{"id":129230,"date":"2019-08-06T10:00:28","date_gmt":"2019-08-06T14:00:28","guid":{"rendered":"https:\/\/www.virtualvocations.com\/blog\/?p=129230"},"modified":"2024-03-15T16:31:35","modified_gmt":"2024-03-15T20:31:35","slug":"missed-freelance-payments-what-to-do","status":"publish","type":"post","link":"https:\/\/www.virtualvocations.com\/blog\/telecommuting-survival\/missed-freelance-payments-what-to-do\/","title":{"rendered":"Missed Freelance Payments: What to Do When You Don’t Get Paid"},"content":{"rendered":"\n

Updated March 2024<\/em><\/strong><\/p>\n\n\n\n

The U.S. had around 70.4 million freelancers in 2022<\/a>, with projections suggesting this number could reach 76.4 million in 2024<\/span> and continue to grow, reaching 90.1 million by 2028 \u2014 over 50% of the U.S. workforce. If you\u2019re one of these millions of freelancers, you\u2019re probably enjoying the freedom and flexibility of this nontraditional work. However, freelancing comes with its own set of obstacles you won\u2019t necessarily encounter at a 9-to-5 job. While self-motivation, time management, and organization all lie on your shoulders, perhaps the greatest hardship of gig work is missed freelance payments and figuring out what to do when you don\u2019t get paid.<\/span><\/p>\n\n\n\n

Reliable income isn\u2019t always synonymous with freelancing<\/span>. So if you find a client who always pays on time, do what you can to maintain that professional relationship. For the rest of your clients who forget to pay, are always late to pay, or outright refuse to pay \u2014 you need a plan. With a mix of proactive and reactive strategies, you can resolve missed freelance payments without sabotaging future or current work relationships.<\/span><\/p>\n\n\n\n

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An Actionable Plan When a Client Forgets, Bails, or Is Late on a Payment<\/strong><\/h2>\n\n\n\n

In an ideal scenario, you have an airtight contract to fall back on if a client doesn\u2019t pay. But if you\u2019re new to the freelance game or have worked with a client for an extended period, you may forego a contract. Although skipping a contract is an easy way to get burned on a payment, even if you have a contract it\u2019s not always cut and dry.<\/span><\/p>\n\n\n\n

Up to <\/span>59 percent of freelancers<\/span><\/a> receive late payments. Clients avoid payments for a number of reasons, and not all of them are personal. A lapse in funding, a change in personnel, or lack of payment from their customers can cause your client to miss a payment. Other clients feel justified to not pay you if they don\u2019t use your completed work<\/span>. They pay in \u201cexposure,\u201d or they don\u2019t take you seriously. Whatever the client\u2019s reasoning, you need an actionable plan that reminds them it’s time to pay you what you are owed.<\/span><\/p>\n\n\n\n

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Check the Contract Payment Terms<\/strong><\/h3>\n\n\n\n

If you have a contract, almost all include a section that <\/span>outlines the payment terms<\/span><\/a>. This portion of the contract dictates your contracted rate and payment date, as well as late fees that may be incurred by the client. Before you have a minor meltdown, make sure that your client is outside these terms. If they\u2019re within the guidelines or just a day or two late, you may want to have some leniency, especially if they\u2019re a valued client.<\/span><\/p>\n\n\n\n

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Learn everything you need to know about getting started in a freelance career<\/a><\/strong><\/figcaption><\/figure><\/div>\n\n
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Send Multiple Invoices<\/strong><\/h3>\n\n\n\n

Sending clear, accurate, and timely invoices is crucial for getting paid on time. However, many <\/span>freelancers struggle with invoicing<\/span><\/a> because it\u2019s outside their realm of expertise. If you\u2019ve already sent an invoice and haven\u2019t received payment, wait a week before sending a follow-up invoice. Accompany this invoice with a gentle reminder that your client is behind on their payments. If you still don\u2019t receive payment, send a third or maybe even a fourth invoice before taking more drastic measures.<\/span><\/p>\n\n\n\n

Sending follow-up invoices gives your client the benefit of the doubt and demonstrates trust. Whatever you do, don\u2019t fall into the trap of sending a daily invoice.<\/span> It seems accusatory and argumentative and does nothing to expedite the payment process. You may feel frustration or anger toward the client, especially when you need the money, but alienating a client is one of the biggest mistakes you can make.<\/span><\/p>\n\n\n\n

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Make a Phone Call<\/strong><\/h3>\n\n\n\n

When your client has ignored multiple invoices, it\u2019s time to add a personal touch. As a freelancer, you don\u2019t typically meet your clients face to face, but making a phone call is a way to enhance your image while getting to the crux of your payment issue. Although digital nomads may find calling difficult, domestic freelancers can usually find their client\u2019s contact information on the internet.<\/span><\/p>\n\n\n\n

Once again, avoiding an accusatory or angry demeanor will make the situation go more smoothly. The person you talk to on the phone may have no knowledge of your business situation, and an act of kindness is good karma moving forward. Start by asking if you\u2019re talking to the right department. After you\u2019ve found the person who can make or authorize payments, ask if they\u2019ve received your invoice. If they haven\u2019t, offer to send it again. You might be able to solve the situation over the phone, while also showing your level of professionalism and assertiveness.<\/span><\/p>\n\n\n\n

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Consider Suing or Writing-Off the Loss<\/strong><\/h3>\n\n\n\n

After numerous invoices and a phone call, you still don\u2019t receive your payment. Chances are, this nightmarish situation isn\u2019t going to end with money in your account. That\u2019s when it\u2019s time to weigh your options between litigation or writing-off the account as uncollectable. Both have their advantages with respect to time and money, so you may want to contact an attorney for advice.<\/span><\/p>\n\n\n\n

If the contract is sizable, consider pursuing payment in a small-claims court. Keep in mind that you\u2019ll have to pay for attorney fees and court costs. Also, even after a decision in your favor, there\u2019s no guarantee the client will pay you. However, bad publicity and attorney fees may push your client toward a settlement in or out of court.<\/span><\/p>\n\n\n\n

If you\u2019re only owed a few hundred dollars, you may want to consider writing-off the accounts receivable, also known as a <\/span>bad debts expense<\/span><\/a>. You won\u2019t recoup any of the money owed to you, but you will be able to write the amount off on your taxes as an expense. It\u2019s obviously a worst-case scenario, but even a write-off will give you a small consolation prize for your efforts.<\/span><\/p>\n\n\n\n

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This fillable resource offers a step-by-step approach to calculating your freelancing rates<\/a><\/strong><\/figcaption><\/figure><\/div>\n\n
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Stop Working<\/strong><\/h3>\n\n\n\n

If you have not been paid and the project is not complete, stop working. Yes, a client can find another freelancer to finish the project<\/span>. <\/span>But typically it\u2019s easier for a client to settle their pay dispute with you rather than tackle the costs and time associated with finding and hiring a new freelancer. In addition, you set another precedent for your work and payment while pushing your invoice to the top of the pile.\u00a0<\/span><\/p>\n\n\n\n

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Terminate the Client Relationship<\/strong><\/h3>\n\n\n\n

The reasons (or excuses) for missed freelance payments are numerous. The delinquency may be caused by a simple clerical error or other employee-related situation that impacted their payment to you. Other clients may just not have the capital to complete their end of the deal. When you encounter these problems repeatedly, the question becomes whether to keep working with them in the future. <\/span><\/p>\n\n\n\n

Ending a business relationship with a client who refuses payment is a no-brainer. But you should use your business savvy to choose whether to maintain relations with a client you have to badger each payment date. Sometimes, terminating your agreement is the more logical answer. You may miss out on some cash in the near future, but a reputable client who pays on time is worth their weight in gold.<\/span><\/p>\n\n\n\n

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A Proactive Approach to Prevent Missed Freelance Payments<\/strong><\/h2>\n\n\n\n

Now that you know how to tackle missed freelance payments, the next step is to integrate a proactive approach so you won\u2019t have to deal with such a devastating scenario. Fortunately, this isn\u2019t as difficult to implement as you may think. Here are a few tips that will help avoid an unsavory situation with your client.<\/span><\/p>\n\n\n\n

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Research Your Client<\/strong><\/h3>\n\n\n\n

Researching your client should go without saying, but many new freelancers fail to take this step. They see dollar signs or the beginning of a new career and cast inhibitions to the wind. Don\u2019t let this happen to you.<\/span><\/p>\n\n\n\n

When a client that wants to hire you, do your due diligence by completing a thorough background check. With employer review sites like Glassdoor only a click away, you can find the information you need to assess a client\u2019s business worthiness. Don\u2019t sign off without this step, or you could create a problem that\u2019s easily avoidable.<\/span><\/p>\n\n\n\n

Bonus Tip<\/strong>: Are you interested in a freelance gig on the Virtual Vocations job board? Visit our Remote Companies Database<\/a> to research the employer. This is a free resource available to all jobseekers.\u00a0<\/em><\/p>\n\n\n\n

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Sign an Airtight Contract<\/strong><\/h3>\n\n\n\n

Before you sign up to work with a client, make sure you have an airtight contract. If the client has one for you, this is a telltale sign that it\u2019s a client you want to work with. <\/span>Especially if their contract has set payment dates, the terms of the payment, and what happens if they\u2019re late with payments.<\/span><\/p>\n\n\n\n

If creating the contract will be your responsibility, hiring an attorney to draft a template is a solid approach. Insist that this contract includes the amount of work you\u2019re expected to accomplish in a given period (e.g. quarterly, monthly, biweekly, or weekly), how long the client has to pay after they receive an invoice, and how you will receive the payment. You should also have a clause that details late payment fees or what happens in the event of non-payment. This will give you some clout and ground to stand on if you don\u2019t get paid.<\/span><\/p>\n\n\n\n

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In this career coaching session recording for our premium members, we discuss strategies for thriving as a freelancer<\/a><\/strong><\/figcaption><\/figure><\/div>\n\n
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Invoice Correctly<\/strong><\/h3>\n\n\n\n

Because many freelancers aren\u2019t experienced with invoicing, there\u2019s certainly a learning curve. Hopefully, you won\u2019t have to learn the hard way, so the best approach is to study invoicing and how to do it properly.<\/span><\/p>\n\n\n\n

Most importantly, creating an invoice template that includes all of the information below will help avoid confusion, resulting in you getting paid on time:<\/span><\/p>\n\n\n