On not being paid

by Tom Albrighton 25 August 2011 Freelancing

As my Twitter followers will know, I recently got stiffed on a debt by a client (or at least, they haven’t paid me yet, and time’s getting on). Since they are in another country, getting the money out of them would be a major challenge, so I’m inclined to let it go. It’s a shame, because I really enjoyed working on their stuff – though not enough, obviously, to want to do it for free.

Count the emotional cost

When contemplating this kind of situation, which is mercifully rare, the thing that looms largest for me is the emotional cost of pursuing the debt. I’ve chased plenty of clients in the past (and taken one to court), and I found that the constant weight of resentment, paranoia and self-righteousness took a toll that ultimately outweighed the value of the actual cash at stake. And if I didn’t get the money at all (which I mostly didn’t), that just made it worse.

Maybe if you’re a more confrontational, hard-bitten character than I am – someone rather like Paulie in Goodfellas, with his ‘f— you, pay me’ – you might actively enjoy the debt-chasing process. But even if you do, you have to accept that you’re expending energy that might be better directed towards developing your business – or just serving some nicer clients.

Business bad? F— you, pay me. Place got hit by lightning? F— you, pay me

I’ve always felt that incorporating as a firm, and thinking of yourself as a business, is a positive step for freelancers. It creates a useful distance between yourself and your work; between your personal money and your work money; and between your emotions and what’s right for ‘the business’.

But this is one case where I think it’s OK to let emotions into the picture. As I’ve said, chasing a debt can put you through the wringer. If you’re longing to write it off just to be rid of the baggage, give yourself a break and move on. Forget the principle – and forget the money too.

Don’t honour sunk costs

Not all debts are equal. The value of the invoice comes into play, and this has to be weighed against the opportunity cost of pursuing it.

For example, if your unpaid debt is for two days’ work and you might spend a day chasing it, the net result will be, at best, one day’s pay. You could just as easily forget the debt, do a day for another client, build a useful relationship and get the same outcome.

Of course, you’ve still lost those previous two days, but those are what economists call sunk costs – they’re spent and gone no matter what you do. What matters is the choice you make now. Honouring or chasing sunk costs is a cardinal error; it’s the commercial equivalent of ‘throwing good money after bad’. And although you lose, remember that what is lost is ‘only’ your time; the money requested by the invoice was never yours, no matter how much you might have counted your chickens.

Revenge is a dish best not served at all

If the invoice is larger, you may feel that the extra time is worth it. But in my view, you should be absolutely sure that this on the basis of a financial or business calculus, not an emotional one. The quest to ‘show’ the client or ‘teach them a lesson’ is futile – if they cared about you at all, they’d have paid, and that won’t change just because you sue them. All you can do is turn passive indifference into active dislike. Respect can only be earned, not demanded.

A similar logic applies to the idea of ‘naming and shaming’ the client, which is much easier now with the advent of blogs, Facebook and Twitter. But again, what will you gain? You take yourself down to the perpetrator’s level, look a bit petty (to potential clients, among others) and ultimately gain nothing.

It’s the freelancer’s destiny to be jerked around; non-payment is just a more brutal manifestation of that eternal truth. So forget seeking revenge or trying to prove a point; it just binds you to an old situation and a rubbish client when what you need is closure and renewal.

Remember the good times

In considering whether to walk away from a bad debt, it’s important to have a sense of proportion.

We have a natural inclination to focus on the dark side, often by letting one piece of bad news drive out hundreds of pieces of good news. Cognitive psychologists call this negativity bias.

Fortunately, an objective sense of proportion in money matters is quite easy to achieve. For example, by my very rough calculation, my bad debts to date represent 0.5% of my total turnover as a freelancer since I started out. So while it’s infinitely galling to have someone walk away from a debt, it’s crucial to see the bigger picture – the vast majority of clients are honest and pay without hassle.

Trade on trust

Whenever I Tweet about a non-paying client, someone usually suggests demanding an upfront payment, and/or using a formal contract.

I can see how these approaches might limit the damage – or flush out potential miscreants before the dancing even begins. But the problem, for me, is throwing the baby out with the bathwater. I’m unwilling to impose delays and obstacles on every client because of the few bad apples, or make smaller projects top-heavy with administration. An email or even a phone conversation is legally binding, after all. And it would represent a waste of energy to red-tape the 99.5% of clients who pay without complaint – as with chasing debts, I could spend that time actively generating revenue.

Moreover, on a purely personal level, I simply prefer to do business on a basis of trust. Maybe that’s naïve, lazy or hopelessly weak. But at the end of the day, freelancing means being free to work the way you want and run your relationships the way you want. For me, that means picking my battles, sidestepping resentment and focusing as much time as possible on creating value. Paulie might not agree – but look what happened to him…

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  • I have been relatively fortunate in terms of clients paying up, but I always keep in the back of my mind the knowledge that social media could cause a non-payer a bit of embarrassment and damage to their reputation if ever it were needed. Just a thought. After all, if someone commissions you to provide some words for them it’s a pretty mean thing to then not pay up. The world should know who these people are. Name and shame I say so that others don;t get stung too.

  • Jackie Barrie

    Thanks to good credit control, I’ve only had one bad debt in over 10 years of freelance copywriting. The client was in the travel industry, which has been in all sorts of trouble recently. He always paid me on time when he could, but when times got tough, he chose to pay his own mortgage rather than help me pay mine. Eventually he closed that business (and set up again under a new name).

    Painful. But I had to learn to let it go.

  • Full respect for your business ethos and can only hope defaulters out there don’t take advantage of this honest approach.
    Taking a friend to court for non-payment is a horrible experience.

  • Somewhat flaky business law doesn’t help when it suggests to people who are struggling, that they can shut their business down and start up again tomorrow using a slightly different name and there’s nothing anyone can do about it. Never understood why that is, but there you go.

  • @Alconcalcia

    Yes, that happened to me with a four-figure debt and it was most distressing!

    What amazed me was that there was no restriction on the previous director taking charge of the ‘phoenix firm’, and also the way they are allowed to pick and choose which assets of the old firm they will buy, and set the price – which in turn determines how much cash will be raised through liquidation to pay the creditors! (I got nothing.)

  • Business law astounds me frankly. A friend and former colleague of mine was stung very badly by a high profile ‘friend’ who declared himself broke owing my mate thousands only to go on to set up another business shortly afterwards. I think we just need to realise in life that some people just have very loose morals/.don;t give a **** about the consequence of their actions.

  • “…the constant weight of resentment, paranoia and self-righteousness took a toll that ultimately outweighed the value of the actual cash at stake”

    You’ve said a mouthful there. The problem is balancing trust – I hate charging up front because I think it makes us look cheap, but it’s sometimes the best way of managing the risk in the first place.

  • @Alconcalcia

    I think I realised that about the time RBS imploded…


    I’m always taken aback if people try to charge me up front. Why should I pay for something not yet delivered? OK, they don’t know me, but by the same token I don’t know them. What if they suddenly delay the project for six months, having taken my deposit?

    Also, I wrote this last night, with help from wine. Hence insane sentence structure.

  • Hey Tom,

    Sorry to hear about that. I think your attitude is right and admirable – and pragmatic.

    There’s a time to fight and a time to walk away!

  • I still say if everything else failed I’d name and shame on social media “xxxxxx – steer clear, they are bad payers”

  • Brilliant post. And a reminder of why I insist on the 50% up front rule. As Ben has already pointed out, it’s the best way of ensuring the lights in the office stay on next month.

    I presume you’re familiar with Mike FTW’s “f–k you, pay me” lecture.


    I don’t agree with Alconalcia that you can use social media to shame non-payers. Believe me, I’ve thought about it — heck, as the proud owner of a domain with a pagerank of 4 (at last!), I’ve considered writing a blog post for every non-payer, just so it shows up on the front page of Google for most searches related to them. As your blog has some serious SEO power I’m sure you could do even better!

    But in all honesty, if you were a potential client, would you want to work with someone who takes that attitude (albeit justified) to clients they’ve fallen out with?

  • Maybe not, but frankly non-payers make me so angry I’m not sure i could resist. I never ask for any money up front but always check out potential clients thoroughly on the web before I take on any work. Call me old fashioned, but I believe in mutual trust in a business relationship. Breaking that trust is unforgivable in my book, unless there is a genuine reason for not stumping up the cash. Why should I shirk at naming and shaming if I’ve tried every which way to get my money? Thankfully it’s not happened yet, but given my client base is quite solid and established I am sure they’d understand if I gave both barrels to someone who was scheming enough to not pay for their words.

  • Judy Olsen

    I wrote copy for more than 20 years without taking money up front but I have now changed my mind. One reason is that the geographic basis of my business has changed. The other is that I got tired of the lead time between briefing and payment and also of taking all the business risk. I am quite sure that in the past clients have strung out projects to avoid sign-off and final payment, and with some design agencies refusing to pay out until they themselves were paid, five or six months could go by from taking to brief to getting any money at all. As for the risk/trust issue: Tom – Amazon don’t send me stuff until the payment has cleared and the Co-op requires cash for my groceries. I don’t see why I should trust a client if they are not prepared to trust me a little in return. In fact I think asking for a deposit has saved me from a few bad debts recently. One client bailed out because I was too expensive – fair enough – and ‘because she wants a deposit’. That really made me think – it’s like saying ‘we want your work but we’re not sure we’ll even pay you half what you quoted’. It also sends a message that the client doesn’t respect my right to set my own terms.
    With my current bad debt, I got nearly half of the money up front and it is my own fault that I let them bully me into some rush work without the deposit. I won’t be doing that again.
    Interestingly the account exec I dealt with actually suggested money in advance. I took the hint. I suspect the company has ripped off other copywriters. No-one wants to name and shame in case people think there is a good reason for the non-payment or that you’re difficult to work with – some clients rely on that.
    Ben – I agree that money up front is a good way of managing risk. I used to agree that it looks cheap but have come to the conclusion that isn’t true. Creatives can be very shy about asking for money, and that can make us look amateurish. If you are clear about what you want and direct about asking for it, that can only be a good thing.
    Final point – if you let someone get away without payment you are subsidising their business in a way that is unfair to the majority of clients who respect our input and treat us as fellow professionals.

  • I’m afraid I am with everyone else here advising getting part payment upfront. It’s been a rule with us since a ‘near miss’ in the early days. The only bad debts we’ve had are one or two cases where I’ve foolishly made an exception.

    I’ve found it the surest way to check a potential client is serious about paying for work. I put a lot more faith in it than contracts of any kind. Call it a deposit. Even just 10% is a good test. If they can’t find 10% of the project cost now what chance of them finding the other 90% later? We ask for anything up to 33% depending on project size and billing schedule. We don’t ask for it on very small jobs, and with large, stable organisations I’m sometimes happy relying on a purchase order number instead.

    Re: project delays. We start work as soon as we invoice the deposit, not when it’s actually paid. We apply a “smell test” if project timescales mean we would be delivering before the deposit payment would normally be due. If I’m at all wary, I make it clear we need cleared payment of the deposit before delivery.

    This is a perfectly business-like request. I’ve never had anyone question it. At least, not anyone who I thought was actually serious about paying for the work they were asking for… Here endeth the lesson 😉

  • @Tom I meant you’d said a mouthful in the sense that you were dead right! Not a comment on your prose.

  • I guess it depends to a degree whether a business thrives on one off projects or regular business from established clients. I do take on ad hoc stuff but the bulk of my work is for tried and trusted clients (ad agencies mostly, including one in Holland that i could never chase for payment but who pay regularly on time). That said, a very recent testimonial from someone who found me via the web said, and I quote “He also kindly did the work before payment which I believe helps build trust and long term relationships”, so it’s a tough call I think. I did ask for payment up front once when I couldn’t find an awful lot of detail onthe web about a particular client. They got a bit offended by it so I decide3d never to do that again. After all, for every bar steward there must be 999 decent, honest and fair clients. Or maybe I’ve just been lucky in as much as to date I have never dealt with a total scheming, manipulative, untrustworthy arse of a client.

  • One thing to watch out for is force majeure. One client I was hassling had been ill, and only found my antsy emails when he got back to his desk. He then paid immediately.

    Also, some clients have genuine difficulties that they need to resolve before they can pay, so some understanding is required.

    However, I don’t really accept ‘we haven’t been paid ourselves’ as a reason for non-payment. If that’s the basis of our deal, I need to know up front.

    See also post-hoc renegotiation on the basis of not liking the text – i.e. ‘we’ve decided not to use it, so we’re not paying’. I’ve had that one too. Again, if I’m working on spec, let’s have it out in the open up front. (So I can decline the project.)

  • Judy Olsen

    Yeah, you’ve been lucky @Alconcalcia. But in my experience the cause of non-payment is usually a bit more subtle. It’s less to do with premeditated ripping-off and more to do with poor project management and company politics.

  • How about insisting on a written order confirmation up front? Would that make a difference? Just not keen on charging before the event myself.

  • @Alconcalcia

    I always get an email explicitly confirming the scope and price. It’s less onerous than a contract, but does make the client confront the fact they’re entering into an agreement. Replying to my estimate with ‘OK, please proceed’ or whatever is not enough.

    Once or twice, I’ve been offered deposits, but declined them. My reasoning: if they offer, they’re probably honest, so I’m on safe ground. In general I don’t mind being paid late, since I can’t spend money I don’t have. Am I weird?

  • I go with my gut. If the potential client in question gives me slightly bad mojo, or if they’re out of town, I get 25% upfront. If they’re local and no alarm bells ring, I don’t worry. I always say that I’ll just see if anyone I know has any big burly mates that can go round there in the event of default.

    I’ve only had trouble once, and that was the second job I ever did as a freelance copywriter. The invoice was for a ridiculously small sum of money – I’m talking very low three figures – but at the time I certainly noticed its absence, and I had to chase it for a good 60 days. Nowadays that client would have rung alarm bells for me anyway.

  • We have only had one bad debt in over 10 years and that was when the organisation decided to go out of business between Christmas and New Year. We had lost some money but people we knew had lost their jobs.

    We ask for a percentage up front with the rest either on completion or part payments depending on the length of the work. With public bodies we send in the invoice for payment early as some organisations only pay out on one day a month so you can wait 7 weeks if you miss ‘that’ date !!

    Have good terms and conditions that set it all out up front that if they are going to mess you around with payment then the time that you take chasing the money will be added to the final bill.

    Finally keep smiling as you work for your self – well would you prefer to have one of those j o b things :-0

  • Paul Eveleigh

    Why worry about bad debts? Use a debt collecting agency.

  • I must admit, in many years freelancing I’ve never had a bad debt. I’ve nagged and nagged and nagged my way to payment every time. Or I’ve been lucky. But you just can’t let it slide!

  • I know of at least one huge company that has a policy when dealing with one man bands to hold back payment for a longer period of time in case they go to the wall. They don’t anticipate their action as being the cause but take the view that so many businesses go bust every year why should they be the one creditor who pays. Fortunately I’ve never worked with them and I don’t anticipate ever doing so.

  • With direct clients, I always get 50% up front unless I know them. Sometimes, especially if they’re overseas or the vibes are bad, 100%.

    @Mike Robinson, that’s dreadful. Truly the unacceptable face of capitalism. In the old days, any decent business would do the opposite, and pay the one-man bands first. I would be seriously tempted to name and shame that company on social media.

  • @ Peter – that would be really brave of me if I did that! It’s not my experience in any case and I don’t think it would do me much good to do that.

    Personally I invoice upon completion of task and I’ve not had any problems although I’ve not worked with anyone who has given me those vibes. Of course I always get them to agree in writing to the work and the price before getting a brief and I think that’s crucial.

  • I had a foreign client didn’t pay, and when I asked, it was something about the budget had been cut and there was no money to pay after all, so I wrote it off as experience.
    Another client didn’t pay, I just changed the invoice from black to red, with a letter marked ‘I am still waiting, please pay without delay’ and it worked. I actually took another job for this client, but again, it took a second letter (in red) to get paid. I have heard there are people like that.

  • I have an out-of-country client who has not paid me for a year now. That deadbeat owes me $1,750! And of course, they use the excuse “Oh, our advertisers haven’t paid us.” or “We just don’t have the money.” I wonder if the pretty girls on his Facebook page would like to know he doesn’t have a lousy $1,750 to pay off his obligations. I’ve even offered to let him do it in payments. Oh, no, they’re all so broke. I will never, ever do another job for a company that does not have a U.S. address, so I can go after them in small claims court. When you just let these debts go, they think it’s okay to treat all of us like we’re just a bunch of bums while they laugh all the way to the bank. They’re getting rich while we provide them with work! Last month, I sent the guy a picture of my puppy. He emailed back and asked why. I said “well, it must be miserable to be as poor as you so I thought you could use some cheering up.” Yep, that didn’t work either. Begging doesn’t, being sympathetic doesn’t, threatening doesn’t. At least I got to give myself a little laugh at the situation. Sure am glad I’m not as poor as that guy is.

  • @SandyF

    That sucks. But thanks for taking the time to comment.

  • Hey, thanks for listening. It’s unreal what that guy pulled — and unreal that my radar didn’t pick up the red flags. I usually have no problems getting paid.

  • disqus_W4KjfaOksA

    I think you take a very level-headed approach to clients that don’t pay. Like you, this problem doesn’t arise very often for me. When it does, though, it can really put a dampener on things.