How to Get Payment From a Deadbeat Client

It is your money, so treat it as such.

In nine years of working for myself, only one client has stiffed me. But, he didn’t get away with it.

Unethical Lawyer

I’ve told this story before, how a cheesy lawyer wanted me to write multiple “lemon car” articles that I determined would take me less than an hour each produce. It soon turned out he had something else in mind and expanded the parameters of the assignment after I submitted the first article, wanting more material than what these $25 articles called for. I told him I could accommodate his request, but my rate was now $75 per article based on the expanded research required. He balked, I sent him an invoice, but after repeated attempts at getting paid, he never paid up.

Normally, I would continue to press the matter, but the amount was small and I was deeply involved in other projects. Instead, I took the article and posted it to my automotive website where it soon became my most read and most commented article ever. Several years later I finally turned off the comments, after garnering 161 responses. Sure, I never got paid, but the article turned out to be more valuable to me than what I would have received from the deadbeat client himself.

It has been said, “the hardest lessons learned are lessons learned nonetheless.” I couldn’t agree more. After that incident, I made sure that all of my future clients were working under a contract. I haven’t had a problem since.

How to Get Paid

This article is based on a conversation I had last week with one of my long term readers. I promised I wouldn’t use her name, but I did ask and received permission to share her story and my tips. The story doesn’t have a happy ending yet, but I believe that said writer’s persistence will result in a positive outcome.

Like most every writer who is self-employed, freelancer “Jane” juggles several clients and has both long- and short-term assignments that she is working on concurrently. It is one of her short-term clients who is giving her a lot of heartburn, someone who came onboard just after Thanksgiving and promised enough work to keep her busy through Christmas and into the new year. Turns out that this client wanted six 1,200- to 1,500-word articles for an online magazine, a project that would pay $150 per article. That’s a low price Jane is charging, but she said it was based on four hours of work per article including research, writing, editing and the rest. That work equals $37.50 per hour.

I asked Jane how she was to get paid and she replied, “Weekly, once each article was accepted.” Her problem wasn’t unlike the trouble I had with my cheesy lawyer client — Jane submitted her first article, the client reviewed it, sent it back for some edits, Jane made the changes and then nothing. Not a word, not a reply to an email, no phone call. Nothing.

Stopping Work

Figuring that the client was busy and that she would still get paid, Jane wrote her next two articles, but decided to wait to submit them until she heard back from her client. That was Jane’s first mistake: assuming that the job was still on and moving forward. Fortunately for her, she made a wise decision not to submit the articles. However, she wasted her time, because it soon became apparent that the client was purposefully out of touch.

On Dec. 14, Jane submitted an invoice for her first article. Three times leading up to Christmas, she sent emails and attempted to contact the client by phone. Still nothing. With the kids home from school and family arriving from out of town, Jane decided to “back burner” the job and celebrate the holidays. On Jan. 3rd with everyone returning to their routines, that is when Jane sent me a note explaining her dilemma. Several back and forth emails revealed the extent of her trouble and a day or two later I suggested a course of action to take. It went as follows:

Send a certified letter, return receipt requested — Jane had no idea whether her client received her invoice or her email follow ups. I told her to write a cover letter explaining what was due and include an invoice. Then, I instructed here to take that letter to the post office and send it out certified with a return receipt requested. This method is the only way to ensure that someone gets a letter from you without going there in person. And that option wasn’t feasible as the client was 1,500 miles away.

Small claims court — Taking a client to court can spur the deadbeat into action. However, if the contract shows that legal jurisdiction over such matters is where the client lives, then your claim must be filed there. That is why when you write a contract, you should insist that legal matters be handled in the state where you live, preferably in your country. Being that I’m in North Carolina, I don’t want my California, Illinois and Florida clients to think I’ll show up there to see them in court. For larger claims, a collection agency may be your best recourse. You’ll lose about half of what you are owed in exchange for getting the collector to help your client “make good” on his debt.

Move on — Some battles you’ll win and some you will lose. What you’ll need to do is move on as quickly as possible whether you win or lose. In my situation, I turned a loss into a very personal gain. Jane may find that it isn’t worth the pursuit to keep pressing the issue. An alternative would be to try to sell the article elsewhere, particularly if it remains unpublished.

I’m sure Jane will find a way to make this situation work out for herself. She already knows that it is important to be emotionally detached when dealing with clients and also to not spend too much time with any client that might adversely impact her other gigs. Deadbeat clients are a drag and if you do lose money you may be able to show that loss on your income taxes. Consult with your financial advisor or tax preparer to find out how to do that.

See Also — Pay the Writer, or Else

How to Plan for the End of the Year

Prepare early to avoid much stress later on.

I love Christmas, but I don’t love the end of the year. That’s because once December hits, I’m fully aware that my deadlines are subject to change as clients go away for the holidays, push off work until January or make some other request that means I will need to react with little notice. I’ll still have my time to celebrate the season with my family and friends, but I am fully aware that planning ahead — like completing my gift shopping early — can help limit my stress.

I’ve been working for myself over the past nine years and have learned a thing or two about the waning weeks of the year and what to expect. Read on if you like because I’ll share with you what I’ve learned:

Talk with your clients — Preferably before November comes to an end and most certainly by the first week of December, contact your clients to find out what changes to deadlines, if any, can be expected. If you’re planning to take time off for the holidays, you should broadcast that fact as soon as possible. For example, if your last day of work for the year is December 23 and you won’t be returning until January 2, then get the word out NOW. Everyone deserves a break — trust me, the week between Christmas and New Year’s Day is typically a very slow one. So take some time off.

Discuss billing schedules — As part of communicating with your clients, you’ll want to make sure that your billing schedule lines up. Don’t be caught blindsided to find out later that the entire accounting department went on holiday as your mortgage payment comes due. For long term clients, you should be able to secure an advance on your work, especially if you’ll be supplying articles, writing press releases or copywriting throughout the holiday season.

Consider your rates — Everyone else is reviewing what they charge you (health insurance, car insurance, subscriptions, etc.) and you should do the same. It is still customary to pass off increases at the beginning of the year. If you haven’t raised your rates in some time, then plan to do so now. For example, if you’ve been charging $50 for those 500 word articles over the past two years, your client should be receptive to an increase. Charging $55 is a 10 percent jump, but don’t let percentages scare you. If your client is immensely happy with your work, then she should agree to your increase. If she is crying the blues, then ask that you both revisit the issue in April. Wait no longer than that as you’ll soon forget and an entire year will have passed by without the raise. For new clients, bring them in at your newer and higher rates.

Review your taxes — Self-employed people, whether they have a formal business such as an LLC or simply work on the side, can look forward to lots of deductions come tax time. Besides the interest on my mortgage, our family’s health and dental insurance, and related medical costs can be deducted. Office expenses, a new piece of equipment and many other things can also be deducted. If you were looking to expense something early next year, consider buying what you want now to raise your deductions. Maybe you wanted a new computer anyhow — the sales this time of the year are phenomenal.

Update your records — This is the first year that I actually paid someone to do some of my work. That means I’ll be issuing him a 1099 form in January. I keep a running record of the articles he has written and what I paid him on a spreadsheet. With each payment that information is quickly updated, so I know that there will be no surprises come tax time. I just need to remember to get the form to him by the end of January.

Order your tax software — I still do my own taxes, but must admit that I would be lost without the help of Turbo Tax. In early November, I pay for my yearly update and later that month I can download my federal update. If you use a bookkeeper, an accountant or some other tax preparing professional, why not schedule your appointment now before he is swamped? That will give you the motivation you need to gather all of your paperwork. With the help of Turbo Tax, my taxes are usually done and filed by mid-February.

Plan your quarterly taxes — Speaking of taxes, your fourth quarter taxes are not due until January 15. But don’t be fooled: set aside enough money now to avoid a financial catastrophe after the first of the year. You can’t afford to let this slip by as both the IRS and your state may not be so forgiving.

Get organized — The week between the holidays is when i go on full housekeeping mode. That doesn’t mean I stop writing, but it does mean that all of the loose ends I left untied will be handled. Fortunately, I’m fairly good at “clean as you go” and won’t have much to deal with. Still, the calendar changes and I will be doing the following: organizing my files, shredding very old and unneeded documents, setting up new files for the new year, putting up a new calendar, backup files, update my contacts list and review my online presence. With the latter, I spend a portion of my time at year end to update my LinkedIn profile to reflect my current projects. I’ll also update some of my websites, decide which ones I want to keep for the coming year and ensure that my domains and web hosting accounts are always up to date.

Have I forgotten something? No doubt that I have. Everything I mentioned here is from the top of my increasingly balding head. No matter, I keep notes in safe places and refer to these regularly. I’ll be on “Christmas mode” through December 26 this year, but when I return to my work on Dec. 27, I’ll swing into my new year mode and complete my year-end transition.

Photo: Hilde Vanstraelen