Late payers are the bane of a freelancer’s existence. Creating havoc with your cash flow, late payments for completed projects can cause all sorts of damage to your business’s finances.

Speak to a seasoned freelancer and you’ll likely get a tale or two about the significant impact of late payments, with some extreme examples like freelance web designer Frank Jonen being pushed to the limit and ┬áturned into an online vigilante to get one of his clients to hand over his hard-earned compensation.

In business, the scale of the late payment problem is huge. The widespread culture of late payments was highlighted in a study conducted by financial services firm Intrum Justitia where the firm discovered that European businesses experienced about $480 billion in late payments in just a year (2012), a reflection of a payment problem that’s increasingly endemic.

Sadly, the possibility of a delinquent payment appears to be a fact of professional freelance life. But thankfully there are ways you can counteract or reduce the problem.

Drawing upon my time spent freelancing and the expertise of some of my contemporaries, I would like to discuss five things you can do to limit your struggles with late payers.

1. Always Have a Contract

Entering into a freelance project without a contract in place means you’ll be lacking a lot of legal recourse if things go south. Always have a contract.

Should a working relationship go wrong, a contract acts as a legal cushion, limiting the likelihood of late- or non-payments.

Often, the mere knowledge that there’s a signed agreement in place will be enough for you to sidestep any chances of a late payment.

And a solid contract may also act as a deterrent against some unscrupulous clients out there who have no intentions of settling their invoice after the job is done.

You’ve probably heard this advice before. But if you still aren’t entering into contracts before your freelance projects start, it’s time to take serious action right now and implement the standard process of contract-signing into your business process.

Not sure how to get started with contracts? Check out these resources:

  • Contract Creator – This online tool will help you easily create a standard contract. (Freelancers Union)
  • AIGA Standard Form of Agreement for Design Services – The global association of designers, AIGA, has a contract template for freelance designers to use. (AIGA)
  • Freelance Contracts: Do’s And Don’ts – Freelance designer Robert Bowen shares advice about contracts based on his experiences in the field. He also has a list of useful resources related to freelance contracts at the end of the article. (Smashing Magazine)
  • Freelance Contract Samples – This is a guide on what a good freelance contract should contain. At the end of the post, there are downloadable contract templates you can use. (Freelance Advisor)
  • 6 Good Tips for Your Freelance Design Contracts – Veronica Picciafuoco, who works for Docracy, a website that provides an open collection of legal contracts, discusses tips for creating a freelance contract. (Six Revisions)
  • 7 Tips for Negotiating a Freelance Contract – What do you do if the client wants to make changes to the contract you’ve drawn up for the project? Find out by reading this article. (Freelance Switch)

2. Know the Laws Against Late Payments

Now aware of the payment problems facing freelancers and small businesses, some governments are finally cracking down on late payers.

In the EU, for instance, the Late Payment Directive was recently introduced, giving business owners the legal backing to levy interest charges and impose fixed penalty fees on overdue bills. Ensure that you make use of legislations like this if needed.

If you’re based outside of Europe, see what your government offers in terms of protection from late payments and non-payments.

Knowing your legal rights will give you an edge when a client refuses to pay on time.

3. Keep Your Cool

Money is often an emotive issue (especially when you’re owed it), but it’s best if it isn’t, so try to put your emotions to one side when chasing up a stray payment.

Be assertive but professional. Don’t go in with guns blazing, and try to see things from the client’s perspective. There might be a perfectly good reason for why they’re late in payment.

As you increasingly pass your agreed payment date though, be prepared to be a bit more insistent.

It’s best if you don’t start the conversation about payment with angry emails straight away, as you can do more damage than good.

4. Find Out Who’s Responsible for Your Payment

From the outset of a freelance job, you ought to ensure that you know who handles the payment process, as having this information at hand should speed things up if you ever experience late payment.

When you’re working with new and small businesses, this is less of an issue. The person responsible for settling your invoice will tend to just be the owner and person you’re working directly with. But when working with bigger businesses, it’ll likely be a specific department, so try to get all their relevant details from the start.

5. Consider Getting Outside Help

If payment is proving impossible and you’re really struggling to get what you’re owed, consider hiring outside help.

For example, there’s an array of debt collection agencies out there that specialize in helping freelancers, so if things have dragged on too long and you’re not prepared to go through the rigmarole of court, consider examining these services.

Here are some resources to help freelancers with debt collection:

Other Useful Articles to Read About Freelancing

What Are Your Tips for Avoiding Late Payments?

Do you have a story to tell about late payments? How did you resolve it and what did you learn from the experience? Please share your stories and tips about late payments in the comments to help other freelancers avoid this issue.

Author:

Mark James is a writer and former freelancer from Brighton, UK. He works as an in-house writer for Crunch, an online accounting firm, covering topics in business and finance. Read more of his work on Freelance Advisor, a popular online resource for freelancers. Connect with him on Twitter @MarkJames891.