As your career grows, you’ll start getting challenging projects and clients. Stuff will happen. Problems are opportunities to show your chops and become indispensable. A single crisis, awesomely resolved, can win undying client love.
This chapter will help you prevent the avoidable and suggest game plans for the unavoidable, the unforeseen, and some of the toughest freelancing problems, including a huge drain on freelancers’ resources: late-paying or deadbeat clients.
As you read this chapter, you’ll see that you have much more leverage in troubleshooting if you have a contract, letter of agreement, deal memo, adoptive admission, or even just a confirming email about what was agreed upon (see Chapter 5). A lot of the troubleshooting we’ll talk about can be handled by having a good agreement in place. I’m saying it here so I won’t have to sound like a broken record repeating it throughout this chapter.
For the same reason, put decisions, approvals, changes of direction, and other important benchmarks in writing as you proceed on a project: “Glad you liked the chapter overall. I agree it needs more examples.” “Thanks for approving the mock-up. We’ll proceed to final and I’ll send an invoice for the payment due on design approval.” “Thanks for our meeting today with the photographer and the stylist. As discussed, we’ll set up the shoot for next week, with a steampunk theme.”
Keep notes on your conversations: “I have a spiral notebook for each client that’s a running phone log and project notes. So if questions come up, I can tactfully say, ‘My notes say that last month we talked about . . .”
This troubleshooting strategy has an easy acronym so you can remember it in a pinch:
1 Acknowledge it.
2 Analyze it.
3 Act on it.
Stare down the problem, in all its ugly splendor. Tips to keep from blinking:
If your client has a problem, so do you. It doesn’t mean they’re right about everything.
You’re the expert, so if you smell a problem, check it out. You might head off a crisis. Then you can relax and have a drink. Better yet, tell your client: “This happened. I took care of it.” Then have a drink.
Sometimes, of course, the client’s the problem. “Often you aren’t the first freelancer to work on a project. You may figure it out by finding another person’s notes, or from vague references to someone named ‘Jane’ whose role is never made clear, or you’ll be told Jane was terribly inept.”
This is where your network can save you: “If at all possible, contact Jane before accepting the job. She can tell you what really happened.” Getting the back story might help you negotiate a tighter contract or avoid a nightmare client altogether.
Don’t let the client beat you to the problem. Get there first with your own solutions, which you’ll probably like better than theirs, plus get points for laying out the issues so they don’t have to. Here’s how.
Is it a missed interim deadline or the final one? Is the photo shoot delayed a week or a month? The stakes determine what you do, how fast, and what it’ll cost. You may have to negotiate additional payment, an extension, eat some time and costs, or all of the above.
Play out the immediate, middle-range, and long-range consequences. Brainstorm ways to prevent or minimize negative outcomes.
If the problem’s potentially serious—financial losses or other damage, or possible legal repercussions—consult your attorney.
On overload? Call someone in your network with dry time to assist or handle your day-to-day stuff.
Research shows we tend to persist with decisions or plans that aren’t working—especially when we’re responsible for them. Look at anything you or the client did that contributed to the problem.
Have a “why” for every recommendation. The best one’s inarguable: “for the good of the project.” Propose what’s feasible in the time frame and budget. Tell your client you want to address the problem but can’t make unrealistic promises.
When deciding how far to go to fix a problem, ask yourself where this client fits in your Freelance Portfolio.
For a Blue Chip, a project you believe in, a career builder, or someone you hope to work with again, you might decide to pour in hours or take losses.
If you’ve been treated badly, you might decide to finish as well as you can, make sure you get paid, and move on.
Don’t be unprofessional. But do be strategic about using your resources, because crisis drains them.
We’re wired from infancy to notice the responsiveness of the adults around us. It’s the beginning of communication. That’s why responding to a client problem is so important. It shows you care about what this client needs—and clients notice. In fact, it turns out that even if you can’t totally solve the problem, your level of responsiveness counts. Think about some of your own experiences as a customer. You’re disappointed that the store doesn’t have the shirt in your size, but you appreciate that the salesperson checked the stockroom and called the neighboring store to see if they carried it; you’re annoyed because your order got lost in the system but gratified that customer service is putting a rush on delivery. So when trouble strikes, responding with prompt and clear communication is critical.
Since problems are often rooted in communication lapses at the contract level, the day-to-day level, or both, good communication is crucial for putting fixes in place.
1 Protect yourself, protect the project. If something happens that could derail a project, go on record. “This is outside the project’s scope, but I’d be glad to do it. We just need to set up compensation and a schedule.” “If I don’t get the designer’s mock-ups by Monday, I’ll hire another designer. I’ll keep you posted.” “I have bad news. There’s a family emergency and I need to revise the deadline.”
Reasonable clients appreciate honesty that comes from wanting to do right by the project and can be surprisingly flexible in working out solutions. “I’ve learned not to get caught up in emotion or the particulars. I focus on the job at hand. My approach is, ‘How can I help you to finish this project?’ I try to remind clients that we’re on the same team and that my efforts are in service to the project. This attitude almost always gets us back on track.”
2 Stay close. Remember my friend in Chapter 6 who avoided getting kicked by staying close to the ornery horse? The more upset or ornery your client, the closer you should stay. Tell them you’ll get back to them ASAP with a plan. Send updates: “Here’s what I’m doing to look into the problem,” or “I haven’t heard anything from the designer yet. I’ll let you know when I do.” Give them no space to wonder about lining up another freelancer. You want to be the architect of a workable solution and indispensable to its execution.
3 Pre-Communicate. Are you waiting for the right moment to bring up a problem? Or maybe you can’t reach the phone from your fetal position under the desk? Pre-communication helps prepare everyone for an important conversation: “There’s something I need to talk with you about. When could I call you?”
4 Choose the medium. For really sensitive conversations, face-to-face gives you access to the full range of human communication: words, facial expressions, and body language. Video calling makes this doable from anywhere.
Email puts things on record, but choose your words and tone carefully.
While you may not choose it for time-sensitive communication, snail mail can be official (a notice about payment) or personal (a note of apology), and can impress on a client that you’re serious.
5 If they need to vent, let them. Emotions trump logic. If a client’s really upset, you may need to let them get it out: “I want to know what’s on your mind.”
Don’t interrupt or make encouraging listening noises; even the touchy-feely “I hear what you’re saying” can be irritating.
Eventually, you’ll sense them winding down. Now you can have an actual conversation: “I wanted to know what you were thinking. And I have some thoughts, too. And a few questions. And some ideas for where we go from here.”
6 Stay in conversation. This dials down the heat and helps you drive toward a solution. To raise the bar above finger-pointing, ask questions to get actionable data: “What do you think happened to make the project go off-track?” “You chose a mock-up, but you’re saying you never liked it. What didn’t you like?”
Use the info to get to next steps: “Good point about faster response time. One idea I have is . . .” “So, you thought the graphics were fine, but the colors didn’t pop?”
7 Look for good news. This keeps the client from trashing everything: “The good news is the files of the previous version were backed up. So while the lost work needs to be reconstructed, we’re far from being at square one.” “The new schedule is very tight, but we’ve set up a super-efficient review system with your team over the months.”
8 Hand them solutions, not problems. Remember, problems are opportunities to become indispensable. “Here’s what I’ve done to fix this.” “Here’s how we can prevent this from happening again.” “Here are portfolios from three new designers. Each can start immediately.”
The more plug-and-play you make the solution for the client, the easier it is for the client to say yes. “The cost of a new design is . . . Once you confirm the price, we’re good to go.” “The printer can start as soon as we send revised files. I’m willing to do the revisions free of charge, if you’ll absorb the remaining costs.”
This is how you have to work to be successful. It’s especially how you have to work through a crisis.
9 Don’t take blame for what isn’t your fault, but take responsibility when it is. If something’s your fault, get out in front of it. “I shouldn’t have waited that extra week to hear from the designer.” Communicate, don’t confess. Then move quickly to solution.
10 Don’t overpromise. You want to stop the bleeding and succeed, not make it worse and fail.
11 Put the resolution in writing. Don’t let misunderstandings undo your all your repair work.
12 Communicate the Triple-A way. See this chart.
| SITUATION | TRIPLE-A COMMUNICATION: |
|---|---|
| Schedule in jeopardy or lost | “We’re X weeks behind schedule. [ACKNOWLEDGE]. Delays on my end were caused by . . . Delays were also caused by . . . [THEIR ACCOUNTABILITY] [ANALYZE]. Here’s a revised schedule and a plan for going forward: . . . [ACT].” |
| SITUATION | TRIPLE-A COMMUNICATION: |
|---|---|
| Errors on your end | “I apologize for the errors. Although I have safeguards against this sort of thing happening, obviously these got past them. We don’t want that to happen again [ACKNOWLEDGE]. Part of what caused this were the additional revision rounds, which shortened our time for checking the work [ANALYZE]. Some solutions might be for you to budget for a proofreader, and/or to compress your team’s feedback. Here are some proofreaders who could be hired, and a schedule going forward: . . . [ACT].” |
Problems can happen if you weren’t totally clear about the job scope, your services, price, or your day-to-day policies and practices. Or maybe your client is just brazenly expecting more attention, calls, meetings, fittings, sessions, revisions, touch-ups, or retakes.
Here are six plays for when clients go out-of-bounds:
1 The Smooth Move. Hide the boundary in a plug-and-play solution:
“Sure, I can do that. It would cost . . . Let me know how you’d like to proceed.”
2 The Flying Change. Fix it in real time:
“I should mention that I no longer do weekend calls. Of course, we can talk today, since you didn’t know about the change—I just wanted you to know the policy going forward.”
3 The Straight Arm. Ward off the tackle:
“I’m happy to answer your questions, but I suggest we bundle them into a phone consultation, to make sure everything has been answered. The cost of a phone consult is: . . . ” (Even if you don’t charge, you could suggest the call to reduce interruptions.)
4 The Ounce of Prevention. Set up a system to handle it:
“That’s a great question. It’s actually one of the FAQs on my website/in my brochure. I’ve pasted the answer below, with a link to the others, in case they’re helpful.”
5 The Charge for Refills. If an issue crops up a lot, maybe it’s a clue to a new service. Example: different price levels of support packages (X number of follow-up questions, revisions, or consults). If old clients return, make sure they know:
“I have a new service plan—here’s the link with the info.”
6 The Lemon Squeeze. Turn a problem into a product. For an accountant, it might be:
Your e-book: The 100 Most Asked Small-Business Tax Questions. Free to clients with Premium-level service.
Your workshop: Audit-Proof Your Business! Clients get a discount.
Your webinar: The Top Ten Tax FAQs for Small Business Owners. Clients get a discount.
After a client crisis, do a postmortem. Go with a freelancer friend for a walk, a run, or a stagger to the nearest watering hole. Laugh, cry, beat a pillow, whatever. Get it all out about what went wrong, losses incurred (dollars, time, reputation) and lessons learned. What were the red flags? What could you put in your agreement that would prevent problems? Was the project description vague? Did you take on more than you could do for the time or money? Did you communicate often and clearly enough?
Good communication in a tense situation can take a load off your mind and might even save you from getting fired, as these freelancers learned:
“I edit publications for a company where the schedules are always tight. On one very tough project, the client asked me to return a hundred pages within one workday—coincidentally, a day my toddler was home from school.
“They’d asked the impossible. I let them know I couldn’t do it same day but would return it the following morning. I got no response. I spoke with the company’s local rep, who said the rep had been talking to them about their tight schedules. I’m adding a thirty percent surcharge for any future work from this client requiring less than a week’s turnaround. Even if it costs me some work, I hope it will encourage them to respect my time—or at least their own budgets—a bit more.”
“I was under the gun to finish my first freelance design assignment and ended up turning in a version that was a little rough around the edges. I assumed I’d have a chance to rework it after the client responded. Instead, he sent it out to others for feedback. When it didn’t pass with flying colors, he fired me. Lessons learned: I need to explain the back-and-forth of the design process. Also, if I’m running out of time, I’ll ask for more time. I’ll never again hand in less than my best work. Of course, your best work should be done on time. But if it’s not, ask for more time. (Side note: The client ended up going through several designers. So I didn’t beat myself up too badly. Still, it was a good learning experience.)”
Below are symptoms, treatments, and prevention tips for common client ailments. They may not fit your problem exactly and won’t replace legal advice, but I hope you can adapt some to your situation.
Symptom 1: Client is slow to respond.
Treatment: Bring it up as soon as you see the pattern: “We need to discuss the feedback process. It’s taking longer than it should.” Be on record: “I know you don’t mean to jeopardize the schedule, but this does.” Suggest a fix: A weekly call, a revised schedule. Monitor in writing: “I know you’re busy, but please continue to give this project your priority.” “The delivery date cannot be met unless I hear from you by . . .”
Prevention: Protect against client delays in your contract. Examples:
• Client will be available for consultations, interviews, approvals, et cetera.
• Client will provide necessary materials, data, and information.
• You can terminate the contract and be paid a kill fee if the client fails to meet these obligations after a reasonable number of requests.
• Set deadlines for feedback and/or approvals.
• If no response is received in X time period, materials are considered approved.
• You won’t be held to your delivery dates if the client doesn’t respond in the time period specified.
• If there are client delays, rush rates may be charged to deliver on time.
Symptom 2: Client is making too many changes.
Treatment: Make sure you both agree about the project’s direction. Remind the client in writing of what’s been approved, so you have a paper trail preventing them from reworking approved material or rejecting the final. Set deadlines for changes and stick to them. Say you won’t be able to meet the project’s deadlines if there are changes after these points.
Prevention: Build into your contract:
• Specify the number of revision rounds—you get paid extra for any additional rounds.
• Stipulate payment at an hourly rate for changes beyond a “reasonable level.”
Symptom 3: Client is indecisive/keeps changing her mind.
Treatment: Part of your job may be to help the client narrow things down. Offer fewer options. Offer opinions. Suggest group conferences where everyone gives feedback at once.
Prevention: Specify in your contract:
• The number of mock-ups, drafts, or samples you’ll provide.
• A time frame for the client’s response (see “Symptom 1: Client is slow to respond”).
Symptom 4: Doing the work is taking longer than you thought.
Treatment: Alert the client and team up to solve it. “We need to work out a new schedule. Here’s why.” How you handle compensation depends on who’s responsible for the schedule problem. If it’s your fault, you may have to do extra work without pay, compress stages, subcontract work, pull long hours, or all of the above.
If both of you had responsibility, discuss how you can both take on some of the burden. If the schedule’s blown because the client wants more than was agreed, instead of saying no, think about what you’d charge so you can say you’d be happy to accommodate them, for X price.
Prevention: Build an automatic extension into your contract for some cushion on the deadline. Log your time on projects for a more accurate idea of how long tasks take.
Symptom 5: You have too much other work.
Treatment: Negotiate extensions on less-critical projects. Subcontract portions, and/or get temporary help (another freelancer, a student, your mate, a virtual assistant) to handle routine work. Engage or barter help for child care or home chores. If missing the deadline is unavoidable, check your contract for consequences for late delivery, nondelivery, and termination. Then alert the client and use the communication skills in this chapter to work out a solution.
Prevention: See “Doing the work is taking longer than you thought.” To help keep projects from colliding, set start-date schedules with your clients (maybe with a deposit to hold that date). Let them know they may lose their “spot” in the lineup and/or the delivery date if the project doesn’t start on time.
Symptom 6: You have a serious personal or family issue/crisis.
Treatment: Figure out how much you can realistically do. Consider subcontracting portions, or other projects. Depending on the situation (for example, it’ll be very distracting or prolonged) and the client (you have a friendly, personal relationship), you might clue in the client: “I’m dealing with a family problem. This is how it affects the project: . . . ” Or: “This won’t affect the project, but there’ll be times when I’m less available [or whatever].” If you decide you must resign from the project, check your contract for termination and repayment terms. Consult your attorney if there could be legal repercussions. If you do pull out, suggest candidates you think could pick up from here.
Prevention: Keep your network active so you can find subcontractors or, if necessary, people you trust to replace you.
Symptom 1: Client cuts the budget.
Treatment: Submit revised project specs/services. Be polite but firm about what’s possible.
Prevention: Write the budget (or a minimum) into your contract, and/or stipulate that if the budget changes, the project specifications will be revised accordingly.
Symptom 2: Client puts the project on hold due to financial or organizational changes.
Treatment: Let the client know you’re suspending work until the issues are worked out. Discuss how you’ll be paid for work completed/expenses incurred to date.
Prevention: Put the budget in your contract. Include how you’ll be paid if the project is delayed or suspended for reasons beyond your control. Build in a kill fee or nonrefundable up-front payment or deposit.
Symptom 3: Your expenses/costs are coming in way over projection.
Treatment: Tell the client the costs are higher than anticipated. Consider changing vendors or subcontractors. Discuss modifying the project. You may have to take a hit financially if the client refuses.
Prevention: Create a cushion by giving a cost range. Make sure you’re getting accurate estimates. Specify in the contract that you’re not responsible if costs go up as a result of delays or late start by the client. Be transparent in costing out the project so if there are problems, you can partner with your client to brainstorm solutions together.
Symptom: Client wants something more than what was originally agreed.
Treatment: If the contract doesn’t specify or you have no contract, use emails or notes from your conversations to remind the client of what was decided. Negotiate the additional cost or time required for anything different.
Note: If you charge by the hour, don’t just rack up the time and start pricing tickets for your beach vacation. If the bill is way over what the client expects, you might be sitting in small claims court instead. Give the client a chance to bring the project back in scope.
Prevention: Put detailed specifications about the job scope in a contract, deal memo, or confirming email. Keep a phone log and email records. Confirm procedures and approvals in writing. Use your experience to anticipate scope creep and suggest ways to expand your role, adjust the terms, or hold firm to the deal.
Symptom: Client rejects the final, says they never liked it, or claims you didn’t deliver what was promised.
Treatment: Keep/show documentation of approvals, decisions, or pattern of unresponsiveness despite your attempts (see “We’re Off-Schedule”).
Prevention: Sometimes clients forget what they approved or change their minds. Either way, it’s not your responsibility. Ask questions at the start about the client’s ideas. If the client’s expectations aren’t realistic, educate them. See previous prevention tips re keeping good records and written confirmations. Tie payments to approval stages—this documents approvals and ensures you won’t lose a lot of money if they dispute the final payment. Make sure the contract specifies how disputes will be handled (for more on dispute terms, see Chapter 5). Assess their place in your Freelance Portfolio. For a Blue Chip, try to work things out. For a one-off, finish as well as you can and move on.
Symptom 1: A mistake or oversight.
Treatment: If it’s your error, you have to fix it, make your deadlines, and eat the costs—unless the client is a mensch and will cover some costs or extend the deadline. If it’s the client’s error, the same applies in reverse. If you’re the mensch, you’ve banked a lot of love with this client, which might be priceless for future business. But don’t say yes with that expectation.
Prevention: Live and learn. Look into professional liability insurance or other kinds of coverage (see Chapter 10).
Symptom 2: Something unexpected happens that’s no one’s fault (client gets laid off, event is called off, equipment fails or is stolen, shipments are delayed or damaged, personal emergency, natural disasters, et cetera).
Treatment: Damage control is paramount. In the case of a major glitch or disaster, inform each other right away and keep the updates coming. Make a disaster plan together to stop, rethink, or revise the plans. If your contact’s been laid off, there’s not much you can do other than find out who your new contact is, take steps to connect and quickly bring the new person up to speed, and show your value in being clear about what you’ve done so far and what you will do to finish the work per the terms of your contract.
Prevention: To the extent that insurance, preparedness, padded deadlines, and contract terms such as force majeure language, non-refundable deposits, kill fees, and expense reimbursement help, do them.
Never Assume
Sometimes you might think asking questions might make you look bad; other times misunderstandings just happen. Better to ask than have to fix it later at your own cost.
Just saying “This might seem like an obvious question, but . . .” gets it done. If you do mess up, being a class act can pay off: “I had to write a piece for two investment advisers. I’d worked with the personal banking division of their parent company, but not the investments side. The banking side had a very specific brand voice that I was familiar with. I wrote the piece using that voice. I learned very quickly that banking and investments are very different markets—at least at this company. I apologized, talked with my contact, who explained the difference—he was very understanding about it—and rewrote the document in the style they wanted. I spent a lot of time reading their website, thinking about the brand, and made sure I had it right in the new document. They loved it and I’ve worked on several projects with them since then.”
Even if it isn’t your fault, the financial, reputational, and stress price of a major error can be high. That’s why you may want to check out liability insurance (see Chapter 10). It’s easy to get in some fields; tough in others. Check professional associations, search online for liability insurance in your profession, and talk to other freelancers in your field. Licensed professionals should always have malpractice insurance.
If you make a mistake that has (or could have) damaging repercussions for the client, for you, or both, everything we’ve been talking about moves to warp-speed level.
If you have a contract, check the language to make sure you know your obligations and the client’s, and how termination and disputes would be handled. You might consult a lawyer and your accountant about legal or financial fallout (one reason why it’s smart to have a lawyer and accountant who are already familiar with your business). (For tips on choosing a lawyer, see Chapter 5; for tips on choosing an accountant, see Chapter 15.)
FREELANCERS SPEAK
The Importance of Facing the Mess
“I’m a freelance food writer and recipe developer and had written an article, including several recipes, for a major magazine. Between the time I did the work and the time the story ran, I realized one of the recipes was dangerously close, copyright-wise, to something I’d done for another client. I laid awake for a couple of nights worrying about it, vacillating between telling myself that no one would ever realize the similarities and telling myself that I had to come clean and tell my editor, even though I was convinced that if I did, I’d probably never work for that magazine, and maybe any other, again.
“I realized I had to clean up my mess—that any work I did after that would be on top of a mess and could therefore never feel good or satisfying. So I took a deep breath, called my editor, and explained what I’d realized. I also completely apologized for being so irresponsible and said I’d do whatever it took to make it right. The editor’s response was, ‘Your food is delicious. Now, give me a few more details and we’ll figure out what to do.’
“In the end, the most major repercussion was that I had to reformulate the recipe a bit. No big deal. And in the process, I learned how much my editor appreciated my work and ended up acknowledging me for my integrity. Bottom line—in all kinds of relationships, work or otherwise, it’s always better to speak up. There may be some work involved in cleaning up a mess, but in my case I found that the relationship was better, stronger, for having done it.”
Employees can recruit their posse to keep ornery clients in line: “My boss says . . . the sales director wants . . . it’s not company policy . . .” Freelancers don’t have that built-in protection. What to do?
First, accept human nature. The longer you freelance, the more likely you’ll hook a client like this now and then.
Second, mentor yourself. Read up on psychology and communication; learn how to deal with tough customers.
Third, freelancers have to mentor one another. Tap into your Brain Trust at times like these.
Fourth, freelancing gives you more freedom to walk away than the company worker who’s handcuffed to the benefits, retirement plan, and paycheck and has to grin and bear it. Some tips for keeping your freelance freedom:
Protect yourself on paper. Negotiate deal terms protecting you from the most common client toxicities (scope creep, delays, unreasonable demands, late payment/nonpayment, unclear direction). For negotiation tactics, see Chapter 5.
Have an exit strategy. You can’t walk away if you can’t afford to. When you sense a 3-D client, keep killer records of every transaction and conversation. And start working to line up a replacement gig. It might take time, so don’t wait until you’re desperate. If your 3-D is a big name, that’s leverage to help you get an even bigger (let’s hope nicer) one.
Don’t let one client dominate. Work every level of your Freelance Portfolio. Have two or more Blue Chips. All it takes is one bad hire at the company you count on for your freelance life to become suddenly, significantly miserable.
Add combat pay. If you get a bad vibe from a prospect but need the income or the career boost, build high maintenance into your price. The time you spend babysitting a 3-D is time lost from other ventures.
And here are some strategies to help you deal until you’re out of there:
Kill ’em with kindness. Don’t sink to their level. Be proud of how you handled things in the end.
Find something to like. It could be a common interest in sports, or even their dedication to their work (which, uh, compels them to call you on Sunday evenings). It can help create a connection, however fragile, between you.
Use positive pressure. Most 3-D types are hiding insecurities or have an inflated ego. So, appeal to their past performance, which they’ll want to uphold: “You tend to have clear ideas about things, so I’m surprised you haven’t sent your thoughts on the mock-ups.”
Be gently assertive. You know how things are typically done in your industry, so feel free to lead, saying, tactfully, “This is how it works; this is what we’re doing.”
Handling a true client meltdown? Here are two fixes.
Short-Term Fix: Draw the Line
If their venting gets personal, tell them this is getting too personal and you’ll have to call them back, and say when. Use the break to cool down and gather your thoughts for the callback. Maybe they will, too.
Or you can say something like, “You know, I can’t be spoken to that way. I hear you’re very upset and I’ll work with you to get to the bottom of the problem. But we’re both professionals, and we need to treat each other professionally.”
Longer-Term Fix: 3-D Freedom
Your ultimate ticket to 3-D freedom is having the reputation and the financial stability not to work with clients who don’t respect you. Network and prospect, build your chops to work with the best and charge top dollar, and systematically save money and reduce debt. It may seem like a lot to do, but effort accrues over time.
What do 44 percent, more than $10,000, and thirty-six hours have in common? They’re just a few of the sad stats about late-paying clients and freelancers:
• 44 percent = the percentage of independent workers who had trouble getting paid in 2010, according to Freelancers Union’s survey of more than 2,500 respondents.
• $10,071 = the average amount paid late.
• 36 hours = the average amount of time spent chasing payment.
Of those who had trouble getting paid in 2010, 81 percent were paid late, and 37 percent were never paid. The average amount they couldn’t collect: $4,643.
In the best of times, freelancers struggled against the drag of slow-paying or nonpaying clients. And it hasn’t been the best of times for a long time. The Great Recession pushed record numbers of businesses into cash-flow crises or out of business.
Freelancers felt that pain. According to one study, in New York State alone, 42 percent of the state’s 900,000 independent workers experienced problems getting paid in 2009. Average amount owed: $12,000—for a whopping estimated $4.7 billion total.
These factors don’t help:
• Freelancers without contracts have less leverage for collection.
• Freelancers’ economic instability makes them fear pursuing collection because they can’t afford to lose the client or referrals. Even collecting is a losing proposition:
• There are caps on what you can collect in small claims court.
• Every minute you spend chasing collection (calls, letters, small claims court, obsessing) is time lost for paid work.
• You may not be able to afford to hire a lawyer to pursue deadbeat clients. (Compare this with company employees, who get free help from the Department of Labor to investigate and recover unpaid wages.)
• If you win in court, trying to collect on the judgment costs more time and money.
Freelancers also pay a longer-term price for deadbeats’ delinquency:
• To pay business expenses, freelancers divert income they might have put toward retirement savings.
• They’re sometimes forced to draw on retirement income to meet daily living expenses.
• They may have problems paying their taxes.
While companies that default on their payroll are severely liable (including the threat of criminal proceedings), at this writing, no labor laws exist to deter deadbeat clients.
How can one-third of the U.S. workforce be left twisting in the wind when trying to secure payment for an honest day’s work? This undermines the spending power of a large segment of the population.
ADVOCACY ALERT
At Freelancers Union, we wanted to expose dead-beats and career late payers. Thus was born our “Get Paid, Not Played” campaign, inviting freelancers to out clients who didn’t pay.
Next, we launched the Client Scorecard (https://be.freelancersunion.org/client-scorecard/), a tool for members to publicly rate companies they worked for. Check it out (and fill it out!). The more freelancers work to protect each other from bad business practices, the stronger their leverage becomes.
What’s really needed are laws protecting freelancers from nonpayment by punishing offenders, just as employees are legally protected from employers who default on their obligation to pay.
There are basically four types of nonpaying clients:
1 Well-intentioned nonpayers. These clients can’t pay for legit reasons. Suggest smaller increments. Confirm a timetable in writing. Contact them the day before to confirm they’ll be making the payment.
If they say it’s a cash flow thing and they’re expecting money by X date, suggest paying you some now, with the balance due when that payment comes in.
2 Unhappy nonpayers. These nonpayers are unhappy with you. Maybe you made errors or underestimated the job. If you made errors, apologize and work out an adjusted pay scheme. Taking a hit now might preserve future business.
As for underestimating a gig, lobbing a giant invoice into an unsuspecting client’s inbox is asking for trouble—and your post-delivery leverage is zip. Try to work something out with the client as soon as you realize the problem.
If they’re unhappy for unreasonable reasons, see “This Isn’t What We Agreed,” “That’s Not True,” and “Seeing 3-D,” above, for some options.
3 Serial nonpayers. These folks may pay some, then no more. Chances are, there’s a trail of stiffed freelancers in their wake. Ask your network and check Freelancers Union’s Client Scorecard archive before signing on. If you suspect a nonpayer, get paid up front or get a deposit before starting, don’t work too far ahead of the payment installments, and if possible in your profession, try not to deliver the final until you’re paid. For additional tactics, see “Seeing 3-D.” Your gut can alert you, too: “Only once was I stiffed by a client. She walked out with my work and never paid me the nine hundred dollars she owed me. She came in all flustered and jittery, saying someone had tried to rob her. She promised to come back and pay me. Something didn’t quite ring true. I should have listened to my instincts and not taken her on.”
4 Mega-corp nonpayers. These businesses delay or stiff you because they can. They’re big, you’re little, and they set policies that sweeten their cash flow. If you manage to shoehorn an arbitration clause into their contract, gold star for you. Another trend in a down economy: Accountants advise small businesses and others to put freelancers on a ninety-day payment cycle, effectively treating them like any account receivable. That policy is conveniently blind to the human toll on freelancers, who don’t have larger vendors’ cash flow cushion.
Diversify your Freelance Portfolio so your boat isn’t moored to these monoliths. And fill out a Client Scorecard for posterity.
Remedy 1: Have a Payment Policy
State your policy at deal time. If you get push-back, it’s your choice to negotiate or stand your ground. Some options to build into your policy:
• Negotiate a time limit. If their policy is 90 days and yours is 30, maybe you can agree on 60.
• Specify a late fee, often a percentage of the amount, in your contract and on your invoices. You could even specify more hard-line stuff, such as no delivery if interim payments aren’t made.
Remedy 2: Get a Portion Paid Up-Front
Get paid something to reserve the time slot . . . on signing the contract . . . before starting work . . . or some other early benchmark. Not standard in your industry? Maybe you can set the precedent if you’re in demand, thanks to your excellence.
Remedy 3: Write “Dispute Resolution” Terms into Your Contract
Put arbitration or mediation language in your contract (see Chapter 5). Especially with out-of-state clients, specify where jurisdiction will be—ideally in your state/county. Getting a judgment is hard enough, but the really hard part is collecting on it. You don’t want to have to hire a lawyer in another state and try to collect there.
Remedy 4: Practice Prompt, Preventive Invoicing
Your invoices should:
• Be sent promptly post-delivery, while everyone’s in love with your work. No love? All the more reason to bill them and close the books.
• Be sent in triplicate: snail mail, email, and a phone message saying the invoice was sent. If this is what you do on Round One, let them imagine what Round Three will be like.
• Be dated, for tracking lateness.
• Include your full contact information.
• Include all the data for payment processing, such as the project’s name, project codes or identifying numbers, itemization of services, your payee name and tax ID number, and instructions for payment method (including sending).
• Reflect lateness (“Second notice—30 days past due”).
• Reflect any late-payment charges.
Remedy 5: Make Friends with Someone in Accounting
You’ll glean info on their procedures, get to know someone in a position to help, and keep your primary contact unsullied by the money thing: “I know you’re busy. Is there someone in accounting I could reach out to?”
Remedy 6: Delegate It to the Cloud
Documentation is nine-tenths of the collection game. You can hire an online service to track your time on projects, invoice for them (including late payment follow-up), and handle the payment transaction. It’s one time when making things less personal can work. Make sure you’re comfortable with the site’s security and backup practices. Search under “online invoicing” or “online billing.”
Remedy 7: Have a Follow-Up System
Your system is up to you. It could start with an email, friendly but firm, along these lines: “Our records show you haven’t paid [details: invoice date, amount due, job name]. You might have forgotten, so this is a quick reminder. Let me know if you have any questions. Thank you for giving this your prompt attention.”
If there’s no response or you aren’t paid in a week or so, a more formal notice could be next, recapping the billing info and saying in part: “This payment is now [how many days/weeks] late. Please contact me to discuss this serious matter.” I know a freelancer who created an alter ego in the form of someone who works for her inquiring into the matter of nonpayment.
If you and the client work out a payment plan, summarize it in an email for the record. Keep copies of every letter and email and a phone log. You’re building documentation for possible use in court or for a collections agency.
Don’t procrastinate on follow-up. The older the debt, the harder to collect.
Keep your tone professional, factual, and solution-oriented, focused in a positive way on what can be done to resolve this.
It’s essential not to say or do anything that could be viewed as harassment. Don’t get personal or list their failures. If they ask you to stop calling, stop; if they tell you to call back later, ask when would be a good time and call back then; don’t contact them multiple times a day, and don’t make threats or criticisms. There are strict regulations around the debt collection process. You want to comply fully to avoid any appearance of harassment. To find out more about federal and state regulations, type “consumer debt collection and regulation” into your browser. If you have any questions about how to proceed, consult an attorney.
You might ask an attorney to send a letter after your initial attempts, or pay a collection agency to send letters or make calls.
If your client’s using work you’ve done, you could talk to your lawyer about whether they can be ordered to stop. You could propose mediation (see Chapter 5). If the debt’s large, has been pending awhile, and collection looks dim, you could offer a discounted payment to clear the slate. Put it in writing, put a deadline on it, and be clear that this offer is only happening once. If it works, formalize the deal with a legal agreement called a mutual release and settlement.
If you hand the whole sorry mess over to a collection agency, they’ll generally pay you 50 percent of what they recover. For information on collection services, check out the Commercial Collection Agency Association (ccaacollect.com).
As a final stop before lawsuit lane, you could send a demand letter that a) briefly, clearly, politely recaps the history of your grievance, b) proposes a resolution, such as X amount, paid by X date, and c) states that if they choose not to do this, you’ll file a lawsuit. If that doesn’t work, you might be able to present the letter in court as part of summarizing your dispute.
If all else fails, you’ll have to decide whether to sue or let it go. It costs time and money to pursue legal action. Sometimes people decide to take the loss, move on, and let the universe dole out its brand of what-goes-around-comes-around justice. Others choose to take it to court.
Before you hire a lawyer, do your math and get a realistic assessment of the expenses, because the fees may exceed the debt.
What it is: Small claims court is a venue for resolving relatively small disputes over money and sometimes other issues (depending on the state). While it’s not costly, it does take time. You can represent yourself or (again, depending on your state) you could have a lawyer represent you, but make sure the cost of paying the lawyer makes sense for what you’re looking to recover.
Where it is: Ask the small claims clerk in your city about any regulations regarding where you can sue. It might be in the defendant’s state of residence or business, which can add to costs and time.
How it works: It’s a relatively informal process similar to arbitration. You (the plaintiff) present your evidence to the judge; the other guy (the defendant) does the same; and the judge rules on it. The judge might encourage you to have the case mediated (see Chapter 5). If you do, you probably won’t be able to go back to the judge.
Why you shouldn’t wait too long to file: States have statutes of limitations on how long you have to bring a lawsuit. Check the rules for yours.
How much you can recover: Each state limits how much you can recover in small claims court. It’s usually somewhere from $3,000 to $10,000 (which makes a case to break payments into amounts that fall below your state’s limit—but keep in mind that you can sue only for one cause of action; you can’t break a large payment into multiple parts and seek to collect on more than one. That’s why small claims court doesn’t work for recovering larger amounts. It’s designed for very small matters, hence the term small claims court. Check your state to find out limits.
Tips and tactics: While you can represent yourself, it could help to pay a lawyer for a coaching consult or two. Also, carefully compile the evidence you’ll bring to persuade the judge. It could be your written and spoken communications with the client; copies of your contract, letter of agreement, or deal memo; and invoices. It could be photos. Or witnesses.
Winning ≠ collecting: If you win, the fun has just begun. If the client doesn’t pay up, you have to pursue payment, a process in itself requiring more time and (yes) more money.
Resource: To get information on small claims court in your area and learn more about the procedure, type “small claims court” and your state’s name into your browser, and look for official government websites, which end in .gov or .us.
Woody Allen famously said, “Eighty percent of success is showing up.” I believe the other 20 percent is keeping going, especially when problems come up. It’s about resilience. In Chapter 6 I told my misclassification story. It was rough while it was happening. But in hindsight, there’s a weird symmetry. Without that experience, I wouldn’t have had the idea for Freelancers Union and found the work I love and am uniquely suited to do.
No, I won’t segue to mystical ravings about silver linings and lessons learned from adversity. There are bad work situations that defy positive spin. We all have them. They push us to learn from our mistakes, protect ourselves better, and in the end be better at what we do. They make us smarter about finding good projects and good clients—the ones who are appreciative, intelligent, accommodating, honest, and happy to pay us what we’re worth, on time. And they make the hard-won rewards of freelancing—chief among them the opportunity to work with great people—even sweeter.