When Clients Do Not Pay

Comments

14 responses

1. 

   Ali Hussain

   July 24, 2010

   This is why i always use a 50% up-payment. Something is better than nothing.

   Reply
2. 

   leah shepherd

   July 24, 2010

   I’d be interested to hear from other freelancers about whether they charge a percentage of the payment upfront. I haven’t done this, and I’d be interested to hear about client’s reaction to this idea. Does it turn them off?
   I’ve been burned once by a client that didn’t pay for four stories, and now I’m being more careful about which clients I take on.

   Reply
3. 

   Lara

   July 24, 2010

   I just had this happen. You’d think I’d know better. From now on, 50% to start, and 10% discount if they pay 100% up front will be the new corporate policy. I hate having to say “the corporate policy is to do no further work until the account is current.”

   Reply
4. 

   Lucy Smith

   July 24, 2010

   I started charging 50% for new clients after my second job as a freelancer took three months to pay (it was something like NZ$200, so not even US$150, but a lot to me at the time). I only got it by nagging over the phone; emailing and posting invoices didn’t work.

   Nobody has ever had a problem with paying 50% of my estimate upfront. I guess if they’re serious clients then they won’t mind, and if they do mind I probably don’t want to do work for them anyway.

   Reply
5. 

   Janette

   July 25, 2010

   Of course, non-US readers should note that they need to refer to their own tax legislation for advice about whether the same or similar provisions apply to their business. IRS publications may have little relevance for other territories 🙂

   I agree about the milestone approach. Where possible, I negotiate for one-third up front, one-third at an agreed point partway through and one-third on delivery.

   Also, where possible I retain copyright and simply grant the client a license to use the material (which can be anything from exclusive, worldwide and in perpetuity at one extreme, down to non-exclusive and limited time and territory at the other). In some contexts (eg speechwriting) it’s much simpler to sell the whole thing, of course. But for “on spec” stories, articles and fiction, the business arrangements differ wildly.

   I guess the key advantage for writers in Australia is that our work is automatically protected by copyright (this also applies in many other countries – check your local arrangements). I find it really helpful to provide potential clients with a short explanation that they cannot use my work until I grant them permission – which I will happily do upon payment in full. That tends to sort the sheep from the wolves!

   Reply
6. 

   Meili

   July 25, 2010

   Yes, this is one reason why I feel worried every single time I talk to a new client. Event the ones I know in real life have failed to pay me or paid me months after the work was done.

   There is this one guy in Singapore, I did a month’s work for him and spent my own money on expenses but he never paid. I called him up once, like a year after I already left Singapore. I was perfectly polite and I knew he wasn’t going to pay but I called just to let him know that I won’t be forgetting his behavior.

   Reply
7. 

   Rebecca Theim

   July 25, 2010

   After first talking to a prospective new client and we agree on their intent to hire me, I send an official-sounding letter of agreement (which I created from a number of letters I found on the Internet and revised the legalese to make it understandable) that indicates I will be charging an upfront deposit equal to the first month’s retainer or expected total rate. I don’t start the work until I receive the signed LOA and deposit. I’ve never had a client balk, although I assume there are plenty out there who may.

   I’m happy to share a copy of my LOA with anyone who’d like to see it; just email me at rebecca@tipitina.biz.

   Reply
8. 

   Susan Greene

   July 25, 2010

   I just wrote an article on this very topic! It’s a case study of a client who hired me to do copywriting and then, as you described in your opening paragraph, disappeared. The client wouldn’t respond to my emails or phone calls.

   I try to give advice to other freelancers so that they don’t find themselves in the same situation. It’s titled, “Freelance Copywriters, How to Avoid Being Ripped Off, Case Study – Guard Dog ID.”
   http://www.susangreenecopywriter.com/articles/avoid-being-ripped-off.html

   Reply
9. 

   Allison

   July 25, 2010

   It’s one of the advantages to working through sites like Elance. I know a lot of people don’t like that site, but it is nice to have the escrow service when working with a new client.

   Reply
10. 

    Gina Jennings

    July 25, 2010

    I always heard that it was wise to charge a 50% kill fee first before proceeding with the rest of the project. I think that would apply to all freelance workers–graphic artists, coders, etc.

    Reply
11. 

    Linda Moore

    July 25, 2010

    I’ve been burned twice in the past five years. This was not internet work; it was face-to-face work in my hometown (Detroit).

    One was a company for which I’d freelanced for more than 17 years. They went out of business without paying me for my last project and owe me more than $7,000. One of its principals teaches at a local university, which makes anyone who is part of the local instructional design community, who wasn’t paid, reluctant to come forward. Several people (that I know of) were not paid. So far, no one has spoken up.

    The other was subcontract work for a major, well-known telecommunications company in another state. The woman who hired me screwed eight people across seven states out of their money. If you Google her name, you’ll see that we have effectively prevented her from cheating anyone ever again. Outside of that, we really don’t have much recourse.

    In both cases, I completed the work that was assigned to me because the ultimate clients (a major bank and a major telecommunications company) had no idea the contractors assigned to their projects weren’t being paid. I didn’t want to be characterized as having “walked away from the project.”

    I use the cash accounting method, which means I can’t write off my losses, so I’ve decided to turn my records over to an attorney and let him collect in return for a “cut” of the proceeds. That way, hopefully, I’ll receive some of the money. I should also be able to deduct the “cut” paid to the attorney as a business expense.

    I’d be interested in hearing anyone’s thoughts on my approach or suggestions on other approaches I might take.

    Reply
12. 

    Brian

    July 26, 2010

    As far as I know, it doesn’t matter which accounting method you use, the net effect is the same.

    In the accrual method you mark down $100 in income when you bill and then take off $100 in write downs when you aren’t paid. Net income is still $0, sames as the cash method of accounting.

    Reply
13. 

    Susan thrower

    July 29, 2010

    Talk about rip offs, one of my books sold over 100,000 copies in three months, then, the publisher pulled their website down and ran. I am out over $50k on royalties alone. mystic moon press was the compNy and Jennifer Rae Mitchell is her name so beware.

    Reply
14. 

    Paul MacArthur

    October 30, 2010

    The National Writers Union provides grievance assistance to writers who are having trouble recovering money from deadbeat publishers. Since 1991, we’ve helped writers recover almost $1.5 million. For more information, check out: https://nwu.org/grievance-assistance

    Reply

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