As a freelancer, you run your own business. Proper management of your cash flow is imperative for survival and success. If a few clients fail to pay you on time, it may mean the difference between going on a holiday and moving back in with your parents. Regardless of whether you’ve done a good job or have a contract with your client, some clients are just not going to pay up when they’re supposed to. Going to court to enforce a contract is notoriously expensive and despite our desire for access to justice for all, getting paid what’s due to you is an expensive, exhausting process.
Aside from breaking knee caps (which we don’t recommend), there are a few other traditional ways to stay off your parents’ couch:
1. Be Proactive
Start building a separate savings account to anticipate a client not paying you, so that you have a safety net. Your landlord will still be expecting rent, even if your invoices aren’t being met. The same way you are saving for retirement, it’s key to save for the unknown – that applies to any business. There will always be ‘that client’ during your career. Assess what went wrong with unpaying clients and learn from those mistakes. Avoid working with a late-paying client again or get paid prior to you commencing your work.
2. Get That Deposit
It’s tough out there in the freelancer world and in what seems to be a race to the bottom, newbies to the game don’t want to scare off clients by requesting a deposit as part of their work process for fear of their clients going to another freelancer. Think of being paid a deposit as a trust exercise. The client will pay you in advance for part of your work, trusting you to do the rest of the work. You will complete the work without being paid in full, trusting the client to pay the remainder. It is a commercial transaction for both parties and there is no reason why a freelancer should hold all of the risk.
3. Write Down The Rules
Since you’re not an employee, and you’re not automatically protected by labour law, the commercial relationship between yourself and your client is governed by what you decide between yourselves, whether that is verbally or in writing. Setting out your process and the client’s payment obligations in one document saves time, effort and miscommunication later down the line. A written agreement can act as the bad guy when you need to enforce its rules, so that your client relationship doesn’t have to take a toll – you just need to point to the agreement.
4. Make It Worth Your While
If you’re noticing a habit of late payments from a client, but they’re too important to you to let go of, let them know that after a certain date, you will be adding interest on the outstanding amount. If the services you provide are capable of being suspended, then if a client fails to pay, stop working. Once they pay you, you can resume.
5. Keep the Peace
There’s that saying, “you get more bees with honey than with vinegar”. That’s not always the case with debt collection, but for most situations, there is little benefit to anger. Avoid name-and-shaming on social media unless it’s the last resort – all you’ll end up with, most of the time, is some sympathy shares. Be careful with your words as a freelancer – your reputation is the basis on which you get jobs.
6. Send a Letter of Demand
A Letter of Demand is the first step taken before going to court. It should set out what happened, what is owed and that the outstanding money should be paid within 14 (fourteen) days. There are many law firms that can draft this kind of letter for you, but you can also set out the claim yourself. Just remember to send it via registered post to ensure that you have proof that the letter reached the client.
7. Small Claims Court
If a client owes you less than R15 000.00 and you’ve already sent your letter of demand, you can (if you’re not a registered company, but a sole proprietor) approach the Small Claims Court and get a court order to ensure that your client pays you. The Small Claims Court is a court specifically for a layperson to have quicker, easier, cheaper access to a court to settle a debt. You won’t need a lawyer and if you have a written, signed contract and an invoice, it will make your case that much stronger. Sometimes the shock of being served a summons will result in the client settling the amount outside of court.
If you would like to chat to Legalese about having your Terms of Engagement drafted to manage the commercial relationship between yourself and your clients, send us a mail to firstname.lastname@example.org.
Words by Reneesha Davidson.