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zook

Clients paying late

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I have a client who is becoming a serial late payer.

 

They always paid within 30 days, but in the last few months they've defaulted every time, and with a week to go before everyone packs up for the xmas break and me being broke, they're telling me they'll pay me when they get a big cheque they are waiting for.

 

They are over a couple of weeks late in paying (more in one case) which doesn't seem much but as a one man band this could make for a bleak Christmas.

 

So how do other freelancers deal with this sort of situation? How acceptable is this sort of behaviour? Should work be commissioned by clients who insist on being paid for the job before paying the designer who has put the hours in?

 

zook

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Weekly emails apparently aren't doing shit for me..

 

 

I keep about $2k in a savings account for occasions like this. When it's bleak, I transfer the money out, then when the money shows up, transfer it back into savings. Kind of like borrowing from yourself. I know socking away 2K isn't easy, but I think that emergency savings are critical for the self employed.

 

Also, my tax deferrence dollars are in a Money Markey that can also be transferred out in a a pinch (a Paypal account, actually, earns an easy 5%). So when the fit hits the shan, there's emergency-emergency funds available.

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You have to remember, sometimes clients wait to pay vendors until THEY get paid from the client.

 

Sometimes large corporations take 60 days to pay out after a job. My GM clients are like this on larger jobs. It's just something you have to anticipate.

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You just gotta keep on them - keep reminding them, send many emails. I've been waiting on a particular payment since 8/30/06!! They are JUST sending it to me! Usually my clients are diligent, but sometimes they slack like a high schooler.

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is 50% down, 25% midpoint, 25% on delivery too much to ask of clients these days? how about a payment schedule based on project milestones, so no $$, no wasted time/work?

 

with good clients a contract is not needed, and with bad clients a contract is never enough.....

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is 50% down, 25% midpoint, 25% on delivery too much to ask of clients these days? how about a payment schedule based on project milestones, so no $$, no wasted time/work?

 

I use the 50/25/25 formula quite frequently and it works well for me. As far as clients waiting to get paid by their client to pay you, I say bullshit. That's not your problem, unless you failed to discuss it up front, and in that case chalk it up to lesson learned. Communication, if not contracts, can solve all these issues. At least that way if they intend to wait to pay you, you can weigh that factor when deciding whether or not to take on the work.

 

with good clients a contract is not needed

 

Disagree.

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Agree with Graymachine - always keep a pad, if you don't have one, be extra frugal for a month or so and save save save. Late payment is definitely the norm, you just have to prepare for it.

 

When it starts to get ridiculously late, bug the hell out of them. Don't worry about bugging clients that pay extra late, chances are, if they're so late that you have to harass them, you probably don't want to work for them again anyway.

 

My rule of thumb (which I think I learned from reading a frizzle post) is to have at least 3 months income handy at all times. If you dip below, then you need to spend less for a while until you build it back up.

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I include a note in both the project contract and invoice that says "This account is due in X days. Late Payment interest will be charged against overdue accounts." after the 2nd reminder (every 5 days) they are delivered with a new invoice ... and interest charged (5%) it usually kicks people into gear, though I have on very odd occasion had to charge interest twice and 'threaten' debt collection fees - which the client will pay for if I have to use such a service.

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I include a note in both the project contract and invoice that says "This account is due in X days. Late Payment interest will be charged against overdue accounts." after the 2nd reminder (every 5 days) they are delivered with a new invoice ... and interest charged (5%) it usually kicks people into gear, though I have on very odd occasion had to charge interest twice and 'threaten' debt collection fees - which the client will pay for if I have to use such a service.

 

I like that approach, if the terms are Net 10, then after ten days charge 'em. Obviously, no one solution is perfect, but at least you have some post delivery motivation to pay on time.

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sorry I should have been clearer. payment terms are generally 21 days (sliding scale for total amounts) > no payment > 1st reminder sent > 5 days no payment > 2nd reminder > 5 days > no payment > then interest! > payment > then party!

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hehe. I had a client do the same, he then went on to tell me that it would be great if the industry worked like 'that'.

 

It's clearly stated on the invoice and in the terms of the project, simple as that, same as the hourly rate, additional costs ... and the clients signature accepting all the terms.

 

if I got laughed at the interest would jump up to 10%

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It's weird how good clients start taking advantage of you after you've worked with them a while.

It's almost a given, and I don't understand it. My favorite is the guy who always paid a specific

rate. I spent 2 labor intense weeks on a project for him, then he said he thought we understood

that I was doing it for $1,000. No, my real favorite was the company that treated me like royalty,

paid promptly, and then stiffed me the last 2 weeks. At least "tried" to stiff me. I have a scorched

earth policy when it comes to deadbeats.

 

 

 

is 50% down, 25% midpoint, 25% on delivery too much to ask of clients these days? how about a payment schedule based on project milestones, so no $$, no wasted time/work?

 

with good clients a contract is not needed, and with bad clients a contract is never enough.....

 

This is always the policy in video production, because it is the only way to survive.

I can't believe how soft designers are when it comes to business. When I try to set

standards, producers just move on to an idiot who will lets himself be a doormat, and there

are so many nowadays.

Edited by tomcat

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I think my clients will run a mile at the 50/25/25 thing.

 

I have dibbed into my savings, but with one thing and another they've been a little depleted of late.

 

More clients are asking for retainers - my time guaranteed for a couple of days a week at a discounted rate, as the work will be guaranteed. This seems OK in the short term, but could take away my flexibility in the longer term.

 

Any others tried this approach?

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What about posting who all the deadbeats are so other freelancers won't get screwed in the future?

 

Or maybe a database, kinda like a shopping site that rates retailers.. Leave comments both +/- ?

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gentlemen, business IS war... this is an opportunity

 

1) Write a clause in your initial agreement/estimate/contract that includes YOUR payment schedule and include stiff INCREMENTAL penalties for late payments. ... 2 weeks late +15% etc

 

2) Never whine when they are late, just send the new invoice. Its not a fine, its business and its your money.

 

I ran a freelance T-shirt biz- and this works. ;)

 

...oh, and if the big corporation can't get the funds to you in 6 month.... fine, just work that in and charge 275% more, but don't raise the initial cost of the project. Also offer a 5% discount to all accounts that pay in cash, especially whiners.

Edited by Tiger Leahu

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