How to Avoid Getting Stiffed on Payment

How to Avoid Getting Stiffed on Payment

It’s just a cold, hard truth in business—for all our best work and intentions, sometimes client don’t pay. Sometimes, they were the wrong fit in the first place. Sometimes, circumstances happened beyond their control. Sometimes, circumstances within their control happened, but they chose to put you last. And sometimes, you just get a rotten apple.

The good news is that there are steps you can take and ways you can work in your business that greatly reduce these occurrences. When non payment happens, it’s a perfect opportunity to examine and improve upon things so your business is better and stronger than before.

1. Establish consistent billing and payment policies. Set a billing schedule and stick with it. Don’t wait to bill for work you did six months ago. Not only does that teach clients that paying you is not priority, it creates problems and inconvenience for them (which make it more difficult for them to pay). Before you even begin taking on clients, work out what happens in the event that someone fails to pay or pays late. Know what your recourse is. Have a plan for collecting what is owed.

2. Conduct thorough consultations. I know it hurts to hear this, but sometimes we let clients down and non payment may be their way of voicing their dissatisfaction. I’m not saying it’s the right way; you just need to recognize when this might be the case. This is more likely to happen when we fail to set proper expectations or fully understand the work and results the client is seeking. A more thorough consultation conversation will help avoid these misunderstandings and subsequent client unhappiness.

3. Prequalify clients. Your website can do a lot of this work upfront. Be sure it clearly outlines who you are looking to work with, who you work with best, and who is the best fit for your services, as well as who isn’t. Likewise, your consultation is another mechanism in your business that helps you determine fit and suitability for working together. Don’t be afraid to ask questions about the health and financial viability of any client’s business.

4. Always work with a contract. A contract doesn’t guarantee that you won’t ever get stiffed on payment, but it does help clients take you, your business and the work more seriously. If you don’t respect your business in this way, clients won’t either. And, worse comes to worse, a written contract—which leaves less room for interpretation and faulty memories about what was agreed upon—can help you prevail in court should that step become necessary.

5. Work with clients who can afford you. Are you running a business or a charity? I’m always amazed at people who work with clients who clearly can’t afford their services and had all kinds of red flags a-waving and then are shocked when those clients don’t pay. They might “need” and even “deserve” you, but you have to be mature enough to let those folks be responsible for their own circumstances and growth. They can come back to you once they are in a better position to pay. In the meantime, keep your focus on the folks who come to the table already prepared and well able to pay.

6. Don’t work with anyone and everyone. Narrow your focus down to a very specific market. When you do that, you are better able to understand and screen for just the right folks who have the greatest need and desire for what you do and therefore will more highly value, honor–and pay–for it.

7. Don’t allow clients to go into debt. You have a duty to mitigate your losses, and you aren’t doing anyone any favors by allowing them to get deeper and deeper in the hole. As soon as late or non payment occurs, stop working immediately until what is owed is paid. Remember, you teach people how to treat you. If you keep letting them slide, you teach them to devalue and disrespect you. You deserve better than that!

8. Get paid upfront. You don’t get to take groceries home and decide later when or if you’ll pay, do you? When you buy a product, you have to pay first before the item is given to you, right? So why do you think professional services are any different?

If you provide an ongoing service (such as administrative support, coaching or consulting, for example), you can charge an upfront monthly fee and avoid the whole nonpayment thing altogether and reduce administration at the same time. For projects, getting a deposit or at least 50% upfront is perfectly acceptable, professional business practice.

Remember–you are not your clients’ bank. They need to have some skin in the game. Save special favors only for those clients with whom you have a long history and who have earned your trust.

9. Boot the deadbeats. Your business will never evolve if you don’t learn this lesson. You are never going to “fix” these people. If a client constantly nitpicks, pays late, complains about the work in order to prolong or avoid payment, you are responsible for your own abuse by keeping them on your roster. Love and honor yourself enough to show those folks the door. I promise—when you do that, you open space for more and better clients to arrive in your life!

5 Responses

  1. Excellent article. I’m sure we have all dealt with this issue. I am dealing with it right now. Excellent direct and to the point advice.

  2. David K says:

    Good recommendations, particularly #6 and #7. It is a common mistake for a new freelancer to undervalue themselves. When I first started out, I was almost apologetic when asking for payment! When I really started relying on the income (and after dealing with several deadbeats), I overcame that very quickly! Personally I break payments into thirds for large projects, with the first third due before ANY work starts. That guarantees I get paid for most of the work I do, whether a client skips out or not. And the suggestion of stopping work when things go past due is critical. If the client doesn’t feel obligated to pay you, you are no longer obligated to do work for them. That is a simple rule to keep you from getting taken advantage of.

    Every freelancer, regardless of what line of work they are in, develops a “sixth sense” for deadbeats over time. I have finely tuned mine over the years, and am happy to say I have managed to secure a small but reliable group of good clients.

  3. Janet says:

    Thank you for this article. Actually, another administrative consultant directed me to the article as, like Joanette, I am going through this right now with someone.

    I will be going over this post again and again. Thank you. It’s great advice. Hopefully, I won’t be learning this lesson twice. Contracts, thorough consults, and retainers will become my good friends. LOL

  4. You bet they will, Janet 🙂

    Sorry to hear you’re going through that right now. Here’s a blog post that may be really helpful to you as well:

    The Most Effective Debt Collection Letter I Ever Wrote

  5. Karla Donaire says:

    Great tips!

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