Here’s something that could be the #1 entry in the freelancers’ playbook: What to do when a client doesn’t pay.
That might seem harsh, but research shows that nearly 40% of freelancers have experienced getting stiffed at least once or twice. And almost 10% say that it’s happened multiple times.
Plus, not getting paid on time is one of the common challenges of freelancing.
Sadly, this isn’t even about having issues with finding enough of the right clients. Even the best customers sometimes slip into the “past due” zone.
Although it can be a major bummer, the good news is there are some simple and effective ways to collect money from customers. Unpaid invoices don’t have to be the bane of your existence.
All you have to do is put a few procedures in place to protect yourself against late-paying clients or, worse — clients who don’t pay at all.
Let’s get to it.
Put the Right Precautions into Place
Before you start doing any work for a client, it’s essential to make sure you’re protected (as much as one can be) from any late payment situations — so later you won’t have to wonder what to do when a client doesn’t pay.
After you determine your freelance rates, there are a few things you can do to help both you and your clients stay on track, starting with requiring a deposit upfront. This is always a smart move, especially if they are a new client.
Otherwise, how can you trust that they’ll pay you if you’ve never worked with them before?
Requiring an initial deposit before you start (or even schedule) the work helps in a few ways. It:
- Provides security that your client is committed to the project
- Reduces the chance of the client not paying
- Gives you working capital
This is just a jumping-off point. If you never want to see an unpaid invoice, then the next step is to put it in writing.
Include Your Payment Terms in Explicit Detail in Your Contract
One of the best ways to protect yourself from late payments (or not getting paid at all) is to include a detailed breakdown of your payment terms in your contract.
This includes, but is not limited to:
- When payments are due
- How payments will be issued/collected
- Your late fee policy
- The deliverables the client will receive at the time of payment (or what will be withheld until they receive payment)
- Legal repercussions for unpaid invoices
If you aren’t sure about how to put payment-related language into your contracts, it’s worth either hiring someone to draw up a contract that you can adjust per client or investing in a contract tool that streamlines the process.
This is the perfect time to determine if your payment terms are working in your favor or if they’re actually hurting your business.
Depending on your needs, net-0 payment terms — meaning payment is due upon receipt — may work best. Or maybe you prefer net-15 payment terms, which gives you and the client a little bit of time to settle up.
Sometimes clients (especially bigger companies, in my experience) ask for net-30, and if cash flow isn’t a major issue for you, then you can accommodate them.
Figuring out what to do when a client doesn’t pay all boils down to what you need to keep your full-time freelance business running.
Make This Part of Your Onboarding Process
To avoid any awkward conversations or “surprises” when explaining your payment process, it’s a good idea to communicate these details early on.
Think of it as a crucial part of how you go about setting boundaries with clients. Plus, you’re doing them a favor: making your payment terms part of your onboarding process will help eliminate any confusion or grey areas.
If you have a “getting started” document or something of that nature, that’s an excellent place to include that information so your client can revisit it whenever they need to.
Provide Multiple Payment Options
The best accounting software for freelancers allows clients to pay invoices through various methods such as credit card, Apple Pay, ACH, PayPal, and more.
The more options the client has, the easier it’ll be for them to pay the invoice (and on time, too).
Some accounting software even lets you see if a client has viewed an invoice, which can help you determine if you should send a follow-up email or not.
As helpful as these precautions are, sometimes they’re not enough to prevent late payments. Topping the list of what to do when a client doesn’t pay is to send a clear message — in writing — to alert them that there’s a problem.
Because while you may interpret their unpaid invoices as a sign they are negligent, rude, or worse, intentionally messing with you, don’t jump to conclusions. The last thing you want to do is make an enemy of an otherwise good client, so start by offering them the benefit of the doubt.
Acceptable Reasons for Late Payments
If this is your client’s first time being late to pay an invoice, consider why they might be delayed in the first place.
It could be any number of understandable circumstances:
- Your client’s payment cycle is off
- Your client simply forgot to pay you
- There was a miscommunication with deliverables and payments
- Your invoice accidentally went into their spam folder
It’s been my experience that when it’s an oversight or a miscommunication, the client is usually eager to rectify the situation with an immediate payment.
Sometimes the issue is with your client’s cash flow (something freelancers can relate to). This is still one of the more acceptable reasons for late payments — as long as your client is transparent and clear about when you can expect payment.
In this case, when you’re wondering what to do when a client doesn’t pay, consider offering your client an installment plan. It’s better to get what you’re owed incrementally than not to get paid at all.
Your mantra for how to collect money from clients who won’t pay (or don’t pay on time) is to communicate to understand.
The following will help you word messages to get what you want (your compensation) without burning bridges.
Before an Invoice Is Due
No matter your payment terms, sending your client a reminder email that an invoice will either be due upon receipt or that you’re going to send them an invoice that’s due on a specific day is always a good idea.
Especially if this is the first invoice you’re sending to a particular client, it’s wise to send them a quick reminder email so they remember what’s coming.
This email doesn’t have to be long or detailed. It’s meant to serve as a quick heads up, and then you can move on to your other freelancing project management tasks.
Send this email a few days to a week before the invoice is due.
Subject line: Invoice #XXXX is due soon
Hi [Client Name],
I hope you’re having a great week! I just wanted to send you a quick reminder that invoice #XXXX is due on [Due Date].
Please let me know if you have any questions.
If your terms are net-0 and you haven’t sent the invoice yet, make sure you explicitly say payment is due upon receipt to avoid any miscommunication.
After an Unpaid Invoice
You’ve sent your reminder email, but unfortunately, the payment is still delayed.
It might be time to send something with a little more oomph.
Note: As mentioned, there could be any number of reasons why a payment is late. You always want to be professional, even if you aren’t getting the same attitude from your client. Take the high road, no matter how frustrating the situation may be.
Also, it’s important to stop doing any work until your invoice is paid. This helps create a sense of urgency and will communicate to the client that you’re serious about late payments.
Subject line: Invoice #XXXX is past due
Hi [Client Name],
I hope all is well at [Company Name].
My records show that invoice #XXXX for [Project Name] is overdue. When you get a chance, could you look into this? I appreciate it.
Here is the invoice again for your convenience [either include a link or attach a PDF].
Until this invoice is paid, I will pause working on anything related to [Project Name].
Please let me know if you have any questions.
Notice how the wording of that message gives the client the benefit of the doubt that there was a miscommunication. However, stand your ground and don’t allow yourself to be pushed around if it comes down to it.
Invoice Wording for Immediate Payment
There are past due invoices of a week or two, and then there are dramatically late invoices of a month or more.
One of the ways to collect money from customers is to pick up the phone and have an actual conversation with the person who has the power to pay your invoice. This may not be the person you regularly do business with — instead, it might be someone in the company’s accounting department or perhaps the business owner.
This takes courage, and it might not be the path you feel most comfortable taking. If that’s the case, you can try a different but equally direct method: change your tone to strictly business and carefully choose your invoice wording for immediate payment.
Here’s a sample message you can use:
Subject line: Invoice #XXXX is due immediately
Dear [Client Name],
According to my records, invoice #XXXX for [Project Name] is now [amount of time] past due.
To avoid further action, please remit the payment immediately.
Please let me know if you have any questions.
By “further action,” you’re implying that the next step will be punitive. If you stipulate a late fee in your contract, that could be the carrot. (For example, you could instead say, “To avoid a late fee as stipulated in our freelance content marketing contract, please remit the payment immediately.”)
However you handle it, this sternly worded message is your client’s last chance to rectify the situation before you take further action. So, choose what you say wisely, and don’t be afraid to state the steps you’re willing to take next.
How to Collect Money from Clients Who Won’t Pay
A freelancer’s nightmare: A client who refuses to pay their invoices.
You hope you never get to this point, but sometimes clients are just straight-up difficult and make it challenging to collect what’s yours. Whether they refuse to pay you due to whatever reasons they have or if they’re just a problematic client, these situations happen.
So what to do when a client doesn’t pay?
There are a few avenues to take if this happens:
- Send another email explaining that you have no choice but to get your lawyer involved if the invoice is not paid.
- Mail a physical letter from your lawyer explaining that your contract has been breached and that you’ll be taking legal action if they refuse to pay.
Depending on how much the invoice is for, it may not be worth your time to pursue legal action. If that’s the case, send the client an email explaining that you have no choice but to terminate the contract.
You may take a financial hit, but you’ll have peace of mind that you are no longer beholden to a deadbeat.
Takeaway: Hold Your Ground and Don’t Be Afraid to Stick Up for Yourself
No one likes to ask for money. But the unfortunate reality is that it’s something freelancers face frequently.
It’s important to learn what to do when a client doesn’t pay and confidently navigate those situations, so you can protect yourself and make sure you get paid for your valuable work.
And if you find that dealing with late-paying clients is too much for you to handle, consider offering your services through an online freelance marketplace.
One of the top benefits of using a platform like Upwork vs Fiverr, or some of the other best freelancer sites is that your compensation is held in escrow while you complete the work — so not getting paid isn’t a concern. (On the other hand, giving the platform a cut of your profits is the price you pay for having a third party handle your payments.)
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