It's happened to the best of us -- you work feverishly on a project for a client trying to wow them. You send the project, and they tell you how much they love it.
You're ecstatic and ready to get paid. So you draft up your invoice and click send.
Then all goes silent.
Where did you go wrong? This is the thought freelancers have when you get stiffed for a payment.
But if you're lucky, you'll get a late payment. If not, you'll get nothing at all.
This isn't an ideal way to run a business. So what can you do to increase the chances of getting paid on time?
First, you have to understand why your clients aren't paying.
Let's take a look.
The 4 Types of Non-Paying Clients
To most freelancers, there are two types of clients -- those that pay and those that don't. But there are four categories of non-payers (at least, that we know of).
Let's take a look.
Nonpayers Who Mean Well
You'll run into these types of clients when you're doing projects with small businesses. In many cases, they don't pay on time due to cash flow issues.
Or they lack the time or manpower to manage the project. So it sits on their virtual desk collecting virtual dust.
The best way to handle these clients is to set up a payment arrangement with small increments. For instance, they can pay 10% to 15% now. And then another 20% each month until it's paid off.
It's better than nothing! Then the next time around, you should either request upfront payment or demand 100% transparent communication regarding payment time frames.
Nonpayers Who Are Dissatisfied
You try hard to please your clients, but it's impossible to satisfy them all. So you'll eventually come across a client who refuses to pay because they're unhappy with your work.
In many cases, they'll even try to reduce the balance of your invoice (or refuse to pay at all) until you resolve the problem.
Now, if you find that you did something wrong, then apologize and work on rectifying the issue. On the other hand, if they're just trying to low-ball you or get out of paying, then you will need to stand firm and remind them of the terms you agreed to.
Nonpayers Who Are Serially Delinquent
These are clients that freelancers should steer clear of. These so-called businesses frequently disappear on contractors when it comes time to pay.
There are warning signs in the beginning, such as not asking for a contract, not answering emails quickly enough, and so on.
So trust your gut when you communicate with a client for the first time.
Nonpayers from the C-Suite
Well, these may not be CEOs and CFOs, but they are people who work in a major corporation. And the fact they are a big company is one of the reasons you decided to work with them.
In your mind, these people have the money to pay, only to find out they can be stingy as well.
Most of the time, these mega-corp clients have pay cycles that are 90 or 120 days. This means you have to sit tight for three to four months before you can get your payment.
So make sure to ask about the pay cycle when you're dealing with companies with accounting departments.
Next, let's take a look at the top reasons why clients don't pay their freelancers.
1. You Fail to Follow Up
You completed your project on time and sent your invoice promptly. So it makes sense that the client should do their part and pay you quickly.
But depending on the client, they may need a little nudge. Business people get -- you know -- busy. So to make sure they didn't forget about you, you should follow up with a payment reminder.
If you're using a platform like invoicely, you can set up automated payment reminders, so you never forget.
2. You Missed Your Deadline
A part of a freelancer-client agreement is to deliver a specific project, at a precise time, for a particular rate.
However, if the project is insufficient and/or late, then this changes things (at least, on the client's end). This makes them feel empowered to lower your price or refuse to pay because you failed to meet the deadline.
To counter this, you should keep open lines of communication, so your client knows of any hiccups you run into along the way. It's also a good idea to give yourself more leeway on projects.
Consider adding on 2-3 days to your quoted time frame, so you don't continue falling behind.
3. Your Payment Options Are Inconvenient
Maybe you're old school and prefer either a check or money order. Or perhaps you want clients to wire your money to a bank account.
Truth is, most businesses today are using online payment platforms to complete transactions. For example, you can use Invoicely to send bills and allow clients to pay using a credit/debit card, Mollie, WePay, PayPal, or Stripe.
These are some of the top platforms SMBs use for their transactions. So it's a good idea to have these options available.
4. The Quality Isn't There
As we mentioned earlier, some clients will refuse to pay if your work isn't up to par -- and rightfully so. If you didn't perform the task at your highest level, then it's going to show in the outcome.
Once they see your work, they won't be impressed nor will they want to pay you. The only way to counter this is to communicate more in the beginning.
Create an outline of the project requirements and have it approved before you begin. There should also be a time table for milestones so you can send these in for approval as you go.
It beats sending the entire project, only to have it rejected. Starting over from scratch is disheartening.
5. They Don't See the Value in Your Work
Some clients want your service but are reluctant to pay the rate you quote. So they go in thinking they can haggle you when the time comes to take care of the invoice.
They'll downplay your work, even though they want it. And hope that you'll agree to accept a much lower rate.
It's important to work with clients who see the value in the service you offer. If you're cold pitching companies, then make sure they have a budget and strategy in place for the service you're providing.
If you have to convince them that they need your service, then chances are they're not going to want to pay industry rates for it.
Next, let's take a look at some ways you can deter clients from becoming nonpayers.
Establish a Contract from the Get-Go
There's a thin line between trust and naivety. When you're entering into a business relationship with a client, you have to treat it as such.
Otherwise, it's your word against theirs (if the matter was ever brought to court).
The beauty of contracts is that they plainly lay out the terms of the project's scope, your service, the payment amount, the project deadline, and the due date for payment.
There's no room for negotiation -- unless you agree to adjust and re-sign the contract.
Research Prospects Before You "Hire" Them
As an entrepreneur, you're a business owner, not an employee. So you have just as much right to hire and fire clients as they do.
This is why you have to do your due diligence to learn all you can about a prospective client before bringing them onboard. You can look up their name and their company on Google and social media.
See what others have to say about them as a brand and as a client or employer. Do they have reviews on sites like Indeed or Glassdoor? Check them out if so.
Ask for a Deposit to Start Project
What's excellent about demanding a deposit is that it shows the client is serious. This also puts pressure on you to deliver quality results so you can get the rest of your payment.
It's a win-win.
As for how much to charge for a deposit depends on the project and the rate. Some contractors charge as low as 10%, while others go as high as 50%.
Consider a small percentage for larger projects and vice versa.
This is something you and your clients can negotiate. Maybe after working together for a while, you can request a higher deposit rate or even the full price upfront.
Establish a Healthy Client-Freelancer Relationship
The key to getting paid on time (or at all) is to set ground rules -- and don't break from them. If you have a contract, fee schedule, and pay cycle you feel comfortable with, then lay those rules out and allow clients to accept or decline.
Whether you choose to bend for them is up to you, but it may lead to an unhappy situation.
Ideally, you want to stick to your price ranges and payment terms. Everything else is negotiable, such as deadlines and project scope.
Remember, you became an entrepreneur to be in charge of your life and your business. So keep that top of mind.
Have other ideas for getting clients to pay on time? Let us know in the comments!