{"id":6128,"date":"2014-03-21T10:00:00","date_gmt":"2014-03-21T14:00:00","guid":{"rendered":"https:\/\/www.wework.com\/creator\/?p=5470"},"modified":"2020-03-30T19:07:51","modified_gmt":"2020-03-30T23:07:51","slug":"deal-deadbeat-clients","status":"publish","type":"post","link":"https:\/\/www.wework.com\/ideas\/professional-development\/deal-deadbeat-clients","title":{"rendered":"How to deal with deadbeat clients"},"content":{"rendered":"

Has it ever taken you six months to collect a payment? Have you felt like your invoices and friendly reminders just get lost in the ether?<\/p>\n

Fortunately, most clients you\u2019ll encounter are professional and responsible payers, but\u00a0unpaid invoices<\/a>\u00a0are always a risk for anyone who bills for their services. The problem is so pervasive that there\u2019s a new campaign (The World\u2019s Largest Invoice<\/a>) for independent workers to share their deadbeat stories and unpaid invoices via hashtag #GetPaidNotPlayed. So far the total amount is closing in on $16M.<\/p>\n

There are plenty of reasons why clients fail to pay. Some just procrastinate. Some don\u2019t consider it a priority. Others don\u2019t have the cash, and even end up filing for bankruptcy or closing their own business. But no matter the reason for missed due dates, it\u2019s ultimately your responsibility to collect payments from your clients. It may be the least fun part of you job, but here are five tips for what to do when your invoices go ignored:<\/p>\n

1. Be proactive<\/h3>\n

The most important step toward\u00a0getting paid<\/a>\u00a0is to standardize your business practices by drawing up a contract for every client \u2013 no exceptions. The contract should include a statement of work, how much you should get paid, along with when you\u2019ll get paid. While it\u2019s possible to take legal action without a written contract, it\u2019s going to be exponentially easier if you have everything in writing, signed by the client.<\/p>\n

Define your payment terms upfront. Some businesses require a down payment (i.e. 25% or 50%) before the start of any project. Some specify that the full balance must be paid before the final goods\/files\/work are turned over to the client. Others require that payment must be received within 15 or 30 days after receiving the invoice.<\/p>\n

While it\u2019s common practice to charge clients a\u00a0late penalty fee<\/a>\u00a0or interest on a past due bill, I\u2019m not necessarily a fan of this tactic for most circumstances. First, unlike a credit card company, you probably work with the client on a face-to-face (or phone-to-phone basis). You\u2019re developing a business relationship, and punishing your client isn\u2019t conducive to building a good relationship. In addition, if someone isn\u2019t in a hurry to pay your bill, they probably won\u2019t be in a hurry to pay your late fee either. And a small penalty can just be written off as a cost of doing business and almost legitimizes the delay.<\/p>\n

2. Invoice on time<\/h3>\n

A key to getting paid on time is getting your invoices out on time. When you\u2019re slow to send out invoices, you are unintentionally setting the tone that timeframe and payment schedules don\u2019t matter. Be sure to invoice promptly based on the terms set in the contract. Every invoice should include your payment terms in plain English (i.e. \u201cplease pay within 30 days\u201d). Some payment terms work better than others, find out\u00a0the best terms to get you paid faster<\/a>.<\/p>\n

3. Small delay? Be polite and patient<\/h3>\n

From time to time, even the most reliable of clients may be late to pay. A late payment shouldn\u2019t be a major cause for concern, and at this point you\u2019ll want to be thinking about nurturing the client relationship, rather than being the strict collections agent. In particular, when your client is a small business owner, they may not have a formal accounting procedure or accountant who\u2019s responsible for their bills. Things can easily slip through the cracks, and it doesn\u2019t mean anyone is trying to cheat you out of your hard-earned money.<\/p>\n

As a first step, I always recommend sending the client a polite\u00a0reminder via email<\/a>\u2014this is something you can\u00a0automate<\/a>\u00a0to save you the trouble of staying on top of every late payer. There\u2019s no point in sending a reminder every day; at the start, sending a notice once a week will suffice. A simple phone call can be effective if you think your email reminders are getting lost in the client\u2019s inbox.<\/p>\n

It\u2019s also wise to know who\u2019s actually responsible for paying you; if you are working with a larger client, there\u2019s most likely a business manager or accounts payable department who issues the checks. Contact this person to inquire about the status of your payment.<\/p>\n

4. Still no answer? It\u2019s time to get firm<\/h3>\n

When your polite emails and friendly phone calls go unanswered for an extended period of time (let\u2019s say 3-5 months, depending on the client and situation), your patience is probably wearing thin and it\u2019s time for a new tactic. This is what I consider the middle point: the days of the casual email are over, but you\u2019re not quite ready for legal action. Here are a few options to try:<\/p>\n