When Clients Don’t Pay: Legal Options for Freelancers
It’s a worst case scenario for a freelancer. After spending valuable time and energy completing a project to your client’s exact specifications, they drop contact as soon as your invoice hits their desk. Ordinary employees have numerous protections granted to them under the law, but the legal waters are murkier for independent contractors.
If a client doesn’t pay up, what are your options? Here are a few points to consider.
Especially true if you’re working for a larger company, accounting departments can be disorganized places. A company may have multiple bills in the pipeline, so don’t always assume the worst if you aren’t paid on time. Send polite reminders and follow-up emails, make calls and try to speak with an actual representative of the company.
Of course, getting nothing in the way of response is a troubling sign. Try to remain professional and level-headed, but stress the urgency of being paid for all outstanding invoices in a timely manner.
Send a formal collection letter.
If your client remains AWOL after multiple attempts to contact them, send a formal collection letter. In it, lay out the entire situation with even-handed, professional language. Attach copies of invoices, contracts, oral or written agreements (such as emails), and show your client that you are serious about getting paid.
Here are some templates to help get you started.
Work something out.
Sometimes, a client can’t pay what you invoice them because their business or organization is in financial trouble. If this is the case, see what you can work out with your client. Consider accepting payments in installments, or settling on a price lower than what you initially agreed on. It isn’t ideal, but in this rare circumstance it’s better to get reimbursed for at least some of your work.
Threaten legal action.
Nobody wants to have to go to court. It’s expensive, time-consuming, and can be a headache overall. Your client, however, needs to know you’re serious about collecting payment.
Send another formal collection letter, this time threatening legal action if your invoices are not rectified within a set amount of time (2 weeks to a month is ideal).
Before beginning a project, communicate clearly about the payment process.
It might seem obvious, but a surefire way to make sure you don’t get burned by a stingy client is to communicate clearly about your rate, billing process, and payment process. If possible, draw up a formal contract.
Don’t be shy about the bottom line—if your client isn’t willing to discuss the payment process, they may not be a client worth pursuing. Some companies and organizations have specific dates they want invoices submitted, so be sure to ask about the best time, date, and format to submit invoices.
What if you have to go to court?
If you’ve exhausted all of your other options, the time may come to call up a lawyer and take legal action against your former client. Robert John Hudock, a business attorney practicing in Santa Monica, California, says the following about legal options for freelancers taking their case to court.
“In addition to a claim for breach of an oral contract, you have a claim under what are called the ‘common counts.’ They are somewhat difficult to explain, but for informational purposes, what you need to know is the particular common count that applies in your situation. The common count that applies is simply a common count for services rendered. The count for services states that the defendant is indebted to the plaintiff in a certain sum for (or on account of) ‘work and labor done’ or ‘services performed’ for the defendant (or at the defendant’s request). This claim is often more advantageous to a plaintiff who did not enter into a written contract because proving an oral contract can be difficult, and with this common count, you don’t have to prove the elements of a contract; the agreement underlying this count is a ‘quasi-contract’ or implied contract. All a plaintiff needs to show is that defendant became indebted to plaintiff for an agreed upon amount, for work, labor, services and materials rendered at the special instance and request of defendant and for which defendant promised to pay plaintiff. There is a Judicial Council form that lays this all out.”
This is a good resource. I experienced having worked for 2 months and not get paid in the end just because his business was not doing well. What I did was just changed my billing schedule I now send out my billing every friday and I wait a week the next friday if I am still not paid then work stops that way I lessen the risk