Freelancers’ Questions: How to get paid the other half of my fee?

Freelancer’s Question: My invoice along with payment due date has been sent and nothing’s come back, even though the due date’s now passed. I emailed the client a polite reminder but still didn’t receive a response. I will send a third late payment letter to the client, who’s overseas, but then how should I proceed?

They’re a good client in a niche area so I don’t want to upset them. But what complicates this is that although 50% of my fee’s been paid up front, the remaining 50% (in a few instalments) will only be paid once I release the work I’ve done to a freelance designer, who I’ve partnered with for this assignment (and others previously).

I have a good relationship with him, so I could call him up and let him know what's happening. I certainly won't authorise the client to use my work if I'm not paid for it; the license doesn't become theirs until it's all been paid for. I could also send a late payment notice or a notice that the outstanding balance will go to collections. The overseas location might make monies hard to collect though. Is there a way I can get my money without resorting to escalating the situation?

Expert’s Answer: When an expected payment date passes with little or no contact from the client it can be more than a little disconcerting, especially if the client in question has traditionally been a valued customer and more importantly, a prompt payer. But it isn’t unusual in our experience for clients to pause or delay progressing a project for any number of reasons without necessarily feeling they have to keep all the freelancers ‘in the loop’ as to the latest developments. That said, you are right to look to the implications for your own cashflow should the worse happen.

Luckily the fact you have a good relationship with the designer means you are in an excellent position to keep abreast of both current developments and crucially any issues or problems that occur after your part in the process has ostensibly ended. As for how to proceed, you do have a number of options available to you currently that do not require any kind of formal escalation to debt collection or legal action.

You say that the remaining 50% of the fee is due to be paid in instalments once assets are released to the designer, but unfortunately you do not state if this has already happened. For the purposes of the following two recommendations, we will assume the work has not already been placed with your designer colleague. In addition, the following solutions are provided on the assumption that your contract allows for them. Please check your contract carefully to ensure you are free to pursue these steps, as some contracts explicitly state what action must be taken in the event of non-payment.

Solution one – this is the simplest and offers the most immediate resolution and it involves picking up the phone and calling the client (time zones permitting) to find out exactly what the current state of play is. You can use the call as a customer service call initially, to confirm they are happy with the work done and that everything is progressing as it should. If it is, then this gives you the perfect opportunity to bring up your payment terms and the like.

If this picking up the phone options isn’t possible, or you can’t reach the decision-maker, then your next best option -- Solution 2 -- may be to just do nothing and wait for the end-client to come back to you. If the work hasn’t been passed on to the designer then presumably they will contact you to discuss the next step. You can legitimately state you were unsure of how to proceed given you had previously received no response to your emails. Again, this gives you the chance to sound out the client for any potential pitfalls that may impact your own payments. Once the client has been in touch and assuaged your fears, you can then move forward.

However, if you have already passed the assets across to the designer then that does put a different spin on the situation, as you now have a client ignoring you for work completed at the point they feel they no longer ‘need’ your services. At best, this demonstrates a lack of respect, at worst it can be an indicator that this client already intends to try and avoid or otherwise ignore your legitimate payment demands.

In this case, we would suggest you contact the designer as a matter of urgency to see if they have any details you do not. It is possible some internal reorganisation at the clients end means your emails are now going to the wrong place or person. If the work continues apace, and it is only your emails that go unanswered, then you need to take steps to safeguard both your intellectual property and cashflow.

In the first instance, we would suggest you call the client as outlined above (Solution 1) and make strenuous efforts to confirm your payment is free of queries and that it is being processed. If not provided, press for a firm date of payment from the client and confirm this in writing (on email) if possible.

If that doesn’t work then explain the situation to your freelance colleague and ask for their help. Chances are if you are struggling to secure payment now then the designer will eventually be faced with the same problem. Plus, as the old adage goes “a problem shared is a problem halved” and that is especially true in cases like this.

If the designer is willing to assist, we would suggest sending a formal notice by email reiterating that the IP does not transfer until payment is made in full, and back this claim up by including the relevant contractual clauses. Copy in the designer and make it plain that you retain the IP and will robustly defend its ownership until such time as payment is made. If your designer is willing they can then ‘down tools’ in response to this email in order to avoid infringing on IP you still own.

This may be enough for the client to make payment as the project is effectively stalled. However conversely, you and your colleague may then find yourselves in exactly the same position as far as securing payment goes, and there is potentially little stopping the client from finding someone else to finish what the designer has already started.

Failing that, your options to pursue payment without escalation are limited. You could try negotiating with the client but if they are already ignoring your legitimate requests for payment and ownership of the IP, how much leverage you have without resorting to an expensive copyright claim is open to debate.

Whilst we appreciate you have no desire to upset a valued client, it should be possible to pursue payment using a professional and respectable agent without this action having a detrimental impact on the relationship. But practically speaking, would you really grant further credit to a company you already knew from experience to be poor payers?

That being the case, and if push comes to shove and you do need to look at your collection options, then try to find a respected and recommended debt collection agency based in the UK who has a local affiliate in the same country as your debtor. They will place your account for collection with a company versed in the laws and customs of your debtor. Note, we often find a local agent makes an overseas creditors claim that much harder to ignore.

Keep in mind -- reputable agencies usually charge a percentage-based commission that is payable on success, but most will not require you to sign a binding contract or pay any fees in advance. Generally we would advise steering clear of any agency that promises the world in return for an up-front payment, as in our experience these claims never seem to hold water and those paying the fees never get refunds. Good luck.

The expert was Adam Home, a manager at Safe Collections, a debt recovery agency that specialises in serving freelancers and the self-employed.

Editor's Note: Related Reading -

How small suppliers can break the late payment cycle

Freelancers' Questions: Can I charge 5% interest each week I'm unpaid?

How to get paid when freelancing


2nd April 2015

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