Not getting paid on time by a client is a lot like having a hard drive fail: it's really not a question of “if” it's going to happen but “when.” When it does happen...and it will, how you handle the situation will often determine when and if you get paid, and if you're able to salvage the relationship.
Panicking, overreacting and assuming the worst in people are all things you want to avoid when a client fails to pay you when they were supposed to – all three approaches are like throwing water on a grease fire. (Bad idea).
Here's a lighthearted look at some of the steps you could but SHOULDN'T take when a client fails to pay you on time.
1. Panic and jump to conclusions
A while back I saw a guy driving like a complete idiot on the highway. Welcome to driving in Phoenix, AZ. As I see this clown weaving in and out of traffic, as if he was on the NASCAR circuit I thought, "What a jerk." Should this guy’s license be revoked? Should he be horse whipped for putting others in danger? While my initial reaction to both questions is “Yes,” I recognized something: I didn’t have all of the facts in regards to why the guy was driving as he was. Sure, the guy's driving like a five-year-old playing a video game with an over-the-top sugar rush, but I don't know why he is. Is he just a jerk, or is he racing to the hospital to see his sister that's in critical condition? I don't. The point is, I don’t know all of the facts, and I need to be careful about assumptions.
This same concept applies when your client doesn't pay you on time. The last thing you want to do is assume and accuse her or him of intentionally not paying you or screwing you over. How would you feel if you found out their check was mistakenly put in your neighbor's mailbox by a postal worker? “You don't know what you don't know,” so give your client the benefit of the doubt until you know the facts. A quick, knee-jerk reaction may leave you with egg on your face.
2. Ignore your client and let them come to you
Fortunately, this tactic isn't used by many freelancers. However, designers have told me they’ve tried it - it is about as effective as ignoring a grease fire in the kitchen and just hoping it goes away. It just gets worse.
While no freelancer wants to go through a non-payment situation, this can be an opportunity to step up, establish their confidence and authority by addressing things promptly and professionally with the client. While that may sound like sunshine being blown up your rear, it’s not. Being forced to manage tougher situations like this will make you a more self-assured, savvy designer. Sure, I know it can be often be an awkward situation, but by ignoring your client owes you money, you'll make it even more awkward. Approach your client with a gentle but honest and professional tone – be fair but be firm. Remember, by not paying you, THEY are not living up to THEIR end of the deal.
By contacting your client directly you'll be showing them that you have probably have been through this before and that you can quickly get things back on track. You will earn respect from your client, and you’ll get paid faster.
3. Email rather than call your client
Never communicate bad news over email – a lesson I’ve personally learned the hard way over the years. Again, if you skimmed over that part without it registering, never send bad news over email. I know email’s much easier to shoot a delinquent client a "where’s my money” email, but if your goal is to get paid AND to keep working with the client, email's not the way to go. Email only allows person to speak at a time, it is slow in resolving issues and is often misinterpreted because it's difficult to gauge someone's emotions or intentions by looking at a bunch of typed-out thoughts.
If you find yourself in a non-payment situation, ditch the email, pick up the phone and say something like, "Hey John, do you have a moment to talk with you about your account balance?" If the client says, "It's not a good time," respond with, "Not a problem, this is something we'll need to talk about promptly, would later today or tomorrow be best?"
SPECIAL ADDENDUM: I initially wrote this post about a year ago; when I did so I was confident that I built a sound, logical argument in all of these five sections. I was wrong when it comes to the previous section (#3). Yep, I had it wrong. While I still believe that it is essential to call delinquent clients in order to get a payment issue resolved, I don’t believe that freelancers should disregard email. In fact, email can also be essential when collecting a balance. An email isn’t going to be nearly as effective as you calling a client on the phone, but it will serve you in one big way (especially if your client resists in paying you): your emails can serve as a paper trail that you can use as evidence if, God forbid, you have to take your client to court. I’d suggest emailing your client after every time you speak on the phone. You can even entitle the email “Account Balance: Summary of what we just talked about”. In this email follow-up you’ll want to provide a quick synopsis of what was talked about in the conversation (including the time you talked and any promises that were made).
I know this sounds like it can be tedious and maybe even a little awkward, but if you take your client to court, you’ll thank me (and yourself) for establishing a paper trail. Over the years I’ve found that I use email as a way to communicate more and more as the client’s balance becomes more delinquent. I do this because the longer the client hasn’t paid me, the more likely I’ll need to take them to court (which means I’ll need a paper trail to establish that I’ve gently tried to collect several times).
4. Just wing it when you call your client
Okay, so we've ruled out sending emails to your client to collect the balance (they are just used to establish a paper trail), but using the phone has some pitfalls to be aware of as well. The biggest challenge freelancers have with the phone is that they aren't prepared to suggest a resolution that all parties can live with. When calling on clients to pay a balance, freelancers don’t plan ahead. This is like going into the boxing ring thinking, "I don't know what I'll do when I get up there, I'll figure it out as I go." Bad idea - and this is coming from a boxer. If you like improv and adlib that's cool, but now is not the time to try it. Before you dial those digits, you have to have a plan. Take a few minutes before you call and think of different scenarios that might happen, as well as what you’ll do if they do. For example, what if you get the voice mail – what message will you leave? If the client tells you that the check is in the mail, what will you say? The bottom line is that if you’re unprepared and you stumble when communicating with the delinquent client, you will lose some of your authority and confidence – both of which are bad if you’re trying to collect.
I've always found it helpful to take notes before I call the client about a past bill. Write important dates and past communications down so you can quickly bring them up in the conversation. Most importantly, get clear on a couple of ways you want this to go down (suggestions on how you want this to get resolved). For example, after listening to the client, you could suggest, "Hey, I understand why payment didn't go out today; however, I can take a credit card number right now or I can send over a courier to your office to pick up a check today so we can get you balance back in good standing, which would be better for you?"
5. Tell your client that she/he can pay you "whenever"
If you purposely, or even by accident, let it slip that you feel bad for the client and that she/he can pay you "whenever," it's going to be a while before you see that money. Being empathetic towards your client's situation is admirable, but the mantra, "the squeaky wheel gets the grease," is applicable in this situation. If you give the client the “okay” to take their time in paying you for your work- they're going to do it.
Most of the time, I've found that freelancers are unsure about how to handle these situations - they'll ask friends or scour message boards, hoping for an answer. If you're in that situation don't feel badly (most freelancers don't know what to do even if they pretend they do). The key is to have a plan on how to handle these things BEFORE they come up rather than trying to scramble for an answer at the last minute. Former Heavyweight Champ, Mike Tyson said it best, "Everyone's got a plan until they get punched."
If you get punched, make sure you can punch back.
I cover what to say and how to handle these situations in more detail in the Verbal Kung Fu for Freelancers book; you can check it out by clicking here. In the meantime, realize that you have a lot more control over the situation than you thought, and much end result will be based on how you handle yourself.