It\u2019s an ultimatum and memorable phrase in cinematic history \u2013 \u201cShow Me the Money!\u201d A hot-shot football rookie pleads with his sports agent Jerry Maguire in the movie of the same name to \u201cShow Me the Money!\u201d \u201cShow Me the Money!\u201d It\u2019s powerful, yet comical in this instance.<\/p>\n
But it\u2019s real and nasty in another. It describes a real-life predicament that many people face in trying to collect fees for the services they rendered. Freelancers, in particular, are subject to this irksome issue of nonpayment. And in today\u2019s gig economy, \u201cShow Me the Money!\u201d is indeed highly prevalent and perilous.<\/p>\n
How common is this threat to financial well-being? Ask freelancers to identify their biggest challenges. Expect to hear not getting paid repeatedly and prominently. This grievance comes in at number six in \u201c25 solutions to problems only freelancers face<\/a>.\u201d This post acknowledges that not getting paid is \u201cgoing to happen eventually. A client is going to cut bait and run after you\u2019ve delivered the work.\u201d This concern clocks in even higher, at number four, in \u201cThe unglamorous side of freelancing<\/a>.\u201d This writer notes: \u201cDoing your work on time and sending an invoice on time doesn\u2019t guarantee being paid on time. Most freelancers have experienced clients who are late at paying \u2013 or worse, clients who won\u2019t pay at all.\u201d<\/p>\n In the bigger picture, it\u2019s not only freelancers who contend with this frustrating matter. The clients that engage them may wrestle with it too. You would think, since these businesses that use freelancers depend on collecting fees for their own products and services, they would understand the importance of paying and not taking advantage of the freelancers who serve them. Sadly, that is not the case\u2026 not for all, but some.<\/p>\n Life being what it is, an oversight in payment may occur. OK, that may (but shouldn\u2019t) happen. Nonetheless, with a simple past due or second invoice, the situation can and may be rectified. Late payment also may arise because of cash flow problems. Again, a reminder and phone chat may pave the way for settling the matter equitably. But then there\u2019s the BIG one \u2013 the client that fails to respond, dodges all calls and contacts, ghosts the freelancer. Multiple attempts to confront the issue aren\u2019t working. The client is incommunicado. The money is not coming. Getting stiffed is infuriating and violating.<\/p>\n What can freelancers do to guard against not getting paid? If \u2013 and when it occurs \u2013 what options are available to deal with deadbeat clients?<\/p>\n Reeling in a client is exciting. It\u2019s a new block to build a business. In planning and conducting exploratory meetings, place your objective judgment front and center. Don\u2019t wear blinders. Working with a new entity \u2013 and even an existing one \u2013 has its risks. It\u2019s not enough to come away with a merging on the minds on goals, workflow, and approaches. You need to determine: Is this client trustworthy? Clients assess freelancers\u2019 work and character. Do the same. Ask questions. Gather supplementary information. Review the client\u2019s website. Research the business and the person. Run a credit check. Don\u2019t get carried away with dreams of a potential infusion of cash. If you\u2019re not cautious and conscientious, you may never collect it. If something seems suspicious, walk away.<\/p>\n How do you land clients? Going the route of local or connected sourcing may remove some uncertainty and unknowns. Personal referrals fall into this category. Getting clients through word of mouth is another potentially lower risk avenue. Let friends and family know you seek new, reliable clients. Similarly, go prospecting at community and religious groups, civic and social clubs, where there may be some ties that bind. The same goes for professional organizations and alumni associations. Common threads may cut down on the chances of acquiring a rogue client. But it\u2019s not fail safe and may not be productive enough to grow a business. Thus, even when pursuing this path of presumably least resistance, it\u2019s critical to vet clients carefully.<\/p>\n A verbal agreement, nod, and handshake are nice. But they are signals and only a start. Freelancers are in business and must conduct negotiations that way. Hash out billing rates, payment terms, contingencies, and out-of-pocket expenses. Then set it all out in a formal letter of agreement or contract \u2013 signed, sealed, and delivered. Retain copies and refer to them, as necessary. If you don\u2019t have these boilerplate forms at the ready, research and retrieve them. Ask other freelancers and business owners for samples of theirs. Search the internet for templates. Discuss upfront with an accountant, mentor, lawyer, or legal service. For each new project, write detailed descriptions with timelines and cost estimates. Have the client review all provisions and sign.<\/p>\n Welcome to the concept of divide and conquer applied to the payment space. Set up incremental schedules to cut down on getting stiffed. For example, collect a down payment for work to commence. Then bill for the balance upon successful completion of the project. Getting paid in thirds with specific milestones and dates is another way to go. Here again, a down payment initiates the work. An interim payment occurs when a meeting takes place to review progress to date. The final payment signifies acceptance of the project. Regardless of the payment scheme \u2013 one or multiple \u2013 include detailed information about terms. Is it on receipt of deliverables, NET 30 or other? And address delinquency by spelling out late fees with set dates and penalties.<\/p>\n Keep detailed financial records and track your receipts or lack thereof diligently. The premise here is to act swiftly to try to rout out a problem and stop the hemorrhaging with a client as early as possible. By being on top of the situation and taking timely action, the outcome may be more propitious. In other words, take a cue from the expression \u201cthe sooner the better,\u201d which tends to work in your favor. Bring up the issue of late or nonpayment shortly after a client misses a targeted payment date. Discuss the situation upfront to determine the cause, extent, and when you can expect to receive funds. Contact Accounting or the Accounts Payable group, if the client has one. Don\u2019t be apologetic. Don\u2019t stop pursuing. Your livelihood is at stake.<\/p>\n Battle up! Sometimes, repeated invoices, emails, and communications don\u2019t bear fruit. It\u2019s time to escalate. Consider Freelancers Union<\/a> as resource in this instance. Bonus: it\u2019s free to join. As the group states: \u201cFreelancers Union has been advocating on independent workers\u2019 behalf since 1995, giving our members access to education, resources, community, benefits, and a political voice.\u201d On its website\u2019s Resources tab, click \u201cClient Issues.\u201d What\u2019s the first to pop up? It\u2019s none other than \u201cHow to Deal with Nonpayment.\u201d Several suggestions there mirror those of this blog post. However, the one to delve into is the Collection Letter Template<\/a>. Download it, fill in the blanks, and take action. Other resources? If you obtain a deadbeat client through an online marketplace, such as Fiverr or Upwork, contact its resolution or support services for help.<\/p>\n The Collection Letter Template referred to above lays out various options. The no-cost ones include filing a report with a state Attorney General\u2019s office. Similarly, register the incident with the Better Business Bureau. Both of these avenues are not direct routes for receiving remuneration. They may work fully, partially, or not at all, but at least make life uncomfortable for your client. What to do when all else fails and you\u2019re determined to get the funds owed you? Hire a collections agency, lawyer, or legal service. At this point, you will be spending money to get your money or, more realistically, a portion of it. Similarly, go to small claims court if the case meets the parameters, pay the required fees to file a complaint, and then prepare to wait weeks or months for a court date. Note: small claims court only renders a judgment; it has no enforcement powers to help collect funds. What does that mean? You can win the case and still not get paid.<\/p>\nDown with Deadbeat Clients!<\/h3>\n
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