5 Ways Creatives can Deal with Non-Paying Clients

Freelance designers have serious problems when it comes to collecting payment from clients. As a follow up to another post that deals with some steps being taken to give creatives some defense against clients who refuse to pay, I wanted to know more about the experiences other creatives have had in dealing with such clients or what design professionals have done to successfully collect on what they’re owed.

The range and variety of solutions offered up by members of the LinkedIn group, Creative Dilemmas, came as a pleasant surprise, shedding some brilliant and practical solutions to creative professionals’ invoicing woes as well as steps other creatives can take to avoid getting burnt.

Below is a list of five ways creatives can prevent getting burnt by non-paying clients.

I.  Collect a deposit before any work begins.

“We collect a deposit up front and then invoice the balance at the end. This way we are covered for at least half of the total cost.”

Having to deal with a non-paying client can be easier to manage — or completely avoided — if some preventive strategies are put in place from the very start. Making payment on a project deposit a necessity of every project you take on protects you in two key ways. First, it ensures you get paid for at least a portion of your total projected time and/or expenses. I’ve found my own clients to be comfortable with 25% of the total projected cost of the project, though it’s common for creatives to ask for at least half of the total cost.

“If [clients] don’t want to pay a deposit, then they have no intentions of paying [later

Many creatives have also found collecting a project deposit to be a useful tool for separating good clients from the bad. If you choose not to collect a deposit, you may never get paid — no one likes to work for free.

II.  If You Don’t Trust Them, Don’t Work with Them

“The two times in my 22-year career that I felt uncomfortable about a client were the two times I got stiffed.”

In our day to day lives, we choose to associate with people we can trust. This mindset should also apply to the way we conduct business. A client that’s in a rush to get work done or makes promises that sound too good to be true are signals that you should reevaluate the relationship. Trust your instincts. Ending a relationship with a client that displays warning signs like these could save you a lot of time and energy later down the road.

“I only deal with companies who I feel are trustworthy from the very start. Life’s too short to be chasing invoices.”

III.  Be Professional, Be Assertive

“Perception is everything. To many, ‘freelancer’ means ‘pushover’. If they think you’re a pushover, that’s the treatment you’ll receive.”

Freelancers have to make themselves crystal clear in the way they conduct business. Otherwise, we run the risk of being walked all over, or misunderstood. Let your clients and prospects know that you’re running your business on your terms – not theirs. It might come as a shock, but people don’t want to work with a quirky, egotistical designer that’s difficult to work with: they’re looking for a reliable, honest professional that is as concerned about their business as they are about theirs.

IV.  Get Creative When It’s Time to Collect

“I have a photo of my dog looking extremely sad by an empty dog bowl with a headline that reads “Time to Feed the Dog”… it has invariably caused my invoices to be found and processed.”

While this may be proof that even funny, good-humored approaches to collecting payment can work, it also proves that there’s no single approach to invoicing that guarantees you’ll be paid on time. Every invoice I send out consists of one copy delivered to the client in the mail, one via email and a phone call to letting the client know that they’ve been invoiced. This may be annoying to the client, but it shows them that I’m serious about what I do and that I want to be paid in a timely manner. A client can’t say that an invoice was lost in the mail if they have it sitting in their inbox, or vice versa. If I think a client may be dodging me in hopes that I’ll just forget about their invoice, that’s when I send another one – this time as a certified letter. Resourceful professionals will demonstrate that sometimes you’re going to have to get creative.

“I was once contacted by the president of a design firm who was owed a fair amount of money… I told her to go to the client’s office and sit in the waiting room until someone came out with a check. It worked.”

V.  Explore Your Other Options

“I have only had one instance where I turned a client over to a collection agency… much to my shock, I actually got the money.”

You do have options available to you if a client absolutely refuses to pay. Collection agencies, the better business bureau and small claims courts are a few of the options available to designers in such events. It’s best to weigh the cost and effectiveness of these and any other options available to you to find the one that is best suited to your needs.

Small claims court is a great tool for small businesses. When you get a judgement in your favor, the sheriff goes over and collects the money for you plus all expenses.”

What have you found to be an effective way of dealing with non-paying clients or your own invoicing troubles? Suggestions?

A Large Concern for Freelancers: Getting Paid

If you’re a freelancer, it’s more than likely that you’ve been burnt by a client at some point in your career. My latest burn constitutes finishing a large project on a tight schedule for a new client, only to be denied the second half of the payment due to me after the job was finished and off to press.

At first and against my better judgment, I wanted to give this client the benefit of the doubt. Maybe they’ve fallen on tough times; Maybe there was some kind of emergency… anything to rationalize the behavior of an unprofessional client that was blatantly ignoring my attempts to touch base.

After failing to contact them by either phone or email over a months time, I decided to send a certified letter and enclosed my final invoice. I knew that the letter was received, being I had the signature to prove it, but another week came and went without a reply or a check in the mail. I contacted a lawyer that could help me to a point, but things could only go so far being I was not financially in a position to take things to court.

Through this recent experience, I’ve discovered a new-found dedication to reading the fine print of every client contract and the importance of assessing each client I take on at a deeper level before entering into a work agreement. In the process, I’ve learned what I thought I already knew: not all clients are good ones and not all projects are worth taking on. A client that doesn’t pay and a client that breaks their own contract is one that you’ll get absolutely nothing but a headache from – trust me.

Which leads me to my point. Where’s the line of defense for freelancers confronted with situations like these? Here in Nebraska, I have two feasible options: contacting the Better Business Bureau and filing a complaint (which never seems quite as satisfying as I’d like) or taking a gamble in small claims court. In the near future however, freelancers in other states may have the law on their side – thanks to recent actions by the Freelancers Union.

Let’s set the stage. In the past, the Freelancers Union has surveyed 3,000 of its members nationwide, asking if they have ever been denied payment for a project. An alarming 80% of survey participants have indicated their difficulty settling up with clients upon a project’s completion. Collectively, freelancers of all types make up nearly one-third of the US workforce, rendering the results of this survey as only a mere sliver of the enormous problem shared by freelancers: getting paid.

Confronting the problem head on, the Freelancers Union recently crafted the Unpaid Wages Bill (S8084/A11520) in an effort to grant independent contractors – such as designers and copywriters – protection against companies that don’t pay for completed work.

“There have been zero standards for freelancers, and that’s why this is so important,” (Sarah Horowitz, executive director of the Freelancers Union)

First introduced in the Senate earlier this summer, the bill aims to grant the New York State Department of Labor additional powers to take action against companies that violate work agreements made with independent contractors, or those that refuse to compensate freelancers within a “reasonable” amount of time. The aim of the bill isn’t to hinder small businesses that rely on independent contractors – only those who choose not to pay for work completed.

“We need solutions to help independent workers get paid,” says Sarah Horowitz. “New York State and New York City can lead the way for the rest of the country.”

While the Unpaid Wages Bill has failed to make it to a vote, the bill speaks for the need for similar bills to be introduced nationwide. An advocate for freelancers since 2003, this organization – 135,000 members strong – has made some significant strides for the 135,000 members they they support. One recent accomplishment includes winning tax cuts for freelancers in the organization’s home state of New York, eliminating New York City’s Unincorporated Business Tax (UBT) on independent workers earning less than $100,000 per year.