20 August

Help! My Client Won't Pay Me!

There’s a special kinship between us freelancers and virtual assistants, isn’t there? Because of Social Media, we work separately together, and we share similar experiences, both good and bad. I enjoy perusing the many quotes and memes on Twitter and Facebook that talk about the ups and downs of virtual work. One bad experience is when a client won’t pay.

Although we often enjoy the benefits of a flexible work environment and schedule, we can also have a bit of a “flexible” income at times, which is less enjoyable. I saw a quote recently that made me chuckle, but it also contains a darker truth:

This is an unfortunate reality for many freelancers, not just writers. At some point you may encounter a client who won’t pay you or who pays late, after you’ve already invested a lot of time and effort into a project. But although it’s one of the risks we take when we become virtual professionals, there are some tips and strategies that can help us. We’ll talk about those later, but first an exciting development out of New York City…

The “Freelance Isn’t Free” Act

On May 15, 2017, New York City became the first city in the United States to protect freelancers and independent contractors from nonpayment. According to an article titled “NYC’s ‘Freelance Isn’t Free’ Act Goes Into Effect Today,” the “Freelance Isn’t Free” Act now sets a deadline for when clients must fully pay freelancers for work worth $800 or more – either by a date set forward in writing or within 30 days of task completion. This law also protects freelancers from employer retaliation and promotes the implementation of written contracts.

The article unpacks how this law can be applied:

“Within two years of being stiffed, a freelancer can now file a complaint with the city’s Office of Labor Standards, within the Department of Consumer Affairs. The office director will then draft a certified letter to the employer within 20 days, explaining how the freelancer’s contract was allegedly breached. Best case scenario, the law will scare employers straight before a freelancer has to resort to claims court.”

This is good news because hiring an attorney and taking a client to court often costs freelancers more than the actual money they are owed.

Tips to help prevent late or missed payments

To quote Benjamin Franklin, “An ounce of prevention is worth a pound of cure.” While it’s impossible to predict the future, and even the best clients can fall on hard times, here are some tips and strategies you can employ to help prevent nonpayment scenarios:

Know your client.

When offered a new task or contract, it’s wise to do a little research on potential clients. Do they have a history of missed or late payments? Is there any negative press about them online? When you receive client referrals, you’re already a step ahead because you can speak to the person who referred you and ask what he or she knows about this client. In her article, “How to Handle Non-Paying Clients,” Sammi Caramela recommends Googling their name and asking your contacts if they have any other information about the potential client.

If you’re connecting with clients through a VA or freelance agency or job board, you can check whether the client was vetted by the agency before the project was posted or whether clients post projects independently.

And last but not least, don’t ignore your gut feelings. If you connect with a client and feel like something’s not right, take time to do some further investigations before accepting a project.

Establish good communication.

So let’s say you’ve investigated your client and are ready to begin working with him or her. Now is the time to figure out how you’ll maintain contact with each other. Does your client prefer email, text, Skype, phone? It helps to work out a plan for how you’ll communicate on a regular basis and how you’ll communicate in an emergency. I would advise establishing both an online and offline method so that you can get in touch even if there’s an Internet or power outage.

Also, be sure to find out whether your client or a separate accounting department is responsible for issuing payments. You want to be sure you can go directly to the source in case of any difficulties.

And most of all, be professional and personable in your communications. If your clients feel you are approachable, they won’t hesitate to alert you to any situations that might delay your payment, and they’ll be open to hearing your concerns.

Agree on payment terms before starting work.

As we’ve seen in the case of the “Freelance Isn’t Free” Act, a written contract is one of your best protections against nonpayment. In a contract or in some sort of written agreement between you and the client, it’s important to outline your payment terms. For example, freelancers often submit an invoice on the last day of the month, and then the client agrees to pay within a certain number of days after the invoice is submitted. Some freelancers also charge late fees or interest if their payment doesn’t arrive by the agreed-upon date. These are all terms you can negotiate with your clients.

Once you’ve set your payment terms, be sure to include them on each invoice. Accounting software like FreshBooks has customizable spaces on their template where you can enter the payment terms so they’re included each time you invoice a client. Here’s an example of wording that’s often used:

1. The Independent Contractor will invoice the company for their hours following the last day of each month.
2. The Contractor will be paid Net 15 (Within 15 days of receiving the invoice).

In “The Freelancer’s Guide to Getting Your Invoices Paid Faster,” Sophie McAulay says, “To encourage timely payments, keep your invoices simple yet professional; they should be easy to read but detailed enough to communicate how you spent your time during the billing period.”

Work out a “prepayment” arrangement or partial prepayment.

Since virtual assistant and freelance tasks vary in scope and length, you may or may not require a prepayment arrangement. But for larger projects that involve a great deal of time and effort, it’s wise to set up some sort of payment schedule. That way, you won’t lose out completely if there are any missed payments.

In the article above, Sammi Caramela recommends asking for a deposit or installment fees after completing specific parts of a job. She also suggests creating a payment schedule on your contract where you would receive, for example, a 40% deposit, 40% milestone payment, and then 20% on completion of the project.

Strategies for dealing with clients who don’t pay on time or have not yet paid you:

So now’s the tough part. You’ve done your due diligence, but you’re facing a situation where your expected payment has not arrived. Here are some strategies for facing a nonpayment situation:

Keep your cool.

At this point, try not to panic. First, check your own records. If your payment typically arrives by email, did it accidentally go into the spam folder? Did it accidentally get deleted? Did you send your invoice? (I have to watch sometimes that I click the mouse properly so my invoices and emails are actually sent.)

If your payment arrives by snail mail, was there a statutory holiday that might have delayed delivery? Do you remember your client mentioning that he or she was going on holiday? At this point, try to give the benefit of the doubt before getting hot under the collar.

If you use accounting software like FreshBooks, it’s often possible to check recent activity in your account and see whether your client has logged in and viewed your invoice. So be a bit of a detective first and view the situation from all angles before moving on to the next step.

Communicate with the client.

If you’ve determined that a payment has indeed been missed or delayed through no fault of your own, it’s time to contact your client. I would recommend waiting long enough to account for statutory holidays, etc., but not so long that you make things more difficult for your client if the delay was caused by a simple administrative error.

As a courtesy, you can first contact your client through your regular communication channels (e.g. email) and politely ask for an update on the status of your payment or send a reminder that the payment is past due. Once again, accounting software can help you out by sending automated reminders. For example, FreshBooks allows you to program it to send reminders at customizable intervals.

If you continue to receive no response and no payment, you may decide you want to contact your client using the more urgent mode of communication you’ve established (e.g. text message or phone call). If a separate accounting department is in charge of payments, you may also decide to contact them to inquire about the status of your payment.

Discontinue project until payment arrives.

If time is marching on, and you still haven’t received your payment, you may want to discontinue your project. The impact of a work stoppage will vary depending on what your tasks are as a freelancer or virtual assistant, but it will get the message across and will prevent you from losing more valuable time and money.

Considering your relationship with your client and your client’s track record, you may approach a work stoppage in different ways. If a client is consistently late or negligent with payments, you might decide to abruptly discontinue your work. If this is the first time a nonpayment has happened, you might decide to warn your client beforehand that your tasks will not be fulfilled until you are paid. If you’re working on a large project, you might also want to determine an appropriate place to pause so that you can easily pick up where you left off if you do receive payment.

Depending on how much is owed you, decide whether it’s worth continuing to pursue the payment or whether it’s time to simply move on.

As mentioned above, it often costs freelancers more time, effort, and money to chase down a payment than the payment is worth in the first place. If the missed payment was small, and your client has communicated with you and proven to be reliable in the past, you might decide to continue work, but require prepayment for any future projects or tasks.

If your client is being underhanded or encountering severe financial difficulties, you might decide it’s time to end your contract and move on. We discuss healthy ways to end a client relationship in a blog post titled “How to Fire a Client (the Right Way.”

Even with a law in place like the “Freelance Isn’t Free” Act, the key is to determine whether or not you will lose more money taking your client to court than you would if you just missed the payment.

At some time or other, many of us have faced or will face these types of situations. But difficult as they are, know that you aren’t alone in this worldwide community of freelancers and virtual assistants.

Since we can help each other along, we’d love to hear your thoughts too. What are some tips or strategies that have helped you in your virtual business when clients don’t pay on time or have not yet paid you?

12 thoughts on “Help! My Client Won’t Pay Me!

  1. Pamela

    When I first started my VA business, I invoiced monthly after the work was done. If a client didn’t pay on time, their account was suspended until payment was received. Unfortunately, that payment sometimes never arrived and I was out for my time and money I paid to subcontractors. After about 5 years of invoicing after work was done, I started invoicing in advance. If a client balks at that arrangement, I give them references. If they’re still uncomfortable with that, we both part ways. Maybe we should start requesting references from a prospective client before accepting their account?

    1. Jena Kroeker Post author

      Thanks for sharing, Pamela. Those are some good points! I’m sorry to hear you lost time and money, but sounds like you have a wise strategy.

  2. Christine Pritchard

    My practice (now retired) was mostly realtors. In the beginning, I would do the work, bill them, and then chase them for half the following month.

    Then I went to pay up front system whereby they would pay me for 3 hours of work and their account was debited like a gift card. Worked well, no issues!

    1. Jena Kroeker Post author

      Thanks for your comment, Christine! Having their account debited like a gift card sounds like a great idea and would feel familiar to many people too.

  3. Elizabeth Nadler

    It sounds like getting a portion paid up front is the way to go. Excellent blog post, Jena!

    1. Jena Kroeker Post author

      Thanks so much, Elizabeth! Yes, having some sort of prepayment or even partial prepayment arrangement is probably the ideal situation.

  4. Kathie Thomas

    Good article. Interesting to note that the Act states ’employer’ and not ‘client’. Because, after all, any work we VAs do are for clients, and not employers. Would be good to see this Act going much further afield and overseas to other countries too.

    1. Jena Kroeker Post author

      Thanks, Kathie! And thanks for bringing up that point – I was surprised by the use of the word “employer” too. I do hope this type of law spreads throughout the world, especially as the VA industry continues to grow.

  5. Barbara Gilbert

    Thank you for this article, Jena. Very helpful and great advice!
    I had a client who was in the medical profession who wouldn’t pay. There was a contract for the work I was doing for her that included clauses on invoicing and payments. I invoiced the client at the end of each month.
    She didn’t pay for the first two months of work until half way through the third month.
    Then she paid for the third and fourth month half way through the fifth month. I invoiced her for the fifth month, then sixth month, then the seventh month – no pay.
    I stopped working for her on the grounds that she has to pay me before I accept any more projects.
    It got to the point where even when my accountant contacted her she still wouldn’t pay. My accountant then stipulated that if she didn’t pay by the end of the month (eighth month), we would have to hire a collection agent or report this to a small claims court.
    She finally paid me after chasing after her over a 3-month period.
    She hasn’t asked me to do any more work since I refused to work for her.
    As far as the contract is concerned, no formal notification has been received from her advising that she no longer wants me to work for her. Based on the contract, I am still to work for her however, given her record of paying for work I have done for her, I doubt I will accept any more requests.
    The thing is, as a professional in her area of specialization, she probably gets paid at least once a month. Surely she would be more responsible in meeting her own obligations to pay for work that is done for her yet she is always late in paying or doesn’t want to pay at all. Really?!!! How professional is that? Unbelievable!!!

    1. Jena Kroeker Post author

      Thanks, Barbara. I’m so glad the article is helpful, and I’m sorry to hear about your experience with nonpayment. I wish you all the best in the future!


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