This article was written by Steve Pomerantz of Freelance Collection.
Chasing down a client over a late payment is one of the most unpleasant parts about being a freelancer, but you’re unlikely to avoid it. Unfortunately, being stiffed has become a right of passage in the freelance world. Over 70% of freelancers have issues getting paid at some point in their careers.
If you’re dealing with a non-paying client, you’re probably not interested in hearing what you should have done to prevent it (have a contract, get paid upfront, do some background research on your client, etc.). There are plenty of good articles on that subject out there (here’s one), but that’s not what this article is about. So let’s talk about what to do when a client tries to stiff you.
While there’s no truly one-size-fits-all approach to dealing with non-paying clients, this article will give you some general rules that apply to most cases. There are, however, several common types of situations. For deep dives on those individually, you can download Freelance Collection’s free guide, 20 Types of Nonpaying Clients and Strategies for Getting Paid.
Almost anytime you’re dealing with a client who doesn’t want to pay you, we recommend this high-level progression:
Optimize things within your control → Deal with your client directly → Make a power move
Optimize things within your control.
You may not be able to dictate your client’s actions, but you can do a few things to make sure your own actions are as effective as possible. The first thing to remember when you encounter nonpayment is that you’re not alone and you didn’t do anything wrong. It’s important to keep that perspective because getting stiffed can feel personal and deflating.
It’s not just important to mentally regroup for your own well-being, because negative feelings can lead you to take actions counterproductive to getting paid. If you lash out at your client, you make it less likely they’ll eventually do the right thing. So even if they don’t deserve it, you should try to keep your client communications positive.
If you’re still working for this client even after they’ve started missing payments, get ready to pause your project. You’ll want to give your client one last chance to pay before you hit pause, but make sure you have everything in place to stop your work. That might mean finishing to do something you’ve already billed for, backing up your work, or making sure you document your hours. Whatever it means for you, get your ducks in a row.
Deal with your client directly.
Now that you’ve done some preparation and you’re ready to show restraint, it’s time to shift your actions toward your client. The opening strategy here is to be firm but friendly. Say something like, “I appreciate that you have a lot on your plate, but I need you to know this outstanding invoice is a priority for me, and it’s important that we get it settled immediately.”
Then if you’re able, give them a reason to pay that immediately that benefits them. For example, you could say, “This is my livelihood, and when I have to worry about making rent, I’m not able to do my best work for you.” Or you could bring up your willingness to pause the project, saying, “I don’t want to have to stop working on this project for you, but I will if we don’t get this taken care of immediately. I love working with you, but I can’t work for free.”
Make sure you don’t just send an email to your client. It’s a lot harder to ignore someone when they get on the phone or, even better, when they show up at your office and are staring you in the face. Also, don’t just make one attempt to get them to pay and give up. Be persistent and consistent, regularly following up a couple times a week, using a mix of phone, email, and in person when possible.
If you’ve gone a couple weeks and you keep getting excuses or if your ignores you, give them a hard deadline a few days out and let them know your next step will be to notify their boss (or partners or investors or suppliers or clients or employees). Embarrassment and shame can be powerful motivators.
Make a power move.
If it’s clear that your client won’t play ball or if you simply don’t want to spend more time or energy playing nice with this client, it’s time to escalate matters. To let them know you’re serious, send your client a demand letter. (Free template here.) Even if you don’t intend to take them to court, you might get lucky and get them to act. If not, you’ll be ready to show a judge (if necessary) that you made every effort to settle the matter out of court.
Small Claims Court isn’t for everyone, but if you decide you want to put in the time, energy, and a small court filing fee, it’s worth considering because collection agents or lawyers will keep a big portion of what you earned. States have different limits for Small Claims, but most of them cap out between $5,000 and $10,000, so if you’re owed much more than that, Small Claims Court isn’t the right option for you. Also, you need to sue your client in their home venue or in the venue designated in your contract (if you have one), so geography might take Small Claims Court off the table.
Because they keep a large percentage of what they recover for you, you don’t want to call up the professionals until you’re out of other options or it’s just not worth any more of your time and anguish. Collection agencies and law firms are powerful advocates, but there are things you should know when you use them:
Collection agents get your client on the phone and attempt to negotiate with them. They can report your client to the credit bureaus and/or threaten to sue if your client doesn’t work out a settlement. Not all collection agencies are created equal, though. Many will make one call and give up if your client doesn’t play ball immediately. Some will charge you lower rates, but you typically get what you pay for. Only a small subset of collection agencies focus on commercial (as opposed to consumer) collections and check all the boxes you’d want checked.
In some situations, lawyers can be more effective than collection agents because they don’t just talk about suing your client; they actually sue your client. But you’ll have to front the money to pay for court filing fees and serving your client, which means you have to go out of pocket up to $700 without any guarantee of success. Collections law is highly specialized, so you may not get the best result by hiring your lawyer friend, even if they’re willing to give you the “friend rate”.
The best collection agencies and law firms generally prefer to work with larger customers who bring them lots of repeat business, so you might not get them to give you the time of day. If you can get a top agency to take you on, they’ll likely charge you a higher rate than they charge larger volume clients. Freelance Collection solves this problem by aggregating smaller accounts like yours so you can access the best collections professionals and get the same level of attention as their largest customers.
You’re not alone.
It’s no fun dealing with a client who tries to stiff you, but know that you’re not alone. Millions of independent contractors and small business owners have gone through the same thing you’re going through now. Even if you wind up having to walk away, try to take something away from the experience so you can emerge stronger and wiser. Hopefully though, the advice here helps you get the payment you deserve.
About Steve Pomerantz
Steve Pomerantz started Freelance Collection because of his own experiences with non-paying clients, and he’s driven by the mission to help the growing segment of freelancers and small business owners work with dignity and stand toe-to-toe with clients who try to take advantage. Steve previously co-founded Tuition.io, which helps companies pay down their employees’ student loans. He’s a former film finance executive and management consultant.