Running your own business gives you a measure of freedom. You can set your own hours, control your income, and when you need to take time off you don?t have to consult with an employer. But while there are certainly positive aspects of being your own boss, you also have to deal with other issues ? deadbeat clients who refuse to pay.
Regardless of how well you manage your business, you may deal with a non-paying client from time to time. Not only do you lose money, but also time. And depending on the size of the amount due, a non-paying client can set you back financially.
This is frustrating to say the least, but there are ways to reduce your chances of getting stiffed on a job.
1. Choose your clients carefully.?
Understandably, you may be desperate for work. But if you accept any and all clients, you may set yourself up for disappointment. Get to know potential clients before you take on new assignments. A brief five-minute or 10-minute conversation about the project can help you decide whether the project is worth your time, and it?s usually enough time to gauge whether you feel comfortable working with the client, and whether you think he or she is among the clients who refuse to pay. Don?t be afraid to request references from potential clients, and always follow your instinct. If you have a bad feeling about a particular person, think long and hard before taking them on as a client.
2. Get payment in advance.?
If this is a client?s first time working with a freelancer, or if you learn that a client has a history of paying invoices late, request advance payment for any projects. This approach might not set well with some potential clients, but it?s the best way to protect yourself from those who may stiff you. To put clients at ease, let them know that this is your policy for the first few months or until you?ve established a relationship. After that, you?ll consider switching to an invoice system. You can also meet your clients halfway and require only 50% upfront.
3. Create a contract.?
Don?t rely on a handshake when doing business with clients. Some people develop amnesia when it?s convenient for them. Without a written agreement, the client may decide not to pay, or pay when he?s good and ready. Even if the client eventually pays, the payment may be less than the agreed amount, or it may arrive weeks or months past the invoice due date.
4. Go the collection route.?
Some large clients will take advantage of smaller businesses. Don?t let the client have the upper hand. There are several cost-effective ways to get a client to pay up. Many small business owners have good results working with debt recovery services like Cavalry Portfolio Services. Hounding clients for payment is time consuming and frustrating. Let a professional handle this aspect of your business while you focus on running your company. Besides, a letter from a collection agency might carry more weight.
Don?t let a handful of non-paying clients affect your cash flow. Learn how to recognize non-payers and slow-players, and use the resources available to get your money.
6 thoughts on “Tips to Deal With Clients Who Refuse To Pay”
Good post. I have had some problems with clients not paying. It gets very aggravating.
Yeah. I once ended up stiffed for about $2,000 of work. 🙁 I’ve learned a lot since then.
Nice post Miranda! I’ve heard a lot of people using online platforms for contractual based work (like Elance). Have you had any experience with such sites, and if so, what are your thoughts? Do the site owners take a commission for introducing the two parties? Is it worth it? It sure can be stressful having to ‘trust’ someone to pay you, so maybe these kind of sites are worth it to ensure a credible reputation for those you are working for, or hiring.
I HATE freelancing bidding sites. While there is a little more security when it comes to these sites, basically you are lowballing yourself. You compete against people who will write a 500-word post for $2.50 or $5. Then the marketplace site takes its cut. I did two jobs that way. To me, the security isn’t worth it. I’d rather take my chances and get paid closer to what I feel I’m worth.
Great tips Miranda! We’ve had to deal with this a bit, but thankfully not for a whole lot of money. After getting burned the first time we learned very quickly to have a contract and to be very clear with expectations up front. That generally makes things much smoother.
It’s amazing what having something in writing can do! On big projects, I also like to have a portion of the payment up front.