broadsideblog

Slow, Late, Non-Paying Clients — How to Avoid Or Cope With Them

In business on December 17, 2009 at 7:55 am
Sand Dollars and Shells

Sand dollars are pretty, but they won't pay the rent...Image by Zevotron via Flickr

Here’s my New York Times story today about dealing with the bane of business, and one that is getting much worse in this recession — clients who refuse to pay you, now or ever.

Like many of my article ideas, this came out of my own costly experience last fall. First, an out-of-state, privately-owned start-up publication abruptly cancelled $20,000 worth of work, then tried to stiff me out of $5,600 for my work already in, accepted and invoiced for. Two months later, an in-state regional publisher sat on my check — my story already in the magazine, already published — for months, essentially thumbing his nose at me in emails.

My favorite read: “The squeaky wheel doesn’t get the grease.”

At least they were answering my calls and emails. My solution, in both cases? Attorneys.

I found the first one — unusual for me, then very new to social media — through LinkedIn. I posted a simple request: “I need to find an attorney in X state to sue a deadbeat client.” I heard within hours from an attorney in San Francisco, referring me to someone he knew in the city where I needed help. Within a day. I’d hired a collections attorney; many other freelancers who had sold writing, photos or illustrations to this magazine, some of whom I was in touch with, said they preferred to be patient. I doubt they got a penny. Six months later, I got 50 cents on the dollar, minus 1/3 to the attorney. Better than nothing.

As for the New York loser, I turned to a friend I play softball with, a local attorney. His letter to this publisher managed to get me a check within days.

Tips:

1) Do your due diligence! If you are going to do business with anyone, find out whatever you can about their current financial situation and their reputation for payment. I’m on the board of the 1,400-member American Society of Journalists and Authors, and we have several mechanisms available to our members to help them recoup their payments and, perhaps most crucially, warn others away from trouble spots. Use any legal or ethical means necessary; anyone who’s recently done business with them (fellow members of an industry association or listserv) can help.

2) Don’t just wait if payment is late. I know one young writer who waited (!) almost a year for her money from a major New York publisher. Call, email, call and email, however politely. You’ve earned your income and you have bills to pay.

3) Use prudent caution if you choose to work with/for a start-up, a family-owned business and/or one that is out of state. All these can be red flags.

4) If you fear your payment isn’t going to arrive, look into small claims court or a collections attorney sooner rather than later. It takes time.

5) Document every deal: emails, contracts, faxes. You need proof there was a deal.

6) Do whatever you can to keep three months’ expenses in the bank, or a line of credit at a decent interest rate — which is also harder to get these days — as backup. Your mortgage, rent and other bills will not wait for these deadbeats.

  1. All good advice. Thank you. There’s another problem that’s unsolvable, I think. And that’s the disappearing contract. Signed, sealed, and delivered, but the job never materializes (they decide not the right time to publish, not right product, whatever). So after reserving time in my schedule — and not accepting any other big jobs — when start date comes: nada. That means a period of time with NO work until I can scrounge some up. Gosh, I hate that.

  2. rockyinlaw, so true. I had this happen in March 2007 — I was in the hospital with pneumonia for three days when a major gig was suddenly cancelled. They were apologetic, but given the circumstances I asked for, and got, 50 percent of the fee we’d agreed on, I’d expected and budgeted for. Not that you can necessarily get that, but it’s worth trying if you’re really left holding the bag.

    That’s why I took a low-level part-time job, even to have something rolling in every two weeks, no matter what else went south.

    • More good advice. Thank you. That client is my bread and butter, so I did indeed push back, but not as hard as I might have (should have?). I ended up with lots of little undervalued work, managed to scrape by, and now have a new “big” contract. But I’ll not be caught cold like that again, if I can help it. I’ve been applying for p/t work myself — retail, clerical, whatever — even if it’s just to put the inevitably small income from it in the bank. Keep your fingers crossed for me; I’ll keep mine crossed for you.

      Reminds me of Bob Dylan’s lyrics: “you better start swimmin’ or you’ll sink like a stone / for the times they are a changin’”

  3. [...] This post was mentioned on Twitter by Tweets Tube, Matt Dickson. Matt Dickson said: Slow, Late, Non-Paying Clients — How to Avoid Or Cope With Them … http://bit.ly/8Rt3o6 [...]

  4. One big reason I’d rather sell blood than try to make a living as a freelance journalist.

  5. Lisa, you’re fortunate if you’ve never had to. If you want to work as a journalist and can’t get a staff job, that’s what you’re left with.

  6. Reminds me of IT freelancing- on one hand, you don’t throw the magic switch until they’ve paid up. But if the project is canceled part way, the client may not want to pay up on something that they decide not to use.
    I gave up on it. In the client’s mind, they can always find a starving student who can “do the same work for a lot less”. And you get what you pay for!

    • My condolences. It always amazes me to discover how very little some clients know about what it is they want and need.

      Which reminds me of a very funny piece that really applies to all freelancers/small-business owners (see link below). Warning: X-rated language:

  7. Steve, I find it ironic and ugly that — in this sexy new “knowledge economy” — those of us selling intellectual skills so often get screwed. Try not paying your plumber, electrician, dry cleaner, etc. They, too, provide services and no one I know in any of those fields does it “for exposure” or haggles on price.

    But I have also seen so many writers, anyway, unwilling to stand up for themselves, terrified of offending an editor/client or getting a rep for being “difficult.” I’ve written off some clients for the PITA factor; someone out there is not as slimy, but you have to go find them.

    I really burned out last fall having to hire, and pay, attorneys to get my dough twice within two months. But it is worth it; it sends deadbeats a very clear message.

    • After watching raw sewage pump into my basement a while ago, I was in no position to argue price with my plumber… as a former programmer- nothing I can do can beat that kind of leverage!

  8. Regarding the first tip given, I have a useful tool to share.

    I am an attorney who has practiced ethics, confidentiality and privacy law for over 12 years. Through a great deal of experience and hard work, I have created another way to avoid aged a/r and “deadbeat clients”.

    Go to http://www.myclientreport.com. It is a great new way to avoid such problems by legally reporting client payment history. It complies with HIPAA, legal ethics, and the AICPA Code of Professional Conduct. Check it out.

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