I've been dealing with more and more payment issues lately. Some clients pay late, others try to negotiate after the work is done, and a few have just disappeared without paying. What strategies do you use to prevent freelance payment issues? How do you handle difficult conversations about money, and what's your process for dealing with clients who don't pay on time?
To prevent freelance payment issues, I require 50% upfront for new clients and projects over a certain amount. This filters out clients who aren't serious and ensures I'm not working for free. For late payments, I have automated reminders that go out at 7, 14, and 30 days past due. After 30 days, work stops until payment is received.
I use payment milestones tied to deliverables. For example, 25% at project start, 50% at midpoint deliverable, 25% at final delivery. This spreads the financial risk and gives clients comfort that they're paying for progress. For difficult conversations about money, I frame it as This is how I structure projects to ensure quality and timely delivery."
I include late payment fees in my contracts - 1.5% per month on overdue balances. Surprisingly, just having this clause dramatically reduces late payments. When I do have to chase payment, I'm polite but firm. I noticed invoice #123 is past due. Can you let me know when I can expect payment?" I don't make excuses for them or apologize for asking.
I've started accepting credit card payments through Stripe. Clients can pay instantly, and I get the money faster. For clients who want to negotiate after work is done, I have a very clear change order process. Any changes to scope or pricing require written approval before work continues. This prevents scope and dope" tactics.
For clients who disappear without paying, I have a collections process. First, multiple attempts to contact through different channels. Then a formal demand letter. Finally, small claims court if it's worth the time. I've only had to go to small claims twice in 10 years, but knowing I will pursue it makes me more confident in my payment terms.