Freelancer’s Survival Guide: Negotiating With a Late Paying Client
Is a Contract Binding?I learned in art school to always have a contract, and upon my departure from school, I joined the Graphic Artists Guild, and used their professional contract. Every prospective client argued the use of a contract, especially from a "recent graduate." The joke was on them as I hadn't actually graduated, but my teachers were working professionals who took great pains to teach me about professional practices, and I always insisted that a contract protected both parties. It seemed simple as the copyright law would only allow the transfer of usage and copyright via a written agreement, as I explained to those who wanted my work on their projects. Some begrudgingly agreed and some had interesting reasons as to why they wouldn't sign a contract. I learned early to walk away from those who wouldn't sign my contract, despite their protestations and threats. Those that did sign them didn't seem to care about what those contracts meant. In the end, anyone can sign and break a contract. The power of that piece of paper is only is as strong as your willingness to enforce it. Over the years, I appeared as an expert witness in court for other freelancers, facing someone's client to remind them, in front of a judge, that a contract is an agreement, binding both parties, and in every instance, it was enforced. Still, it takes enforcement, either in court, or through a collection agency, followed by payment in full.
It's Your Money!A friend of mine once said, "thirty days is a jail sentence and not a payment term!" He was right, morally, but at that time, thirty days from delivery was the norm and payments rarely came in within those thirty days… willingly. Since then, payment terms have evolved, most probably because of the problems with freelancers surviving during and after a project is done. Standards now require at least a third of the fee as a deposit, a third at some point, usually approval of a concept (or at a milestone in the project, as they are called) and final payment upon delivery. The thirty days term still survive, however, mostly with corporations that insist it is the only way they can pay for outside work. As someone who has worked for large corporations, both on staff, and as a freelancer, I can tell you that they can have a check drawn within 48 hours when they want to do so. Faster, sometimes, than a small company that has an accountant visit every other week or once a month to settle accounts payable. There will be, in many cases, glitches with payments no matter what the written agreement. My top worst experience was a regular client that didn't pay for six months, but kept ordering work. The art director insisted payment was coming, and account payables made the excuse that they weren't getting the invoices from the art director. In the end, it seems the company was up for sale, and needed to show a larger cash on hand to the buyer, so no vendor was getting paid. Eventually the large payment was made, but over $500 in late fees, as per the contracts/invoices, were not, and the art director sadly relayed that the head of accounting refused to pay late fees. At that point it was a decision to keep working for the client, who did pay well (when they finally paid), and gave my studio assignments on a weekly basis, or end the relationship by suing for the late fee. The decision was to keep the working relationship, raise our fees, and sue later, if the relationship ended. The hardship of non-payment for so long was very difficult. Other vendors were put off for their payments, late fees were demanded by utility, and credit card companies, and they wouldn't accept a statement of "we don't pay late fees."
Does the Client Truly Understand?I've written my share of letters to clients, pleading for payment. I've tracked down hidden accounting departments, and camped out in front of a client's door, awaiting them to make a confrontation for payment. Many have called me "tenacious," at least to my face. Why wouldn't I try my best to get MY money? The letters start out friendly, but assertive, compassionate, but terse. I explain the situation and how their late payments have affected my business, and life, and, in many cases, it has worked to either get paid right away, or end the relationship because they have no intention of living up to the terms of the contract. A client who doesn't respect a vendor isn't responsible or professional. So why bother with them? For the money… up to a point. The following letter is a compilation of many letters sent over the years to clients. Perhaps you will find it entertaining, or informative, or maybe educational. Perhaps you can use passages for your own letters to clients?
I certainly appreciate your trust in my abilities to grant me the opportunity to work on your recent project. I'm glad you liked the outcome, report the project has done well, and above your expectations, and look forward to building a strong, professional relationship with you on future projects. There is one aspect of the entire project that does, however, need to be addressed, so both parties will see a future relationship between us. There was a problem with a timely payment, as per our mutual agreement.
With such an extensive and time consuming project, such as this one, it becomes the only budgeted way of making monthly expenses down the line for me, as a freelancer. When the payment is made later than thirty days, as was the understanding, I am forced to make late payments for my rent, phone service, internet, credit cards, etc. and all of those services demand fees for late payment, as well as certain problems with my credit rating.
You had specifically asked for trust in setting up payment terms, rather than having milestone payments and a deposit for this project, insisting that the entire payment would be made within thirty days. It took over sixty days, twice as long, to receive payment, which delayed my payments over thirty days to my creditors. Your payment also did not include the late fees billed in the sixty day reissued invoice, as well as the fees for changes made beyond our agreement. I extended my trust to you, but it has not been returned as of yet.
When we first met to discuss this project, you relayed your disappointment with other designers with whom you had worked on previous projects. I assured you I was a professional, and would run this project with the utmost professionality. I assume you were used to how those other designers dealt with you, hence, your expectations, and level of dealing with me. As you expressed your being so pleased with the outcome, I expected that we could grow a relationship as one would with a doctor, plumber, or any other service provider who pleased, and/or went above your expectations. I must ask, to continue that relationship, we must adhere to our contractual terms so that both parties can count on those terms for a smooth and professional relationship going forward.You'll notice that I stayed away from any negative terms, accusations, and used the client's own words of approval to remind him of the positive experience. In many cases, it has worked, and the relationship did grow into having a great, and long term client. Those that didn't respond, or responded negatively, well, then that was that, but I knew I had tried my best.
Why Bother?Some readers might wonder why I tried at all to save a relationship with a client who didn't respect contractual terms. The answer is simple, and business savvy; all it took was swallowing a little pride, reaching out, and taking a chance. Ask yourself if it is worth such action to retain and train a client:
- It's hard to find clients, and saving one through a few simple paragraphs is worth your time, and effort.
- As humans, we tend to push boundaries until we find a common understanding with our neighboring humans. Some call it negotiating.
- Sometimes things get lost in translation, and need to be explained again (and again).
- The worst that could happen is the client would feel slighted, and the relationship would go no further… which it wouldn't with someone who pays late, and not in full.
- There's no death penalty for trying.