I’ve been lucky. In 22 years of running my freelance business, during which time I’ve raised well over 1500 invoices to several hundred clients, I can recall no more than a handful of occasions on which I did not get paid. But last year, I had two.
Now this could of course be a random clustering of bad luck. But it could also be a bellweather for the economic climate now impacting small businesses. If it is, then it’s likely to get worse in the 12 months ahead.
That being so, you may find it useful, if you are also a #freelancecopywriter or some other kind of creative #freelance, to look over these two cases, fundamentally different in the reasons for the failure to pay, and to think about similar dangers that may lie in wait for you.
CASE 1 – Mid-sized UK legal sector business, by whom I’d been paid for previous work without any problem.
I’d done some work a year or so previously for a firm of solicitors based in the North of England. The firm itself was owned by a ‘legal claims generation’ business. The ‘solicitor arm’ had paid for their project promptly and without problem.
When the parent company returned in 2021 and asked me to help them frame the presentation of an entirely new venture, I had no qualms. Legal sector. No problems on previous job. Same marketing guy at the client who had run the earlier project.
At that point, I was still extending 30 days credit to all UK Ltd Company clients.
I did the project, which had a number of tasks to it, and the fee (agreed in writing up front) totalled about £7k.
All parts of the job were completed. The client was happy. In went the invoice.
I never worry if payment doesn’t appear on 30 days. It rarely does. I just send a chasing email and usually payment follows soon after. When you get no reply to the chaser, nor to subsequent chasers, you know something’s wrong.
I chased this one for weeks, until eventually I had no option but to threaten legal action via the Small Claims track. No response. No reply to calls. Nothing. So I filed a claim, which cost a couple of hundred pounds.
When the defendant was served with the Court papers, there was no response. No effort to pay. No notification of intent to defend the case – though this was of no surprise as they’d never expressed any dissatisfaction with the work.
The Court action was swift. As the defendant had not responded, the Judgement was made in my favour without any need for a hearing.
But, of course, this did not get me my money – simply the legal entitlement to the money.
In an effort to discover what was going on, I eventually managed to get an email response from the marketing guy who had been my client at the company. He had now left them, and was eager to explain that neither he nor anyone else there had ever intended to defraud me or not pay me.
They were, however, a company whose bread and butter operation required them to have a hefty line of credit. One day, early in 2022, their funder had simply withdrawn. Without their credit, their business was crippled, and initially they had simply tried to shore things up for long enough to find a new funder by slowing all outgoings – including paying suppliers like me.
The situation never got better for them. They are now in liquidation and the CCJ I had recorded against them simply puts me (low down) on their list of creditors. Essentially, it’s a write off for me.
There was no malice and no intent to avoid payment. They were hit out of the blue by the withdrawal of their funding, a situation which in the current climate is likely to occur more frequently, and having extended my standard 30 days credit to them, my invoice just became unfortunate collateral damage in the havoc no doubt caused by their collapse.
CASE 2 – Small, first time client, UK manufacturing company producing a specialist para-medical appliance.
The owner of this company contacted me for the first time late in 2021 and asked me to complete three tasks for him in relation to materials required for an upcoming conference.
He needed the script for an explainer video, a pitch deck for posting to the conference website, and a draft script for his own short presentation to the conference.
I quoted all the tasks and had him sign my online Terms and Conditions document – something I insist on every client doing.
I then completed the tasks, and he signed off each one (in the last case only by implication, but that proved later to be sufficient). I invoiced, waited for my standard 30 day credit term to elapse, and then chased. The guy owed me just over £4k.
No response. No response to any of the half dozen follow up emails at intervals of 5-7 days.
Eventually, I threatened and then issued another Small Claim in the County Court.
This time, there was a response to the Court. He intended to defend the claim, citing as his defence that, after signing off all 3 parts of the project, he had submitted the draft speech script component of the work to the conference organiser, who had taken the extraordinary step of sharing it in advance with other delegates. The other delegates (exclusively medical professionals) had reacted negatively (in my view most likely to finding a product salesman invited to present at their clinical conference), and his invitation had been withdrawn. In his view, this unfortunate eventuality (which was of course the result of events with no bearing on the contract between us), freed him of the need to pay my invoice. The “value of the work was”, he informed the Court in his witness statement, “Nil”.
It took several months before we actually made it into Court, in front of a District Judge.
As you’d expect, the Judge wasn’t interested in any misfortune that had befallen this client after the completion of the contract between he and I. She cited various sections of my Terms and Conditions document, which he had signed, and which thus formed the basis of the contract between us. She also noted that, when asked by me under questioning at the hearing whether he had at any time suggested to me that the task might only be deemed complete once the work had gained approval from a third party with whom I had no contact, he had confirmed that he had not.
County Court Judgement in my favour. Invoiced sum, plus cost of entering the Claim, plus Court Fees, plus interest, plus a nominal Court Attendance fee. It’ll probably take a little further effort, but I’m optimistic that I may actually get paid on this one. If I don’t, then I’ll apply to wind up his business… but that still won’t get me my money.
In this case, unlike the first one, there was an attempt by a Client to try to offset an arbitrary commercial setback by not paying a supplier for work he’d commissioned. While this could of course have happened at any time at all, I’m inclined to feel that with trading difficulties impacting more and more businesses, this kind of desperation and behaviour may become more widespread.
Things to think about.
- Interest rates. Energy costs. Post-Brexit/Post Covid cost increases. Post-Brexit/Post Covid reduction in consumer spending/changes in consumer habits. All of these things are putting businesses large and small under huge pressure. Under this pressure, small businesses in particular can become unpredictable in their behaviours and responses.
- As a freelancer, you probably have less time, and less resource, with which to defend yourself if clients choose to mess you around.
- It’s important to think about how a payment default would impact you, and how you’d cover the hole in your revenue short term.
A few useful tips.
- Marketing people who make promises when commissioning you on behalf of their employer may have little or no influence over when their finance department pays you. Correspond directy with the finance department once you’ve invoiced.
- Having clients sign a detailed Terms and Conditions document is always advisable. That enshrines what you and they are agreeing. In the second case, above, my T&Cs were taken by the Judge to constitute the contract the client had entered into with me.
- Maintaining a detailed e-correspondence paper trail for every job is important, as is sending your client the emails, as you go along, that confirm every aspect of what’s happening.
- Clients can descend quite swiftly into financial trouble which may prevent them paying you. Running proper credit checks on new clients (via Experian or similar) is helpful. An Experian subscription is not cheap, however, and may not be appropriate for you. Even if you do have this, it may not protect you that well if you work with smaller clients.
- In today’s climate, requiring some or all of your project fee up front should be your norm. I avoided this for years, feeling it made my business seem ‘less professional’, and that bigger clients did not always have the systems in place to agree to this. Since I switched it into my terms last year, no client has batted an eyelid.
- Late paying is a widespread but lamentable practice. But with cashflow’s getting more strained, it’s again likely to become more and more common. If you’ve not been paid a day or two after the ‘payment due’ date on your invoice, chase with a brief and polite reminder that payment is now due. More often than not, this email alone will get you paid.
- In 2023, “Our payment run is at the end of the month” is bull**** for any company, no matter what its size. Do not accept this. Push back.
- Prolonged radio silence from a client after invoicing should always set alarm bells ringing.
- Having to fight to get a due payment is a huge distraction from your work. If you’re in an actual disagreement over whether a fee is due, consider negotiating immediate payment of part of the fee as full and final settlement. To my mind, half of a fee being disputed by a difficult client immediately is better than the stress of fighting for all of it for weeks on end.
- Issuing a Small Claim in the County Court is time consuming, slow, and incurs costs that you won’t recover if the case goes against you. Even if you win, you may not get your money. Threaten it to try to extract payment, be prepared to action it if you must… but see it as a last resort.
- Would I do it again if necessary? Damn right!