Handling an Overdue Invoice & Other Get Paid Strategies7 min read
Getting stiffed by a client is practically (and unfortunately) a freelancing right of passage.
It’s certainly not something anyone ever wants to go through, but it happens quite frequently. So frequently in fact, that Freelancers Union created “The World’s Largest Invoice,” where freelancers can give themselves a therapeutic release by listing out their unpaid bills to date. So far, thousands of freelancers have contributed over $4,000,000 worth of time spent on projects that they’ll never get back.
As a freelancer, sometimes you have to take on roles you never thought you would—like accountant, bookkeeper, and yes—debt collector. Instead of waiting until it’s too late, use these get paid strategies to make sure that your precious time results in the money you need to survive and prosper.
Know your payment terms
Before you spend one minute on a client project, you should have already come to an agreement on payment terms, which are established in your statement of work and service agreement. Different options for payment terms include:
- Due on receipt: Payment due as soon as you send the invoice to the client
- Net 30, 60, etc: Payment due 30, 60 days (etc.) after the invoice is sent
- Monthly retainer: Payment due once a month as part of continuous package delivery
Once the payment terms are established, stick to them. The following tips will give strategies for how to avoid an overdue invoice with the right preparation, or how to handle an overdue invoice if it gets to that point.
Make it easy for clients to pay you
No freelancer wants to share a portion of their hard-earned cash with payment processing services like Paypal or Stripe. There are alternatives if you invoice with one platform, then accept payment with another (like Venmo or even a paper check).
But the more complicated you make it for clients to pay you, the less likely they are to do it, and the more likely you are to be dealing with an overdue invoice. Pick a system that clients can trust, send invoices through your system of choice with all relevant details, and make sure it’s obvious how they can submit payment.
Using a system like AND CO to send invoices and collect payment also makes it possible to see if a client opened an invoice for tracking purposes. If they didn’t, and it’s been a few days, that might be a sign that your invoice went to spam—or that there’s another problem between yourself and the client.
Understand that payment fees are a cost of doing business. There’s a silver lining—payment processing fees make for an excellent tax deduction!
Invoice ahead of expected payment
If you’re working with an organization with payment terms of Net 30 or longer, you’re going to be waiting to get paid no matter what. But if you invoice once a month (or something similar), make sure that you send your invoice at least a week before it’s technically due.
Tip: Use AND CO’s free invoice templates to help make sending invoices quick and painless.
In some cases, you’ll be pleasantly surprised by customers who get ahead of payments, settling up early. If you still end up with an overdue invoice, it creates a talking point with the client about when you need to be sending your invoice for on-time payment.Working under Net 30 terms? Submit your invoice a week before it's technically due. Click To Tweet
Create a follow-up system, or better yet, automate one
The day a payment is late, send a follow-up. This sends the message that you won’t be passive when it comes to collecting on money you’re owed. Most of the time, a late payment is just a simple misunderstanding or just something a client forgot about through the course of their own work day and obligations. You never know what someone else is dealing with, so don’t go in guns blazing. Take the opportunity to be friendly, but firm.
Then, ask what day of the month is best to be sending your invoice so that it never happens again. And create additional follow-ups that get less friendly and more firm based on how late the invoice is. Using a software solution for tracking invoices, like AND CO, is helpful too, as it helps you easily remember when your invoices were sent and will even alert you when they’re overdue.
Give your client a call
It’s easy to hide behind email, and much harder to hide from direct confrontation. If your invoice is late, try giving the client a call (perhaps even before sending your follow up email). Ask your client if they have any issue with taking care of the overdue invoice while you’re on the phone with them.Invoice past due? Give your client a ring. It's easier to avoid an email than it is to avoid a call. Click To Tweet
Invoke your late payment contract clause
Okay, don’t actually charge it yet, but take the opportunity to remind your client of the terms and conditions they previously signed off on. Sometimes, just the threat of extra payment they’ll be liable for is enough to get your invoice promptly taken care of. Remind them ahead of the charge, but give an exact date that the late fee would take effect.
A solid contract is one of the best defenses against an overdue invoice. Is yours up to par?
Reach out to other company contacts
If you have more than one contact at the company in question, consider reaching out to them once you’re dealing with an overdue invoice. This is not about pointing fingers or making anyone look bad, but simply about making sure that you get paid for the work you’ve completed.
If you’re working with a big company that has a dedicated person or department for accounts payable, loop them in on the conversation—they’ll have the most up-to-date information about payment to contractors.
Stop performing work
If you’re working with a consistent monthly client, nothing sends a stronger message than just stopping work. If you’re in charge of something public-facing, like social media, it’s good form to again send a notice letting the client know your next moves (or lack, thereof).
Though it can be hard to take this step in reaction to an overdue invoice, it’s the right one to do. After all, why keep working if a client is sending the message that paying you is not important?
What you do next depends on how much money is at stake, how badly you need it, or even your sense of social justice. Here are three additional steps you can take to collect on an overdue invoice:
- For just $12, you can use AND CO’s new tool for sending physical demand letters to late-paying clients. Did you get stiffed? Let Williams&Harricks get serious on your behalf.
- Hire a collections agency to collect on your behalf. At the risk of affecting their credit, a client may buckle here, compared to your past efforts. This method can be effective, but it’s not cheap. Collections may take up to 50 percent of the money they secure for you.
- Take your client to small claims court. This can be a huge headache, and definitely an expense. Even if the judge rules in your favor, it can be impossible to ever actually get your money. This option should not be considered lightly.
For everything you need to know about invoicing, take a look at our complete guide to invoicing as a freelancer.
For the future
The single best method for protecting yourself against overdue invoices is to require payment up front. No pay? No work. It’s really as simple as that.
Before working with a new client, listen to your gut instincts. Is this person (or company) exhibiting any signs that make it seem like they’ll be difficult to work with, or are they being weird about payment? If so, is it worth moving forward? Probably not.
A word of caution—social shaming a non-payer can cause you more trouble than relief. Besides any problems it raises with the client in general, it might give other potential clients the perception that you’re difficult to work with. If you need to dish, talk to another freelancer or someone you trust—in an offline medium.
Finally, as hard as it is, you eventually have to move on from an overdue invoice that never gets paid. Don’t let one bad situation spoil you for all the great opportunities your future holds. Instead, let it be a lesson to learn from with future clients.
Handling an overdue invoice
How do you ensure swift, regular payments from clients? Share your insights on Twitter and be sure to @andco so that together we can create a better future for freelancers.