There comes a time in the life of every freelance creative when a client refuses to pay for the work they assigned or takes their time doing so. Obviously not all clients are unscrupulous, but there's a few out there that cause us independents to take precautions. You can't identify those scofflaws until it's too late. This is increasingly important with clients putting their projects out for bid on Craigslist and freelance websites. An artist may never meet the client face to face, much less have much payment leverage.
It’s not a matter of if you’ll get stiffed but when, and it pays to take steps to avoid that happening or at least soften the hit. As a business owner and contractor, I’ve been burned and I learned to minimize the scarring and pain by taking some preventative care.
Put it in writing. When you speak or meet with a client about a project, get as much information as possible and clarify any ambiguities. Many clients tend to be vague and generalize details, so ask lots of questions. Present the client with a detailed project estimate spelling out, line-by-line, exactly what you're expected to do and the costs. Don’t present a lump sum like “four-page brochure design… $5,000.” Break every task and cost down and identify who is responsible for each element such as photography, copywriting, printing, etc. Supply a separate project outline if necessary — leave nothing to chance. Include a disclaimer that the quoted price is plus or minus 10% and does not include state or local sales taxes, shipping, and scope changes. Add a line on the bottom where the client can sign and date the estimate and get a copy of that for your files. I'm surprised at the number of professionals that don't do most of this.
Change orders. Include a statement on your estimate that the project includes one round of minor revisions or however many you wish to include. Make it clear: anything above and beyond the original project scope and cost triggers a change order. Describe the exact changes requested and costs — in writing — with an area for the client’s signature and date. Be sure to get a copy for your files.
Get money up front. We're not banks! Ask for at least 50% of the estimated cost up front with the balance due at a later date. At my last agency, management demanded — and got — all of a project’s cost at inception. No work commenced on an assignment until payment in full was received and it didn’t matter if the client was new or long standing. This kept projects moving, as clients won’t let them languish if they’ve already paid for them. If a client balks, take your chances or move on. Hey, even workers in the world’s oldest profession get their money up front!
Give the client a discount. Offer a 10% discount for payment of your invoice within 10 days and 5% for payment in 30 days. This shouldn’t be necessary, of course, as reputable clients will pay on time but for those troublesome accounts, this carrot can work. On a $1000 invoice you’d still get $900 or $950.
When are checks cut? Ask the client when their organization routinely writes checks and make sure your invoice is in their hands at least a week before. Large companies may do this on a weekly, bi-weekly, or monthly schedule. Small companies may write checks as bills come in or wait the usual 30 days. If your invoice comes in on day 31, you'll have to wait.
Accept credit cards. I haven't tried this but I did give it some serious thought. An account with a bank entails some large up-front fees but Yahoo and other web sources offer shopping cart services. PayPal is a nice system that will accept plastic and move the money to your account.
Nonetheless, all this may fail to encourage a client to pay up. Then it's time to get serious.
Use a collection agency. There are many agencies that specialize in handling small balance accounts and do it professionally and honestly. They charge a small percentage of what they recover or work on a flat fee. A firm I have used is Commercial Collection Corp of NY and their efforts paid off. Literally. Some money is better than no money!
Small Claims Court. This is a great resource. Filing fees are inexpensive and some courts take cases up to $6000. Check with your local court. They should have a manual of instructions and rules. I took 10 non-payment cases to small claims and won each case. However…winning doesn't mean you'll get paid. Sometimes you still must pursue the client because the court won't. They merely hand down the judgment, but that judgment shows up on credit reports if the client hasn't paid. If they want to secure a loan or credit card, that can create problems. Would they want that hanging over their heads?
Beyond these suggestions are more serious options like hiring a lawyer and instituting a lawsuit, but that adds considerable expense and time. Is it worth it? A client not paying a bill for contracted creative work is literally robbery. They've stolen your brains, ideas, and skills, and really, it should be a punishable crime! I think all these steps are worth it. CYA!
Steve James owned and creative directed an advertising and design studio in Buffalo, NY with the un-snappy name of SteveJamesDesign, Inc. Steve and his family now live in Indianapolis where he worked as a Creative Director and he is currently in transition, flux, metamorphosis, segue, or whatever looking for work is now called.