Right now, I’m owed just over $9,000 from one client. That’s just over two-thirds the amount I have in outstanding invoices at the moment.
Am I worried? Sure. Who wouldn’t be? Yet I’m contracted with this company and they have, of last week, shown their ability and willingness to pay (they cleared up two forgotten invoices within two days).
That doesn’t stop me from worrying. Until the direct deposit arrives, I hold my breath.
One thing that works in this client’s favor is the written agreement, the ongoing nature of the work, the mere size of the projects (this total is for two projects, one of which was huge), and the fact that the work was paid for by another party. I should be good. I won’t exhale until I’m sure of it, but all signs indicate the payment will arrive shortly (they also have a well-advertised payment process).
Payment — or squeezing payment out of clients — is always an issue with freelance writers. Hell, it is with small business owners of any size or focus.
A writer friend and I were discussing it yesterday, in fact. He’s waiting for payment from more than one client. Ironically, money is often slow in coming when we need it the most, isn’t it?
Most clients intend to pay you. They really do. But often your contacts are beholden to the systems and, let’s just say it, stubbornness of the person or people sitting in the accounts payable department.
I say this because I used to have to deal with the accounts payable team. Here’s what would go down when I would forward a freelancer’s invoice.
- I’d send the invoice to the accounting contact, asking for confirmation of receipt.
- Two days later, I’d follow up to see if it was received.
- If there was no answer, I’d walk down the hall the next day and approach the accounting person. Did she receive it?
- I’d wait patiently as she looked through her emails.
- I’d smile and thank her, then ask if there was an ETA I could relay to the freelancer.
- I’d get a stock answer — 30-45 days.
- If the writer inquired after that time period, I’d take that same walk down the hall.
- Eventually, the check would reach the writer.
In that case, the accounting person was one person handling the business of two magazines and a few other product lines. Things were overlooked, payments were delayed, and this woman’s time was stretched beyond hope.
In a few cases, however, I knew of accounting people who weren’t overworked (they had teams), but who just didn’t seem to get their stuff together. One case was a woman who would respond to my inquiries with “I’ll look into it.”
I never received a reply beyond that. Sometimes, the outstanding invoice was actually paid with no further communication. In other cases, I was in the position of following up. Again. And sometimes again.
Then there was the client who would pay me in August for a project that was invoiced in say June, and he still owed me for July and about to owe me for August. In other words, it was as though he was keeping one payment in escrow until I completed his next project. In one of our last projects together, it had been three months. I inquired about the late payment. He answered with a “Yes, it’s on its way. By the way, here’s another project…”
Did I think he was withholding on purpose? Yes. While he never said it outright, his actions supported my suspicions.
I know writers who are owed money right now, and whose clients are piling on the work. Mind you, in most cases the client contacts are not the ones physically in charge of writing the check, so payment is assumed on their part. But what do you do when your payment is well overdue and more work is coming in?
[bctt tweet=”When the invoice is 45 days late, stop all work until you get payment.” username=”@LoriWidmer”]
That may mean you disappoint a client who isn’t necessarily the cause of your current financial situation. Still, it’s up to you to let the client know there’s a problem. It’s also up to you to insure that you get paid for the work you do. If that means waiting until the balance is paid, so be it.
Yet ideally, freelance writers should be looking for ways to avoid being owed money. Here are a few methods that can help:
Get upfront payment. Securing half of the payment gives you an assurance that your client is financially liquid, that they’re operating in good faith, and that they are willing to work with you. Whenever you can, get an initial payment.
Listen for warning signs. If other freelance writers are concerned about late payment from a client or are upset by the payment process, think twice before sticking your hand in that flame.
Work up the food chain. I won’t say working for clients who respect you enough to pay your rate will eliminate the problem — clients at all levels come into financial difficulty, often without warning. But if you’re working with clients who are well established and have shown a level of financial maturity in the past, your chances of being stiffed due to lack of funds is decreased.
Ask the question. Why writers are reluctant to ask their clients about money is beyond me. Yet to me, it’s the first thing we should be doing. Ask how long it takes to receive payment after invoicing, and put it out there at the outset that anything outstanding more than XX days means all work halts until the payment clears. If you’re afraid of losing a client over this, consider what you’d be losing — a client who takes way too long to pay. If you were that unreliable, they’d stop working with you, too.
Limit the amount you’re willing to have outstanding. While it may sound like strange advice coming from me, a person who’s owed so much, the amount I’m owed is merely two weeks outstanding. I have other invoices that almost equal that amount. Should the $9K+ not arrive when expected, I have other clients whose payment processes are much more predictable. But decide now the ratio of outstanding invoices you can bear. If you can only absorb a 10 percent loss, then limit the work you do for that client until the payment is secured.
There’s no guarantee we’ll be paid at all let alone in a timely manner. The best we can do is contract all work, secure as much up front as we can, and take more control when it comes to assuring that the people we’re working with understand that payment for services is required, not merely an expectation.
Writers, how much do you allow in outstanding invoices?
How late can payment be before you halt all work?
What’s the worst time you’ve ever had in receiving payment?
Have you ever had an instance where payments were about one cycle behind?
16 responses to “5 Ways to Avoid Late Payment Woes”
Solid advice, as always, Lori. My outstanding-amount-allowed varies by client, as seems to be the case with you. It’s quite low for a new, untested client (say $1000) and I’ve gone as high as $10k for someone with a long track record of paying and absolutely NO red flags.
In principle, I’m generally in the 30-45 day camp, but I do have one long-term client that is 90. I’m fine with that, because they have always paid, and I know the company very well–rock-solid finances. Maybe because they make so much money on the float, haha.
On a side note, since you’ve brought accounting departments into the conversation: I’ve always believed that this is an argument in favor of submitting invoices under a company name or DBA, because I imagine (rightly or wrongly) that an accounting drone is going to take a business more seriously. It’s also an argument in favor of making sure you have serious, professional-looking invoices. Perception matters!
Jake, I agree with your approach. The untested clients have to start with a deposit, in my case. And $10K for a tried-and-true client is about my limit. I’m just under that.
They probably do make money on that! If they tell me in advance, I can adjust for it. And I can choose to walk away from it. I think that’s where clients and writers need the conversation to continue — what’s the payment cycle? We should get in the habit of asking before we accept the job.
Funny you should bring up the DBA/company name. A friend just told me he’s having trouble getting one client to pay because their system requires they put his name in as a business name. His bank won’t cash the check because — guess what — it’s not his name (and not his business name, either). And yet some Einstein in accounting hasn’t quite figured out to put it under his first and last name with LLC or Inc. at the end… Oy!
I had some nightmare clients early one—even one which I “fired” a few years ago when it’s slow payment system ground to a halt for over a month. (Their excuse was the publisher had the flu. Um, he can’t sign a check, or delegate that task to someone else? Even kids too sick to go to school have to turn in their homework.)
But my rule with new clients, and slow payers, is that I will not start a new assignment until the one before it has been paid for.
That may have lost me a client last year: before I even turned my first piece in the editor asked if I would take on another. I wasn’t sure she’d even like my work, so I said, “Let’s wait and see how this one goes first.” Never heard a work from her after she acknowledged getting my copy. I emailed her multiple times. No replies. She never bothered to tell me when my story ran— there were barely any changes to my final copy, so she can’t say it was bad. Meanwhile two other writers I know were continuing to get assignments from her. I gave up trying to figure her out when she ignored my New Year greetings in January.
Wow, talk about thin skin! That’s a pretty simple request, Paula. I don’t see why she’d react so strongly. I’d think she’d welcome the chance to review your work first.
The only thing I can think is she confused me with another writer or thought I accepted the second assignment and thinks I flaked on her. I clarified our initial communication in subsequent messages, but since she didn’t reply I’m guessing she didn’t read them or was too embarrassed to respond.
My previous life involved being responsible for collecting payments in the millions every month (for the company I worked for, unfortunately, not for me!), so, yes, I understand the problems with accounts payable. That’s why I always make sure my invoices are faultless (their full company name, any reference that they use), to make sure I don’t get them pushed back (which you know will be ONLY after payment’s late and you chase it).
I’m not actually sure the amount I’d allow outstanding. Luckily (touch wood) I haven’t yet found myself in the position of having high overdue amounts, but your post has definitely given me something to think about. A few years ago I had a client miss the final payment (only a few hundred £), but this was after the work had been completed so I didn’t have the dilemma of whether to carry on or not. I arranged a payment plan with him and he cleared the arrears over the course of a few months – I’ve never been worried about talking about late payments thanks to my finance background 🙂
Emily, have you ever had a case where you do everything right and, a month or so later, they come back with “We require all invoices to be submitted using our form.” I’ve had it often enough that I’ve started asking at the outset if there’s a particular invoice they’d like me to use.
You were smart to work out a payment plan for that client. I bet he appreciated the leeway, too.
Not yet, *touch wood*! That would be immensely frustrating though.
This is why I love the UK. None of the BS runaround.
I always ask what invoice preferences they have. Some want .pdfs, others have special formats, one major client generates invoices that we have to approve or correct, and we’re paid within 45 days. (Of course their invoices are issued the first week of the month and cover all work published the prior month, so there’s about a 3 month gap between doing the work and being paid for it. But like Jake said above, it’s a rock solid company that always pays, so as long as I know the terms, I can plan around it.)
I’ve had to do the stop-work thing before, and it worked like a charm. I had credit card payment within a few hours. If you don’t take credit cards, PayPal (despite the fee) is another way to get paid quickly without waiting for a check.
In rare cases, you might have to consider settling for less than is owed just to get paid at all. After over 15 years in the business, this happened to me for the first time a few months ago. I was owed $15,000 on a $30,000 project, and since I first began working with the company a number of years ago, payment had gotten progressively later and later. I kept getting excuses like, “We didn’t see your email,” or “The accountant is out with the flu today.” When payment was seriously overdue and I pressed for it, they pulled the “poor quality” card out. That didn’t work, because I had gotten approvals and feedback every step of the way. Something in my gut told me to negotiate what I could as fast as I could, and when I finally got them on the phone, we negotiated $10K instead of the $15K that was owed if the check was cut and sent that day. It was; they emailed a tracking number. Friends and colleagues were aghast that I settled the debt, but it was purely a business decision. It was a good one. The company has since laid off about 80% or more of its employees and isn’t expected to survive much longer. The owner is being sued for millions. That was the largest project I’ve done to date, and the payment structure (50% up front, 50% on delivery) made sense at the time.
Eileen, that was an excellent business decision. You were faced with either an argument that might have led to a court battle or getting as much payment as you could. Had I been in your shoes, I’d have opted for that, as well.
I had to do that once. Naturally, it was the end of the project and his complaints came in after his “editors in the office” as he called them looked it over and tore apart the work. Of course they did — A) he’d deleted most of my edits, either on purpose or by some fluke, and B) he didn’t want to pay.
My question would have been if they were such great “editors” in his office, why didn’t he just hire them? Answer: because they don’t exist.
Like others have mentioned, I ask new clients to pay half up front (or all if it’s a really small job). All my agreements specify payment within a week of delivery – I don’t always enforce that for clients with a good track record. When the client provides the agreement, I’ll push back on anything over 30 days. And I don’t deliver new work till old work is paid for – very few exceptions.
I’m still owed GBP900 by one client who had been a perfect payer right up until the recession hit her ad income. She offered a payment arrangement, then didn’t stick to it. When I started upping the ante on chasing her, she unfriended me on Skype, stopped answering emails and had the nerve to threaten to sue me. Then she folded and reopened her business to get out of debt. Grr!
Oh Sharon, that’s a lousy move on her part! I’m sorry to hear it.
I agree with you on all points. Chase the money. It’s owed you, and I don’t know about in Barbados, but here in the states, you can’t claim unpaid invoices as a business loss. You’re completely out of the money with no recompense.
She was in England and it was hard to chase her from here – in the end I had to write it off, but it still galls me. 🙁
It is galling, I agree. The laws here in the states aren’t set up to allow for such losses, sadly. Even in the case where a company went bankrupt, I wasn’t able to claim it. Had the legal papers showing what I was owed on the list of creditors the lawyers had drawn up.