You like what you see on the menu and you order a three-course meal plus a bottle of Bordeaux. After a short wait, the food arrives, meticulously prepared by an expert chef. The meal is delicious. The wine is divine.
When it’s time to pay, you tell the waiter:
“I’d be happy to take care of the bill, but I’m afraid I can’t do that right now.”
“What seems to be the problem?” the server asks. Your response:
“Well, I’m a little low on cash right now. I’m waiting for someone to send me a check. Once that money is in my account, I can pay you. That could take a few weeks or even a month. I’m sure you understand the position I’m in. I promise you’ll get your money. Just not today.”
It’s an absurd scenario, but if you’re a freelancer it’s not uncommon. According to the Freelancers Union, almost 80% of independent workers will be stiffed by clients in their careers. Right now, two of those clients are telling me that I’ll get paid as soon as they get paid.
Is that how it works?
These clients wanted me to deliver ASAP, and now they are urging me to be patient. They were hired by another company to deliver a package of eLearning modules to a third company. If one company delays the pay, everyone has to wait and pray. That’s the idea.
What the people I work for are really saying is this: It’s not our fault that you’re not getting paid. We’re just as much of a victim as you are. And then they always add this line:
“These things happen, especially in this economy.”
Sometimes I feel like saying:
“I understand what you’re trying to tell me, but how you deal with your clients is none of my business. Literally. Recession or no recession. Your clients didn’t hire me. You did. We have an agreement. I have kept my part of the deal. Now it’s up to you to do the same. Don’t order things you can’t pay for.”
Unfortunately, freelancers (42 million in the U.S. alone) are easy targets. Unlike more traditional employees, freelancers have very little payment protection. Most of them run small operations and don’t have the time, the means or the energy to go after deadbeats.
So, what to do when a client fails to pay you?
Before we get practical, let’s talk about something I’ve noticed time and again when this subject comes up.
Some freelancers feel funny about money.
Even though they know their client owes them, they have a hard time confronting that client. The same people cave in during negotiations soon after the first objection is raised.
After coaching a number of colleagues on money matters, I noticed that these people have a few things in common, personality-wise:
- They have a tough time dealing with conflict in general
- They have issues related to self-worth
- They tend to take things personally
- They haven’t learned how to be professional
- They don’t know how to deal with fear
Does some of this sound familiar?
ARE YOU A DOORMAT
Let’s start with number one. As long as you see your client as your boss, you will act and react as a subordinate and the client is in control. After all, a boss is an authority figure, and from an early age you have learned to listen and obey. Heaven forbid you’d challenge their position.
By playing that game as a child, you earned the love of your parents and you received praise from your teachers. You always did what you were supposed to do. You never caused any trouble. It’s the tragedy of the “good child.”
Those who avoid conflict never learn to stand up for themselves and allow the world to walk all over them. The world is more than happy to oblige!
If you have a rather weak spine and a client owes you money, there are a few things I need to tell you:
One: Your client is not your superior. As an independent contractor, you work with someone, not for someone. It’s a relationship of equals. Didn’t you become a freelancer so you could be your own boss?
Two: It’s important to remember that you did not create this situation. You have honored your part of the contract or verbal agreement, right? If that’s the case, then there’s no reason to feel wrong or guilty about asking for your money. You’ve earned it… unless deep-down inside you feel you didn’t.
I’d be the last one to suggest that someone’s sense of self-worth is directly and totally related to what’s in his or her bank account. However, I have noticed a correlation between a person’s level of self-esteem and their level of confidence when it comes to pricing. To put it bluntly: those who don’t feel they deserve it (consciously or unconsciously), have a hard time asking for it. If that’s you, you have also fallen into trap number three: you think this whole money-thing is personal.
I like to be on good terms with my clients. Some of them go way back. It’s wonderful to see their businesses grow, knowing that I have played a part in their success. But even though we’re on a first-name basis, they are not my friends. They are the people I work with. At the end of the day, I offer a solution to their problem.
My voice helps them sell their service and it praises their products. I educate their employees and welcome their customers. In exchange, I get paid a very, very small percentage of their profits. It’s business. It’s a professional relationship. Keep that in mind when a client tries to play the “I thought we were friends-card,” after you’ve kindly asked him to pay up.
BE A PRO
In my experience, those who are rather reluctant to put their foot down when it comes to payment, find it challenging to act as a professional across the board. They expect the world to treat them the way they treat other people. They operate on the basis of trust and good intentions. They jump on a new client like a dog in heat, assuming that everything will work out for the best.
I’m sorry to burst your bubble, but clients have to be qualified and trust needs to be earned. Otherwise you’ll get burned. Qualifying clients means finding out whom you’re dealing with. In other words: You’ve got to do your homework!
Ask them to sign a contract or working agreement, and if they refuse, it’s a red flag. Some colleagues won’t get to work unless the client pays up front or puts fifty percent down. If they refuse, that’s another red flag.
When I make these suggestions, I almost always get the same reaction:
“But what if the client walks away because he doesn’t like my terms and conditions? Then what?”
This brings me to point number five: Fear.
ARE YOU AFRAID
Not all fear is bad. The population of the Netherlands knows a little bit about that. After a disastrous flood killed thousands of people in 1953, they were afraid it could happen again. Instead of running away from the problem, the Dutch became damn good at building dykes to protect the lowlands. Nowadays, those who live close to the sea can feel confident that they’re safe, even when it storms.
As a solopreneur, it’s your job to protect your own interests or you’ll go under. No one else will do it for you. This means keeping a paper trail on all your clients. If you don’t use a formal contract, you must save that email in which your client hires you to provide a certain service. Make sure they know and agree to your terms of payment. If you’d like to formalize the relationship, check out the free Contract Creator from the Freelancers Union.
Having such a contract shouldn’t scare a legitimate company away. If anything, it proves you’re a pro. Would you really trust a new client who refuses to sign anything that’s more than reasonable, especially if that client is located on the other side of the globe?
Don’t be afraid to lose business you’re better off not having in the first place!
The mistake many people make is that they confuse uncertainty with fear. With the freedom of being a freelancer comes the unpredictability of being in business. Even those whom you might think of as “established,” have months that are great and months that are not so great. That’s why they never stop marketing themselves.
If uncertainty is too hard to handle, get a job as funeral director or tax collector.
I’ve been a freelancer for most of my life and at times I despise the unpredictability of my career. One company I worked for had contracts with Fortune 100 companies. The man who managed my accounts promised me a constant stream of scripts from the best global brands in the world. For a while I thought I had hit the jackpot…. until he was replaced. His successor never called.
When business is slow, the temptation to compromise is greater. Clients pick up on that in a heartbeat and will start twisting your arm as much as they can. Insecurity does not win contracts and fear will never pay your bills.
When dealing with an unpaid invoice, be confident that you can work something out instead of being afraid that you’ll ruin the relationship. Successful people focus on what they want. Fearful people focus on what they don’t want.
You’re more likely to attract what you focus on most.
And finally, an entrepreneur is often defined as:
“a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so”
Some people say that if you own your business, you should expect that at least one percent of your bills will never get paid. The older the debt, the harder it is to collect. Common sense dictates that you should build that risk into your rate.
A few questions remain.
Should you hunt your debtors down like a hungry bloodhound, or is it better to write things off and focus on those clients you can rely on?
And how did I resolve the situation with the two companies that still owe me money?
More about that, next week.
Right now, I think I’ll try out that new restaurant in town.
I’ve worked hard today. I believe I have earned a nice meal and a good glass of Bordeaux.
Paul Strikwerda ©nethervoice
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