How to handle late payers Network Freelance

 

I recently attended a networking event organised for freelancers, and the most asked about topic was ‘how to handle late paying clients’.

I didn’t realise how much of a problem this is for freelancers. Well, after some research, I found out it is a massive problem. I couldn’t find any exact figures relating to freelancers, but according to SME Insider, SME’S are now owed more than £255 billion in late payments.

If an SME is paid late, their cash-flow is messed up, meaning they end up paying their suppliers late. It’s a vicious circle. 

 

 

So, how do you handle late paying clients?

Burying your head in the sand and hoping it will solve itself, will not work. Follow these steps to help you stave off late payers:

 

 

Carry out pre-relationship checks  

For any new client, you are thinking of taking on, try to find out as much about them as possible. If they are a limited company, their details will be registered with Companies House. Information available on the company includes: their registered business address, accounts and annual returns. All important information, in deciding if they will be able to pay you for the work you have done.

If they are not registered with Companies House, take to the internet to see what you find on them on review sites and freelance forums.

 

Get your own house in order

Set out your T&C’s at the start of your working relationship. These should clearly state your invoice and payment terms. Normally, payment is due 30 days from when the invoice is issued.

Track every step of the payment process: the date the invoice is issued, when payment is due, the date you issued a reminder for payment and the extended payment deadline. What system you choose to use for this, is up to you. You may find a simple spreadsheet is sufficient, or you could invest in using an online accountancy portal that automatically issues invoices and reminders for late payments.

 

Don’t be shy in speaking up

If a client is late in paying, don’t feel awkward about reminding them that payment is overdue. It could just be an oversight on their behalf.

When you contact them, initially do it by phone (make sure you know who to contact about payments) and follow this call up by an email. Ask them to reply by email as well. It is important to document all communication in writing, in case any disputes do arise.

 

 

Be prepared for the break-up

If all attempts at getting paid fail, be prepared to tell them that all future work will be put on hold until they clear the overdue payment. This action could see the end of your working relationship. But, if it comes to this, do you want to work with them anyway?

This shouldn’t be the end of it, as they still owe you money. Depending on how much they owe, it may be worth claiming it through the small claims court. The .gov website explains in detail how to go about it and the fees involved.

In summary, always air on the side of caution when dealing with clients. The majority of them will pay you on time (hopefully), but you will occasionally come across one or two who are frogs. In that case, be prepared to make them ‘croak up with the cash’.