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slow-money-snail

Don’t get me wrong, I love being a freelancer: I relish being able to choose what tasks I accept and decline, I love being my own boss and working when it suits me (even if that often ends up being more than I’d anticipated!), I even thrive on the inevitable isolation. Yet the one thing that really gets to me, even after all these years, is payment delays. Not for one minute would I consider returning to the predictable certainty of salaried employment, but slow-paying clients can really rock the boat of the most established freelance businesses.

I’ve been self-employed for over 26 years now and in all that time, I’ve only ever had one client fail to pay at all. That was a publishing company that went bankrupt soon after I did my one-and-only translation for them and, strangely enough, I had had my doubts about them before accepting the job. They had a respectable 4 on the ProZ Blue Board and the project managers seemed professional enough, yet for some reason alarm bells were ringing at the back of my brain. The job was right up my street, however, so I ignored my instinctive reaction, only to regret my decision soon after, when it became apparent that I certainly wouldn’t be seeing my £500. Never again: gut instinct is there for a reason and I’ve listened to mine ever since!

Slow payers, on the other hand, are an entirely different kettle of fish. Most of my clients pay on time in line with my 30-day terms and some pay even more promptly – definitely my favourite kind! I often think that prompt payment has to be up there with rates as one of the key attributes of a good client: paying high rates is all very well, but if they also take ages to pay and you have to spend time chasing late payments, the attraction starts to wear off. There’s definitely a balance to be achieved and I sometimes think it’s preferable to accept a slightly lower rate in the knowledge that you’ll be paid on the dot – or in a matter of days in some cases!

This post is in part inspired by a recent case where a large corporate French client was approaching 60 days from invoice, rather than the contracted 30 days. I’d chased them several times and was just about to issue an invoice with delay interest in line with the EU Late Payments Directive, when the overdue payment magically appeared in my bank account. I’ve been working with this particular client for a number of years and we have a formal contract (stipulating 30 days from invoice), but every so often they seem to go through a spell of delaying settlement. The very fact that they are such a large company makes it hard to track down the specific department to speak to in such cases, and my contacts, pleasant though they are, always seem to pass the buck. It’s also hard to broach payment complaints with colleagues you normally bend over backwards to accommodate – or is that just me? I have no problem with complaining about poor service in restaurants or shops, or shoddy products, but I do find it difficult to take a harder line with clients when things don’t run smoothly. (Note to self: must try harder!) In this particular instance I followed up receipt of payment with a note to my contacts seeking reassurance that I would be paid sooner in future and mentioning the terms of our contract and the EU Directive – only to receive a defensive ‘phone call saying they couldn’t possibly “guarantee” payment in 30 days and the problems had been due to reorganisation, the Christmas break, holidays, blah, blah, blah…. However, since then, other payments have miraculously been made within 30 days, so perhaps my little note did serve its purpose after all?

Of course, the simple solution would be to refuse to work with clients who don’t play the 30-day ball and it has certainly been on my mind to turn them down in future, and yet…. they’ve never not paid, they are a prestigious name in my specialist field, and they pay good rates. A difficult choice. The conclusion I’ve reached is not to take on huge chunks of work for potentially tardy clients, so that I limit my exposure to cashflow problems. The problem in my recent situation had come about due to a relatively slow November, followed by a large job for this particular client in December, then 10 days’ holiday over Christmas/New Year and another large job for a different client that wasn’t invoiced until the end of January. Had the party in question paid on time, all would have been well; as it was, I was forced to resort to my cushion of 3-6 months’ income for precisely such awkward situations. Freelancers just starting out may not have the luxury of a substantial rainy-day fund, however and there is no doubt that many small businesses fail to make it because their clients fail to pay on time: cashflow is all.

I always try and mix in longer jobs with shorter jobs (as I described here), which also helps to minimise long periods without income, and I now expressly state my payment terms on my invoice. I’m beginning to think specifying a due date might be a good idea too! Having defined business terms and conditions is a no-brainer, of course – mine are on my website. I’ve reached a solution with another client, who has been slow to pay in the past, whereby I send them a reminder the week before the payment is due: since doing this (at their suggestion), they have been true to their word and paid on time, so the reminder is a small administrative price to pay. I’ve also now outlawed cheques as a means of payment after a largish cheque from one agency bounced, causing untold panic at my end (I don’t do overdrafts!) and transfer from savings back to cover the problematic sum. The agency were very apologetic, blaming an “admin error” and the payment did eventually clear, but I’ve since informed them in no uncertain terms that only bank transfers are acceptable from now on. I hadn’t in fact realised that banks have up to 7 working days to return cheques unpaid, not the three clearance days I’d always assumed, so in theory you may think you’ve received payment from a client, but you can’t actually access it until it has cleared, which could be nearly two weeks later….

I should add that I’ve been extremely lucky on the whole and most of my clients pay on time or before, but even one delayed payment can upset the most organised of apple carts if you’re not careful. If you’ve any other thoughts on how to galvanise slow payers into action – or avoid them altogether! – I’d love to hear them.

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