This article was originally published in the Summer 2024 issue of ICON/REFINED. Get your copy here. 

I recently had an issue with a large international client not paying their invoice in a timely manner. Simply put, that sucked.

It is so easy to descend into a stress spiral pondering, “Why is it taking so long, what if they stop responding, what if they just decided not to pay me, what if I got scammed into working for free?”

It does not matter how long you’ve been in business, nor how big and legit the client is–this happens to everyone, as does the accompanying frustration.

Here is how I was able to finally get paid, as well as tips I’ve compiled over two decades to help ensure issues with collections are extraordinarily rare.

Always Have Terms

I have a two-page contract which has grown section-by-section over my 20-year career. Every time something peculiar happens, I add a new clause to my terms and conditions. But, to start out, your terms can be simplified, and can even begin as an e-mail which states what services are being provided, the fee for the rendered services, and when the payment is due.

This simple, and massively overlooked, step will save you so much time and energy. And I can already hear your “buts” creeping in.

But what if it is a long-term client, good friend, or my twin brother?

Double the reason to ensure clear terms. Remember, this helps the client know fully what they are getting in the transaction as well.

Require a Down Payment

This is another simple step which ensures a client’s commitment to the project. For nearly all of my projects, I take a percentage that acts as a way to secure the project date and begin the pre-production work on the campaign. As an added benefit, collecting down payments nearly eliminates no-show clients.

Granted, collecting a down payment is not always possible, particularly with some larger clientele who are less likely to move quickly due to their structure. However, the more you can enforce, the easier all of your collections will be. A good rule of thumb for deciding how much to charge for a downpayment on a project is to aim for at least 25 percent to 50 percent of the total project cost. This ensures that you have enough upfront funds to cover your initial expenses and also helps mitigate the risk of non-payment or project cancellation midway. The exact percentage can vary depending on the size and complexity of the project, as well as your comfort level with the client.

Don’t Deliver Until Payment Is Received

Depending on your business, it might behoove you to establish a pay-before-delivery model. So often I hear the lamenting of a business owner saying they were promised payment was forthcoming–so they sent off their product only to never hear from the customer again. You do not need a magic eight ball to tell you if you will ever be seeing that check in the mail.

Enforcing a pay-before-delivery model requires clear communication and upfront agreement on payment terms. Start by outlining these terms in your contract, specifying the payment amount, due date, and accepted methods. Request a deposit or downpayment before starting work, and consider breaking larger projects into milestones with payments due at each stage. Communicate expectations clearly with the client and emphasize the importance of timely payment. If payment is not received by the agreed-upon deadline, withhold delivery of the final project until payment is made.

Save All Correspondence

Keep hold of those emails and text threads which include project details, terms, rates, deliverables and the like. Documentation needs to be a part of your standard operating procedures. Saving all correspondence with clients is crucial for maintaining clear communication, managing expectations, and protecting yourself legally. Each interaction, whether it’s emails, messages, or contracts, serves as a record of agreements, revisions, and project details. 

To ensure thorough documentation, create a system for organizing and storing these communications. Use email folders, project management tools, or cloud storage platforms to keep everything in one accessible location. Additionally, consider using email tracking tools to confirm when emails are received and opened, providing further evidence of communication. Regularly back up your files to prevent data loss and maintain a detailed log of all client interactions. By diligently saving correspondence, you establish transparency, build trust with clients, and safeguard your business in case of disputes or misunderstandings.

Advocate Professionally

On my aforementioned example, it took me about three months to collect on a project which had a net 30 term (meaning, it was stated that payment was due within 30 days). As incredibly frustrating as that was (hair was lost), I fully believe my diligent yet professional follow-ups to check the status of payment was why I finally collected. I was polite but careful to reference relevant dates and project terms.

Initially, sending a polite reminder email is a constructive approach, gently prompting the client to address the outstanding invoice. In this correspondence, it’s beneficial to reference the agreed-upon payment terms and the specific services rendered. If the payment remains overdue, a follow-up phone call can provide a more personal touch and convey the importance of prompt payment. Maintaining a calm and respectful demeanor throughout the conversation is crucial. Should the issue persist, escalating the matter by sending a formal letter or seeking mediation may be necessary. Additionally, establishing clear payment terms and penalties for late payments in future contracts can help deter these occurrences. 

Last Effort

Overwhelmingly, in most cases, the above is all that would be required to procure your payment. But sometimes projects go awry, clients break agreements, or things just get dragged out for far too long. In these rare cases, I would seek to pursue legal advice for next options and steps. The reason this is a final effort is because legal help is not cheap and no one wants to work with someone who is quick to litigate, even if that person is in the right. So, it better be worth the pursuit.

If this situation arises and it turns out that seeking legal counsel becomes a necessary step to protect their rights and pursue rightful compensation, initially, you should gather all relevant documentation, including the contract, invoices, correspondence, and evidence of completed work. With this comprehensive record in hand, you can consult with a qualified attorney specializing in contract law or self-employment issues. During the consultation, the attorney can assess the situation, provide guidance on legal options, and outline potential courses of action. This may involve sending a formal demand letter to the client, initiating negotiations, or pursuing legal remedies such as mediation, arbitration, or litigation if necessary. 

In almost all of these tactics, one thread emerges: Keep track of everything. Whether it’s getting clear about your payment terms and being upfront about them, being diligent in correspondence and ensuring all terms are both stated and agreed upon, or creating systems to organize and categorize every email, text, or conversation that occurs between you and your client, clear communication and documentation will solve the vast majority of your collection woes. And if it doesn’t? You’ve got a leg to stand on when you present your evidence to higher powers.