Does it really take that long to cough up $500?
November 6, 2012 10:49 AM Subscribe
Freelance/small business filter: How to handle clients that you are ambivalent about working with?
I am a freelancer and over the past few years, I have tended to weed clients in and out by how much I like them. One of the most important criteria along this domain is: Do they pay on time (net 30), or per an agreement (if it is net 60, fine as long as everyone is up front about this). But if I have to chase to remind them about payment and hear silence, or spend a few months waiting for and chasing a check, then the next time that they contact me I am "busy/can't take on any other projects."
I've been lucky in that I have enough clients/work to get enough work for a salary for the year; if I need more work, then I check in with the clients that I like and enjoy working with and a new project/work almost always appears.
But I still occasionally hear from the client that I've weeded out; they approach me with projects, request for updated contact info, etc. I am polite, but claim to be too busy to take on new work.
If this were a friendship and I decided that they had crossed a boundary, then I would ignore the email, but since this is my livelihood, I wonder if this should be handled differently. Although it is just business, I have a hard time taking emotion out of this because it is my livelihood and I would pay a bill on time; I usually worked hard to hand something over to them on time and meeting all the criteria that they wanted.To be honest, I don't actually need the money right then ...and the clients that do this do it with what seems to be a small amount of money (to me).
These are the solutions that I came up with, but I've always done 2 if I decide that I don't want to work with them.
1) Address what they did and how we need to work moving forward: If you would like me to work with YOUR COMPANY, you need to pay in advance since you paid late in the past.
2) Continue the "I'm busy" (I don't want to refer them to anyone else, if they did this to me, then they will do it to someone else).
3) Just be honest "I like the projects, but late payments are a problem for me. If you ever work at a new company person Y, I would be delighted to work with you again. "
4)??
There is a part of me that is worried about 1, 2, and even 3 because one never knows, people move around in this industry. I don't think that I can or should count on the great clients being there for the next 20 years, and I might need the ones that I weeded out at some point.
So what are thoughts on these solutions and are there other solutions/responses? Is there a way to take the emotion out of this (for me)? Were you upfront with a client and/or did you weed out clients and was there a repercussion for this?
I am a freelancer and over the past few years, I have tended to weed clients in and out by how much I like them. One of the most important criteria along this domain is: Do they pay on time (net 30), or per an agreement (if it is net 60, fine as long as everyone is up front about this). But if I have to chase to remind them about payment and hear silence, or spend a few months waiting for and chasing a check, then the next time that they contact me I am "busy/can't take on any other projects."
I've been lucky in that I have enough clients/work to get enough work for a salary for the year; if I need more work, then I check in with the clients that I like and enjoy working with and a new project/work almost always appears.
But I still occasionally hear from the client that I've weeded out; they approach me with projects, request for updated contact info, etc. I am polite, but claim to be too busy to take on new work.
If this were a friendship and I decided that they had crossed a boundary, then I would ignore the email, but since this is my livelihood, I wonder if this should be handled differently. Although it is just business, I have a hard time taking emotion out of this because it is my livelihood and I would pay a bill on time; I usually worked hard to hand something over to them on time and meeting all the criteria that they wanted.To be honest, I don't actually need the money right then ...and the clients that do this do it with what seems to be a small amount of money (to me).
These are the solutions that I came up with, but I've always done 2 if I decide that I don't want to work with them.
1) Address what they did and how we need to work moving forward: If you would like me to work with YOUR COMPANY, you need to pay in advance since you paid late in the past.
2) Continue the "I'm busy" (I don't want to refer them to anyone else, if they did this to me, then they will do it to someone else).
3) Just be honest "I like the projects, but late payments are a problem for me. If you ever work at a new company person Y, I would be delighted to work with you again. "
4)??
There is a part of me that is worried about 1, 2, and even 3 because one never knows, people move around in this industry. I don't think that I can or should count on the great clients being there for the next 20 years, and I might need the ones that I weeded out at some point.
So what are thoughts on these solutions and are there other solutions/responses? Is there a way to take the emotion out of this (for me)? Were you upfront with a client and/or did you weed out clients and was there a repercussion for this?
If late payment was the only problem, and you like the client otherwise and want to work with them again, I think 1 is the professional way to go.
I am a freelance copywriter, and I have had a version of this talk with late-paying clients. However, I think payment in advance is a bit much to ask for. I would ask for half up front or the whole thing Net 10 (depending on the project), and warn them that if payment is late, I will immediately stop work on the project.
When it comes to your emotions and judgments about late payment, remember that the people you work with may have little to no control over accounts payable. Just because their CFO is a dick doesn't mean they are bad people.
Finally, if you don't like working with them for reasons other than late payment, then keep doing 2. This is how I handle clients that are disorganized, disrespectful, clueless, or otherwise Clients From Hell.
posted by ottereroticist at 11:34 AM on November 6, 2012 [1 favorite]
I am a freelance copywriter, and I have had a version of this talk with late-paying clients. However, I think payment in advance is a bit much to ask for. I would ask for half up front or the whole thing Net 10 (depending on the project), and warn them that if payment is late, I will immediately stop work on the project.
When it comes to your emotions and judgments about late payment, remember that the people you work with may have little to no control over accounts payable. Just because their CFO is a dick doesn't mean they are bad people.
Finally, if you don't like working with them for reasons other than late payment, then keep doing 2. This is how I handle clients that are disorganized, disrespectful, clueless, or otherwise Clients From Hell.
posted by ottereroticist at 11:34 AM on November 6, 2012 [1 favorite]
If you have enough work from the people who pay you swiftly, then you really are too busy to take on work from the dawdlers. So it's not rude or scolding or a fib. You are your own boss, and you decide how much work is enough. I will also tell people I'm too busy if I can tell that the project is going to be a nightmare. Because it's true. I have better things to do than voluntarily walk into a mess. So, "Thanks for the opportunity, but I really can't take it on right now."
However, under the right circumstances I will take work from some clients who are habitually slow payers: The amount of money isn't huge, they are consistent in their amount of lateness, and they are otherwise good to work with. As long as I know they are good for it, I can wait 60 or even 90 days. At today's interest rates, you only miss out on about 40 cents a month by not having that $500 in the bank. Of course, if you regularly get down to your last $500, getting paid on time becomes more urgent.
As for your other options, the first half of #3 looks good. "I like the projects, but late payments are a problem for me." Then stop talking. If they want you badly enough, they will try to work out a better deal. If not, you still haven't burned any bridges. This would be a good approach if they ask why you have been too busy to deal with them.
Here's an option #4: Quote a slightly higher rate, with a discount for paying within 30 days. That discount, of course, would result in your normal rate.
posted by Longtime Listener at 11:36 AM on November 6, 2012 [2 favorites]
However, under the right circumstances I will take work from some clients who are habitually slow payers: The amount of money isn't huge, they are consistent in their amount of lateness, and they are otherwise good to work with. As long as I know they are good for it, I can wait 60 or even 90 days. At today's interest rates, you only miss out on about 40 cents a month by not having that $500 in the bank. Of course, if you regularly get down to your last $500, getting paid on time becomes more urgent.
As for your other options, the first half of #3 looks good. "I like the projects, but late payments are a problem for me." Then stop talking. If they want you badly enough, they will try to work out a better deal. If not, you still haven't burned any bridges. This would be a good approach if they ask why you have been too busy to deal with them.
Here's an option #4: Quote a slightly higher rate, with a discount for paying within 30 days. That discount, of course, would result in your normal rate.
posted by Longtime Listener at 11:36 AM on November 6, 2012 [2 favorites]
I sometimes handle collections for my company, particularly the difficult clients. What I would do in your position is simply say that you would love to help, but they are on a credit hold for failing to pay invoice XXXXX-XX. It's probably just a misunderstanding, but your policy is that you can't work with clients until their account is current. If they don't mind transferring you to their Accounts Payable department so that this can be straightened out, you'd be willing to start work on their project right away.
Also, you really have to divorce emotion from the collections process. I can't overstress this enough. I've worked a broad variety of positions in corporate finance departments, and 90% of the time the reason an invoice isn't paid isn't because of bad faith on the part of the client, but because Accounts Payable doesn't recognize the invoice due to an internal miscommunication. Accounts Payable people are very hesitant to pay invoices unless they know exactly what the invoices are for: part of their job requirement is making sure that money doesn't escape unless they're certain that it is legit. You can do a lot to help in that regard (for example, if the company you work for references internal purchase order numbers or ID numbers on their SOW, it will help A/P immeasurably for you to reference those numbers on your invoice).
Regardless of who is at fault here, I feel that you ought to be honest (yet tactful) about the real reason you are turning down the work. We live in a capitalist society: almost nobody is going to hold a grudge against you for insisting on prompt payment for your work. It's possible that the person who hired you doesn't even know that your invoice hasn't been processed by his accountant yet, and would be happy to help. However, when you exhibit this passive-aggressive behavior of saying you're "too busy" instead of being honest, he's likely to take you at face value and will stop trying to solicit you for jobs in the future, even if he moves to a new company.
Also, try to accept that paying your invoices is not the biggest priority for a business, nor should it be. I deal with tons of vendors who issue "pro forma invoices" when a service contract expires. These are invoices for services that we have not requested - instead, these invoices simply assume that we want to continue the existing service agreement, and payment of the invoice constitutes a legal binding contract - so if we're not careful about which invoices to pay, we could easily end up losing a ton of money to stuff like this. Naturally, these invoices are designed to look almost exactly like regular invoices so that A/P departments are fooled into thinking that they are legit. Do you see where I'm going with this? Finance people deal with tons of scam invoices, pro-forma invoices, duplicate invoices, and similar things. How are they to know your invoice is different? Your expectation that you will just send an invoice and it will get promptly paid without any questions is an unrealistic expection in the modern business world.
If a client is a lot of hassle to work with or get payment, then I recommend simply anticipating the hassle and charging them a higher rate for your service on future assignments, to factor in the additional time that you spend on collections. I think of this as a "dealing with aggravating BS" surcharge (though it's probably best not to itemize it that way - Longtime Listener gives you a better option in his comment above). That's a common practice in my experience. But dropping business entirely (especially without telling your clients the real reason why) really doesn't sound like a career-building move.
posted by wolfdreams01 at 11:36 AM on November 6, 2012 [3 favorites]
Also, you really have to divorce emotion from the collections process. I can't overstress this enough. I've worked a broad variety of positions in corporate finance departments, and 90% of the time the reason an invoice isn't paid isn't because of bad faith on the part of the client, but because Accounts Payable doesn't recognize the invoice due to an internal miscommunication. Accounts Payable people are very hesitant to pay invoices unless they know exactly what the invoices are for: part of their job requirement is making sure that money doesn't escape unless they're certain that it is legit. You can do a lot to help in that regard (for example, if the company you work for references internal purchase order numbers or ID numbers on their SOW, it will help A/P immeasurably for you to reference those numbers on your invoice).
Regardless of who is at fault here, I feel that you ought to be honest (yet tactful) about the real reason you are turning down the work. We live in a capitalist society: almost nobody is going to hold a grudge against you for insisting on prompt payment for your work. It's possible that the person who hired you doesn't even know that your invoice hasn't been processed by his accountant yet, and would be happy to help. However, when you exhibit this passive-aggressive behavior of saying you're "too busy" instead of being honest, he's likely to take you at face value and will stop trying to solicit you for jobs in the future, even if he moves to a new company.
Also, try to accept that paying your invoices is not the biggest priority for a business, nor should it be. I deal with tons of vendors who issue "pro forma invoices" when a service contract expires. These are invoices for services that we have not requested - instead, these invoices simply assume that we want to continue the existing service agreement, and payment of the invoice constitutes a legal binding contract - so if we're not careful about which invoices to pay, we could easily end up losing a ton of money to stuff like this. Naturally, these invoices are designed to look almost exactly like regular invoices so that A/P departments are fooled into thinking that they are legit. Do you see where I'm going with this? Finance people deal with tons of scam invoices, pro-forma invoices, duplicate invoices, and similar things. How are they to know your invoice is different? Your expectation that you will just send an invoice and it will get promptly paid without any questions is an unrealistic expection in the modern business world.
If a client is a lot of hassle to work with or get payment, then I recommend simply anticipating the hassle and charging them a higher rate for your service on future assignments, to factor in the additional time that you spend on collections. I think of this as a "dealing with aggravating BS" surcharge (though it's probably best not to itemize it that way - Longtime Listener gives you a better option in his comment above). That's a common practice in my experience. But dropping business entirely (especially without telling your clients the real reason why) really doesn't sound like a career-building move.
posted by wolfdreams01 at 11:36 AM on November 6, 2012 [3 favorites]
There used to be an understanding that "90 days is as good as cash". That is totally buggy whip now. Put your accounts payable requirements on your invoice. Add a late pay %, and if the invoice is not paid timely, send another with the late pay % added.
posted by Cranberry at 2:54 PM on November 6, 2012 [1 favorite]
posted by Cranberry at 2:54 PM on November 6, 2012 [1 favorite]
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If they push the issue
"I pay my suppliers on time, and I expect that my clients will pay me on time. Unfortunately I am not in the business of unsecured business financing to companies such as yours, which is what I would effectively be doing if I were to work with you again in any other capacity than payment in advance. This is something we could reconsider after developing a firmer business relationship, but for now this is the only way I can move forward with your request"
posted by jannw at 11:14 AM on November 6, 2012 [1 favorite]