Past Due Invoice – What Do You Do to Get Paid?

It’s bound to happen at one point or another…

If you have any kind of freelance clients that don’t pay you in advance of your services, you are going to run into a time where your invoices go unpaid and your clients end up with past due invoices or, worse yet, not paying you at all.

Asking a freelance client to pay their invoice when it is past due can be a difficult conversation.

Asking a freelance client to pay their invoice when it is past due can be a difficult conversation.

While it’s ideal that all clients pay on time every time, we all know that life gets in the way, business owners struggle, and this includes when it comes to paying their freelancers and contractors.

Asking a freelance client to pay their invoice when it is past due can be a difficult conversation, especially for you introverts out there.

Don’t be afraid to politely reach out to your freelance client and remind them of their overdue invoice. In most cases they aren’t doing it to be malicious.

If asking your client to pay you the money they owe you makes you sweat and you would rather just let the invoice go unpaid, don’t!

Here we share strategies on how you can get your freelance job clients to pay you on time and attend to their overdue invoices.

1. How Past Due Invoices Affect The Freelancer

You need to be paid just as much as anyone else. Would you go to a 9-5 everyday and just wait for them to pay you whenever?

Of course not!

When you aren’t getting paid that holds you back from paying for your own business expenses and causes undue stress.

As a freelancer, we all know that time is money!

You want to be able to spend your time finding your next freelance job or working on your next project rather than chasing down your hard earned money.

Just know that you are not alone when it comes to getting paid late. This is a common occurrence for many freelancers, which is why you need to take steps to protect yourself.

2. Before You Start…

Before you ever start any project for freelance job, be sure that you have all details outlined in a contract that both parties agree to.

Of course any late fees you charge should be reasonable and the client should agree to them before any work is started.

Within your contract with a new freelance client or updating a contract with an existing client, you need to be sure to clearly outline when invoices are to be paid, when late fees are incurred, and how late fees are calculated.

If you don’t already have a contract written up, you can easily find many different templates online or that are included with different freelancer invoicing software.

Know Your terms

There are actually a lot of different ways that freelancers get paid.

The most common payment terms that you and your clients should know are:

Due on receipt: This is when your client should pay the invoice as soon as they receive it (or within the number of days outlined in your contract.
Net 30/60/90: This type of payment is due the number of days after the invoice is received. A net 30 would be due 30 days after receipt.
Monthly retainer: This is for clients that get ongoing work and pay a flat monthly fee on a predetermined date.

Once you have determined your payment terms, be sure your clients know them and stick to them.

Having said that, there are going to be freelance clients that you work with that have their own payment terms. If your client only pays their invoices on a single day every month or has a net 30/etc payment, be sure to calculate that into your monthly budgeting.

Make It Easy For Clients to Pay

Just as with your work, clients like it when things are easy. The easier it is for a client to pay you, the faster you are going to get your paycheck. Pick something that is easy for you to send invoices through any number or client invoicing apps and that is going to be easy for clients to just click a button to pay you.

3. Charging a Late Fee

When you sign the initial contract to work with your client, include details of when past due invoices incur late fees. Charging late fees doesn’t make you a bad freelancer, in fact, it makes you a professional business owner.

Just think about any other type of business…

Your utility company, your mortgage company, your phone or internet provider. Pretty much any type of bill that you personally pay or that you pay as a business owner will incur late fees if it is not paid on time (or a service will get shut off).

When it comes to getting paid on your late fees, don’t assume that clients are just going to automatically pay them without being asked.

How Much of a Late Fee Should I Charge?

This is completely up to you and the type of work you are doing. Anywhere between 5-20% of the invoice is not unreasonable, depending on the type of work you are doing. Obviously more time intensive work can command higher prices and higher late fees.

You can charge a flat rate of $X or a percentage of the total bill.

You can also set up accruing late fees, meaning that they will keep adding up month after month for as long as they don’t pay.

For example, if you charge a 5% accruing late fee per month on a $1,000 bill, the first month the late fee charge would be $50, the second month it’s overdue the total bill would be $1012.50 and so on.

Be sure that late fees are clearly outlined on an extra line on your invoice with description of what the late charge is for.

4. How to Enforce Late Fees

This is probably the most difficult part of the process of collecting past due invoices.

I know there are plenty of you reading this that the thought of asking a client to pay their overdue invoices makes you want to throw up.

I get it – freelancing is great for introverts, however, you can’t always hide behind your screen if you want to get paid.

For the most part, if you have a good contract and have good clients, they shouldn’t have a problem paying any late fees.

Be sure to discuss late fees from the onset of your working relationship. Another way to remind clients of your invoicing terms is to include them as a line item or note on your invoices.

This way, they see the terms every time they receive an invoice.

If you find that it has been a bit and they still haven’t paid their invoice, then send them a polite email just reminding them to pay the invoice with the invoice attached.

Remember, it might not always be your client who is directly making the payments. Perhaps they hired a new bookkeeper and your invoice just fell through the cracks.

While it might seem like an impossible task if you aren’t getting paid, don’t give up!

You should be paid for the work you completed and the value that you provided to the client.
You should never have to negotiate your invoice with a client who is unable or unwilling to pay. Nor should you forgive their late fees. (Although this is entirely your call based on the client’s situation).

Just know that if a client knows that they can negotiate you down, they might try to do it again and you are going to end up losing more money than you should.

Create an Automated Follow-Up System

If you feel like you are constantly dealing with having to chase clients down to get them to pay their invoices, then set up an automated system to remind them of their overdue invoices.

One invoicing software that we know of that does this is AND.CO. With this invoicing software you can set up payment reminders for when clients go past their due dates.

5. Final and Legal Actions

While it should hopefully never get to this point, you should at least be aware of your potential legal actions as a freelancer to get paid.

If you are still performing work for someone who isn’t paying you, then stop working. They will get the message real quick when things aren’t being completed. If you are working in a capacity where your work is public-facing (like ads, social media, editing, etc) then you should let the client know your intentions to stop working if they do not make their invoice payment.

While this might seem a little drastic, it’s a logical step. Would you keep going to a 9-5 if they just stopped paying you? Probably not…

Depending on the amount of money the client owes you will determine your next steps.

You can hire a collections agency, which can affect the client’s credit. So they are wise to just pay up at this point. However, be aware that collection agencies can take up to 50% of the money they collect for you (ouch!)

You can also take the client to small claims court. You aren’t guaranteed to get your money back even if you win and it can be a huge headache and additional expense.

Unfortunately, getting stiffed as a freelancer is pretty much a right of passage. It sucks but that is just one of the disadvantages of working for yourself. Do your best to protect yourself with these tips.