Dealing with non-paying clients

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This question came from a student in the most recent session of my direct client marketing class. It’s a good topic that I haven’t covered in a while, so I thought it merited its own post.

First, the basics

If you set things up correctly, non-payment shouldn’t be a huge issue for most freelance translators and interpreters. In 20+ years of freelancing, I’ve only been completely stiffed twice: once by an individual (which led to a change in my payment policies that I’ll describe below), and once by an agency that went bankrupt. I’ve had to chase clients for large invoices maybe three times. However, this track record is at least partly due to how I set things up. I would recommend the following basic rules:

• Never, and I mean never work for an agency without checking them out on Payment Practices and/or the ProZ Blue Board. I find it somewhere between heartbreaking and maddening when I (not infrequently) hear from freelancers who’ve been stiffed by agencies, and I can tell them in 30 seconds that this agency is a known non-payer. If you work with agencies, you must have a membership to at least one of these services.
• Always put the payment details in writing. Even if it’s just in an e-mail, and you ask the client to reply and confirm, write down the details: rate, full amount, payment terms, payment method, who pays any banking fees (typically I pay mine and the client pays theirs), etc.
• Don’t be afraid to ask for full payment in advance. Subsequent to being completely stiffed by an individual client for a large project early in my freelance career, I started requiring full payment in advance from individual clients, before I do the translation. Especially with individuals, you have very little recourse if they don’t pay. In my case, the individual stopped responding to my e-mails and phone calls and refused to sign for a certified letter (“There’s no one here by that name”).
• Don’t assume that a contract will force a client to pay. If I have doubts about a client’s solvency or if they’re not an established business, I just require advance payment so that I don’t have to worry about chasing them for money. If a client really doesn’t have the money or is otherwise determined not to pay you, it’s unlikely that having a formal contract will sway them. Likewise, don’t assume that the legal system will do much for you. In many jurisdictions, claims under about $5,000 or $7,500 are handled in small claims court; the non-paying client likely will not show up, resulting in a default judgment in your favor, but you still have to get them to hand over the money. And it’s generally not worth hiring a lawyer (unless you have a personal connection) for a claim of that amount.
• Have an easy way for clients to pay by credit card. This is really important. If a client is trying to weasel out, or is blaming their own cash flow issues, “check must have gotten lost in the mail,” etc., you want to have a way for them to settle the invoice with you ASAP via credit card. I used to use PayPal for this and I now use QuickBooks; you could use Stripe or any other online credit card system, but you definitely need a way to say, “Let’s take care of this right now and I won’t have to contact you again if you can just put it on a credit card.”

When you have to escalate things

About a year and a half ago, a direct client in France delayed and delayed on paying me for a fairly large (~3,000 euros) invoice. As is typical in these kinds of situations, they started out with some normal-sounding excuses (glitch in their payment system, accountant was on vacation, etc.), but it soon became apparent that they were having money issues, and after they outright lied to me (“We sent the wire transfer last week, you didn’t receive it??”) I was done being nice. Here are some strategies to try if you find yourself in this situation.

First, send a polite but firm e-mail with specifics

Remember that if this client is having cash flow issues, you want to get paid before they declare bankruptcy, if that’s where they’re headed. In most jurisdictions, bankruptcy is a “get in line” kind of situation, and you may be in that line along with a lot of other people to whom the client owes money.

Start with a polite but firm e-mail, reminding them that your invoice(s) are overdue, giving the dates and amounts of the invoices, and asking for a date on which the invoices will be paid. There’s a strong chance that the client won’t respond, or will respond with something vague, like “We’ll pay you as soon as we can,” or “As soon as one of our clients pays us.” Even if you’re fundamentally a kind/generous person, this is the time to remind yourself:

• The client manages their cash flow, and you manage yours. Especially if the client is an agency, non-payment from their end clients isn’t your problem, it’s their problem.
• It would be totally unacceptable for the client to do this to their employees. It always irks me when a client acts as if freelancers who want to be paid on time are being unreasonable. I’ve actually said to clients more than once, “Would you be OK with your employer delaying your paycheck by three weeks?” The client should be treating you in the same way they treat their employees.

Then, bump it up

If the client still doesn’t pay, you may have to escalate things further. Here’s what I would suggest, depending on the specifics of your situation. Write the client an e-mail, giving various “possible further actions” that you may take if they don’t pay by a certain date. State that in the e-mail. “If I have not received your payment by X date, possible further actions on my part may include…”

• Never threaten legal action unless you’re actually going to follow through. Because if you don’t follow through, you’ve lost all credibility. It just doesn’t work to say, “I’m going to take you to court if you don’t pay me. Just kidding! I’m actually going to write a negative Google review!”
• If the client is an agency, and if you know or can identify the end client for the translation, you can threaten to contact them. “Further actions on my part may include contacting the end client, to let them know that I was never paid for this translation.”
• You can point out that this may be a copyright violation. Under U.S. law, the client’s use of the translation may be a copyright violation if they never paid you.
• If the client is an agency, you can threaten to report them to any professional associations that they belong to, especially if the non-payment is a pattern. Many professional associations don’t get involved in individual payment disputes, but you may be able to report the non-payment as an ethics violation if it’s a pattern, or if the client has engaged in deceptive behavior around the non-payment.
• You can threaten to send a collection agency after them. This should be a last resort, because most collections agencies will try to get the client to immediately settle for less than the full amount, and then you’ll get only a percentage of that. Specifics will vary, but when I contacted a collections agency years ago, they told me that on a $2,500 unpaid invoice, they would probably offer the client to settle it for $1,900, and I would get two-thirds of that amount. It’s better than nothing, but it’s worth trying to settle it yourself first.
• You can threaten to “post a report of this transaction” in various places. Negative Payment Practices/ProZ Blue Board review, negative Google review, report to the Better Business Bureau, report to any other professional associations they belong to, really any place you can find to tell other people about this and warn them not to work with this client.
• You can copy the highest-ranking people you can find. This is how I eventually got paid for my 3,000 euro overdue invoice. I combed through my old e-mails and found the e-mail address for a C-level person who had been copied in on an e-mail that I was on. Don’t be afraid to give details in this type of e-mail, particularly if the client has lied to you. It felt icky (for lack of a better word) to do this, but it got me paid! I e-mailed the C-level person and said, this invoice was due four months ago; first I got this excuse from this person, then I got this excuse from this person, then this person told me the invoice had been paid by wire transfer but that wasn’t true, and now the whole department has stopped responding to me, is there any way we could get this settled this week?

Of the clients I’ve chased down using these methods, all have eventually paid. If you’re in a payment struggle, I hope they can help you as well!