you nearly didn’t get paid.
Even if you don’t actually need to use your insurance, simply having it there in the background can give you the confidence to stand up to a client who’s trying to get out of paying you.
If you’re already a With Jack customer, remember to lean on us if you need to. You don’t have to handle payment disputes alone.
