There’s no other way to put it: Not getting paid on time is one of the common downsides of freelancing.
We have bills to pay! And retirement funds to, well, fund.
Unfortunately, the late invoice song and dance seems to come with the freelancer territory more often than not. Although it can be a major bummer, there are several things you can do to make sure you get paid as well as 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 important to make sure you’re protected (as much as one can be) from any late payment situations.
Below are a few things you can do to help both you and your clients stay on track.
Require that clients pay a deposit upfront
Requesting an initial deposit is always a smart move, especially if they are a new client. How can you trust that they will pay you if you’ve never worked with them before?
This helps in a few ways:
- Provides security that your client is committed to the project.
- Reduces the chance of the client not paying.
- Gives you working capital.
Many freelancers won’t start working on a project or carve out time in their calendar for a client unless they have that initial deposit. It helps build trust and verifies that the client is serious about working together.
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 if invoices are not paid
If you aren’t sure about how to put this language into your contracts, it’s worth either hiring someone to draw up a contract for you 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 what your needs are net-0 payment terms, meaning payment is due upon receipt, may work best. Or maybe you prefer net-15 payment terms. It all boils down to what you need to keep your business running.
Make this part of your onboarding process
To avoid any awkward conversations or “surprises” when it comes to explaining your payment process, it’s a good idea to communicate these details in your early discussions with clients. Perhaps, making this 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
Most accounting or invoicing software allows clients to pay invoices through a variety of methods such as credit card, Apple Pay, 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.
We hate to be the bearer of bad news, but sometimes these precautions are not enough to prevent late payments. Below are a few templates to guide you if you find yourself having to send that email.
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 smart 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 heads up.
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 include when you are processing it to avoid any miscommunication.
After an invoice is late
You’ve sent your reminder email, but unfortunately, the payment is still delayed.
If this is your client’s first time being late in paying an invoice, consider why they might be delayed in the first place.
It could be any number of things:
- Your client’s payment cycle is off
- Your client forgot to pay you
- There was a miscommunication with deliverables and payments
Still, whatever the explanation, that doesn’t make it acceptable.
It might be time to send something with a little more oomph.
Note: You always want to be professional, even if you aren’t getting the same attitude from your client. It’s important to 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’m going to pause working on anything related to [Project Name].
Please let me know if you have any questions.
Most of the time, we can give our clients 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.
What to do when your client refuses to pay
A freelancer’s nightmare: A client that 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 do you do?
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.
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 know how to navigate those situations so you can protect yourself and make sure you’re getting paid for your valuable work.
Do you have other late-payment tips? We want to hear them! Also, be sure to tune into the Unemployable podcast for all the entrepreneurial musings your brain can handle.