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Even if you love being a freelancer, it can get disheartening when a client doesn’t pay their bill. The truth is, no one likes to work for free. As much as we love being entrepreneurs, we still want to be able to pay our bills, take care of our families, and have a little money stashed away for a rainy day. When a client doesn’t pay their bill, they could be putting your business at risk. So how do you fix it?
State It In The Contract
Although a contract doesn’t automatically guarantee that a client will pay you like they should, a contract will protect you legally. When writing up your contract, remember to include when and how you expect to be paid. I also highly suggest adding in a clause that states the penalty for late payments.
For example, I bill once a month at the end of the month, and my clients all have 15 days to pay to be within their time frame. If not, a 1.5% interest charge is charged monthly until the bill is paid. Once they’ve hit 30 days overdue, all work is ceased until payment. I do this to protect myself and my business, and to ensure that I get paid in a timely fashion.
Now, I know there are some extreme cases where a client would be unable to pay, like a death in the family or an illness. For cases like those, I would use your best judgement. It is OKAY to give a little grace every now and then, and many businesses do. Just do what works best for the situation at hand.
Have All Of Their Information
Another part of your contract should include not only all of your information (like name, email, phone number, etc.), but it should also include your clients information. A client could be overdue and not return your calls or emails, so sometimes a letter to their address may be needed.
You may not always need a clients information, but it is important to have on hand. Plus, you can always use this information to send thank you cards or small gifts around Christmas to show your appreciation!
Let’s be honest, some of us are forgetful. Many of us have to write things down, or be reminded, for us to remember to do something. For me, I have to set alarms and email reminders so I remember to do certain tasks. If not, I will completely forget.
That could also be true when a client doesn’t pay their bill. We know what it’s like to be freelancers, business owners, and solopreneurs. So imagine how hard it is to remember to run your business, and make sure you take care of your contractors. While not a total excuse, it happens.
To work around this, you can always set a time to send out reminders a few days before the payment due date, and on the date itself. You could also set late payment reminders if needed. You can do this either through your bookkeeping system (Quickbooks* has this option), or even via email (through an app like Boomerang). That way, you don’t even have to stress yourself out with sending multiple emails.
Try Every Point Of Communication
We tend to have that one client that pays a little late sometimes, or a client that is forgetful. But that doesn’t mean we aren’t able to reach out. Again, if a client doesn’t answer a phone call or email, send a friendly snail mail reminder with their attached invoice! It sucks having to take multiple avenues to receive what you are owed, but it happens.
If this becomes an issue every time you bill your client, it may be time to let them go. But sometimes it could just be a matter of a client not having access to their phone or email. You never know, so exhaust all options before moving on to the last step.
Extreme Cases: Threaten or Pursue Legal Action
Sometimes, you just have to take legal action. When a client doesn’t pay their bill, it hurts your bottom line. Simple as that. You shouldn’t have to beg and plead for your hard earned money. You shouldn’t have to stress that you need to be able to pay your bills.
As entrepreneurs and freelancers, we may not have all of the protection in the world, but we are entitled to the money that we worked for. If a client doesn’t pay their bill, and you’ve tried everything else, you can send them a letter threatening legal action. You may even be able to take them to small claims court (depending on your county and state). I have a letter that I send out, and you can download your own copy by joining my resource library below! Thankfully, I’ve only had to send that letter once, but I’m so glad I had it on hand.
It can be hard to get a client to pay their bill, but it isn’t impossible. Following these steps could be the difference between non-payment and getting the money that you deserve.
What are some ways that you ensure a client pays their bills on time?