A regular client I invoiced earlier today paid me within six minutes, beating my previous record with a client I worked with on a major project a few years ago. That client was paying me in weekly tranches and they processed and settled my final invoice within half an hour, then emailed me to let me know.
We freelances love clients like these, but unfortunately they are few and far between. The legal standard payment term is 30 days, and a client is obliged to pay up within that window. However, far too many companies think Day 30 is the earliest day they should settle your invoice, and then only on the next payment run two weeks later – if you’re lucky.
(I’m excluding here the abhorrent practice of many publications of paying for an article by a freelance only on publication, which could mean months, or even years later. This is why I rarely pitch and write these days, because waiting months for my money doesn’t pay my bills or feed me.)
I emailed my prompt payer immediately to express my appreciation for their speediness. Shortly after, a colleague told me she had invoiced a client – a local authority no less – six months earlier and she was still awaiting payment. I suggested she write a letter before action to give them a boot in the right place and get that invoice settled. I also said she should tack on the legally permitted interest and late payment charge.
Legal action is not something to go into lightly. For one thing, it can damage a client relationship permanently – and although there is an argument that freelances probably shouldn’t work again for a late payer of such magnitude, in practice the late payment could be down to a change of staff at accounts, for example, and a simple phone call could resolve matters. In those circumstances, that client is likely to be worth hanging onto especially if they pay well and offer regular work.
On the other hand, if it turns out they have ongoing cash flow issues that is a red flag. Their cash flow problem is not my problem – it’s theirs. But their problem becomes mine if I need that money to pay that month’s mortgage instalment. If you need to push for your money, with the threat of legal action, simply make your business case: “Your payment is overdue. Please settle within the next 7 days or you may face legal action.” Don’t make it personal – your late payer is not going to care that their action stops you putting food on your table, and telling them that won’t speed up getting paid.
The government needs to do more to enforce the late payment legislation – small businesses (including freelances) are the backbone of our economy and they can and do go under when clients fail to pay in good time. This is why we appreciate it so much when a client settles that invoice so quickly. It shouldn’t have to be that way. But if you hire a freelance and pay them promptly, you can enjoy that glow when they let you know how much they value your custom.
PS My client’s payment was in my account within 20 minutes. Can anyone beat that?