It’s a distressingly common story. Freelancers are often taken advantage of by clients who can’t or simply don’t want to pay. Here, we’re going to look at what you can do to prevent this issue from popping up in the first place and how to handle it when it happens.
Get a contract
If you’re very clear with the terms of your service and payment, then a client doesn’t have much wiggle room to get out of them later. Furthermore, if it’s cemented in a contract, then it sets clear expectations that are legally enforceable, as you can see here. Still, it pays to understand the why of why clients are late with their payments, too. Sometimes, there are legitimate extenuating circumstances and being understanding could work in your favor.
Follow up on your invoices
If you rely on invoices, it’s important that you stand up for yourself when it comes time to collect. Use an invoice tracking system to be always be aware of who owes what, when they’re supposed to pay it, and the last time you contacted them. Instead of relying on automated contact emails, however, make it personal and talk to them directly. This can give the payment a sense of urgency that makes them more likely to act on it. Be polite, be open, especially if it’s a first reminder, but be firm.
Get them to pay upfront
One way to circumvent the problems of clients and customers missing payments at all is to only accept all or some payments up front. Smaller deals could be handled upfront, for instance. You just need to make sure you prepare an accessible and immediately way for them to pay, which you can find if you click here. Credit card processing systems are available both as software and hardware, so whether you’re handling everything through the website or you need a way to bring your payment processing methods on the go with you, there are definitely solutions available.
Use some capital
If you can’t have clients pay upfront and you use invoices on a regular basis, then late payments may simply become a risk of doing business that you have to get used to. Working capital loans and invoice financing will cut into your profits, but they can offer some protection and stabilize your cash flow so that late payments don’t become as much of a recurring risk. In many cases, you are borrowing based on the invoiced amount, and pay a share of the invoice to the lender when the client or cusotmer finally sends it.
As a last resort, don’t be afraid of considering the legal options. If it’s a small enough payment, it might make more sense to simply write it off and never work with that client again. However, if we’re talking thousands, rather than hundreds, you can still recoup some of the costs by lawyering up. Just make sure you never get angry or threaten if a client refuses to pay, it can work against your favor.