Handle Non-Paying Clients

I’m a fre­quent reader of Site­Point Forums (my user­name is dnord­strom). In a recent dis­cus­sion the poster is won­der­ing if he can, and should, take a client’s web­site down due to over­due invoices. This arti­cle will express my view on this all too fre­quent issue.

Ethics

Ethics are impor­tant. How­ever, this is not a ques­tion of ethics. It stopped being a ques­tion of ethics when the client after repeated reminders and unan­swered inquires decided to post­pone pay­ment beyond the due date. Regard­less of the cir­cum­stances, this is an uneth­i­cal thing to do.

One may say that the client is excused if they are hav­ing finan­cial prob­lems. If the client would have actu­ally taken the forum poster’s calls or replied to his repeated inquires, it would have been an entirely dif­fer­ent story. Finan­cial prob­lems are no excuse to skip pay­ments but if the client com­mu­ni­cates her con­cerns, a con­tracted pro­fes­sional may decide to cut her some slack. Of course, sym­pa­thy is impos­si­ble with­out communication.

Patience

How far over­due is the invoice and what are the terms? How much do you need the money? This is not only a ques­tion regard­ing your client’s sit­u­a­tion but also yours. If you have a finan­cial buffer for these sit­u­a­tions, which you should have but which is not always real­is­tic, you may be able to afford being patient for a while longer.

On the other hand, if you’re in des­per­ate need of this pay­ment to be able to eat and pay the rent, there is no ques­tion about it.—you obvi­ously need to take care of it imme­di­ately. Don’t use up your credit or bor­row money because your client is an ass.

Another thing you may want to con­sider is the terms of the invoice. If you’re using NET15 pay­ment, the client may have been expect­ing twice as much time to pay the invoice. Again, if the client com­mu­ni­cates her con­cerns we can surely come to an accept­able agree­ment. Due to the fre­quency of over­due pay­ments in this indus­try, NET15 could be a smart move as long as the client is aware of the terms from the start and accepts them. 30 days how­ever is more com­mon and should be fine with any client, in an ideal world.

Inform

This leads us to the mat­ter of keep­ing every­one informed. It’s your job to make sure that the client knows when the project is deliv­ered as well as when the invoice is both sent and due, prefer­ably far in advance. Agree on the pay­ment terms before both of you sign any con­tract or you risk con­flicts once the project is completed.

Charg­ing an up-front fee can be a good thing for keep­ing the client ded­i­cated and get­ting her to lis­ten and under­stand the terms of the pay­ments. You’ll also be able to han­dle expenses dur­ing the project and be more cer­tain that the client actu­ally has money to pay for your work. For up-front pay­ments to be use­ful, they should in my opin­ion be applied to larger projects. For minor work it’s just ridicu­lous and you risk appear­ing like a jerk.

Once you send the invoice, make sure the client gets it and that they are informed about the due date. As the due date is clos­ing in, send out reminders. On or around the due date, send another reminder and a per­sonal mes­sage ask­ing if there’s any way you can help with the pay­ment. Always remain polite and professional.

Fresh­Books and Billings are great invoic­ing appli­ca­tions that I rec­om­mend. Fresh­books for exam­ple will auto­mat­i­cally send out reminders after a cer­tain amount of days which you can con­fig­ure to your liking.

Future

Con­sider your future with this client. A core part of my busi­ness con­cept is to nur­ture valu­able and friendly long-term rela­tion­ships with my clients. Even though you have done every­thing right and you are enti­tled to the pay­ment (two weeks ago), some ways of deal­ing with this issue could piss off your client and poten­tially ruin any chances for repeat-business.

Then again, do you really want to con­tinue work­ing with a client that doesn’t pay on time or even reply to your inquires about the pay­ment? This client is prac­ti­cally wav­ing a huge red flag right in your face. How­ever, use your intu­ition. If you feel that this is a one-time occur­rence, make it work. If you have a bad feel­ing about the client, grab your money and get out.

Con­tract

You have a solid con­tract, right? Hav­ing a con­tract is a neces­sity. Keep­ing this para­graph rel­e­vant to the sit­u­a­tion, the con­tract should include who owns the rights to the work, when those rights are trans­ferred, terms of pay­ment, what hap­pens upon over­due pay­ment, any late fees you may charge, and terms of can­cel­la­tion and ter­mi­na­tion of the contract.

Of course, your quo­ta­tion or pro­posal should also state clearly the scope of the project so that every­one is aware of what the term “com­plete” means. Being ridicu­lously detailed can save you a lot of trou­ble dur­ing the project since peo­ple tend to mis­un­der­stand the infor­ma­tion in this kind of paper­work. If you need to use very tech­ni­cal terms, also explain them practically.

What to do

The orig­i­nal ques­tion was if you could take the web­site down. If you have a con­tract stat­ing that the work belongs to you until pay­ment has been received, you can def­i­nitely take it down. If you are host­ing the site your­self then of course you can take it down. Make sure you give plenty of notice before doing so though.

If you’re host­ing the site your­self and want to receive the pay­ment fast, you can replace the web­site with a notice that the “account has been sus­pended due to over­due pay­ments” or sim­i­lar. Turn on your evil ass­hole mode and be cre­ative. Don’t do this if you value your rela­tion­ship with the client.

Have patience—don’t imme­di­ately take the web­site down even though you want to. Remain pro­fes­sional, pos­i­tive and cour­te­ous at all times. As men­tioned, inform the client that the invoice is over­due and ask if there is any­thing you can do to help. This makes you a service-minded pro­fes­sional rather than some jerk scream­ing “SHOW ME THE MONEY”.

As a user on the forums states, you can offer a down-payment option to relieve some of the pres­sure that is keep­ing the client from pay­ing. The same user rec­om­mends that the agree­ment includes that if the down-payments become over­due, the whole remain­ing amount will be charged immediately.

If you after repeated phone calls and emails can­not get an answer about what’s going on and the invoice is way over­due, you’ll need to take action. While it may seem harsh, send the client a new invoice with a late fee applied and inform her that you would rather avoid tak­ing legal action. It would per­haps be more sub­tle to take the web­site down, depend­ing on how much that would inter­rupt the client’s business.

Con­clu­sion

Don’t be a pussy. Con­sider these things and if it seems like the ratio­nal choice, take the site down and stop deliv­er­ing. Clients need to learn that due dates are set for a rea­son and ignor­ing them with­out notice is unac­cept­able. But remem­ber to be polite and behave pro­fes­sion­ally and pos­i­tively regard­less of the situation.

• Day 2: Are Clients Stupid?
• Day 24: Blog­ging For Clients
• Day 22: Pas­sive Income
• Day 27: SpeechesAreHot.com online
• Day 3: Mac Time-Tracking Apps