Payment precautions and followup tips for freelancers - eNidhi India Travel Blog

Payment precautions and followup tips for freelancers

Getting payment processed promptly on time is a big challenge for freelancers. All the urgency shown to get work delivered vanishes when it comes to make payment. Sometime the time and effort spent on payment follow up, and compliance process is more than time and effort spent on the deliverables. Many learn it the hard way. In this post I am listing various precautions to take before beginning an assignment w.r.t payments and some ways to deal with delayed payments and worst case scenarios.

This post has 3 parts
Part 1: Precautions to take before beginning assignment.
Part 2: Dealing with delayed payments
Part 3: Worst Case Scenario- Not getting paid at all

Part 1: Precautions to take before beginning assignment.
Do not assume ever that once work is delivered payment will be done promptly. Typical precautions to take are as follows:
1. Give a quote and get written confirmation. Avoid traps of agreeing for things on phone which can later be disputed.
2. Ask for payment processing timeline- like 1 week, 2 weeks or whatever
3. Ask for payment process. Some agencies keep unnecessarily complicated process- like having to send hard copy invoice by courier, then claiming they didn't get it and so on. Times Group has an intensely complicated vendor registration website which has worst UX and doesn't work most of the time and more red tape and complicated procedure than Govt offices. The time and effort spent on compliance is huge and this will be communicated only after you complete your deliverable and ask for payment. So ask upfront so that you are comfortable and if required you can factor required time and effort and cost in your invoice (like courier charges)
4. Payment cycle: If the work is long term or huge, you should insist on either monthly or milestone based payment at regular intervals. If you complete 6 month worth of work without any payment they you will be completely at the mercy of your client for money having done all the hard work. Always either take an advance or insist on periodic payment so that risk of non payment and wasted effort is reduced.
5. Get a signed agreement back. Most agencies send an agreement for you to sign. But they never send you a copy back with a sign from their side. This is a huge risk as an unsigned document is useless in court of law. But if they wish they can sign and drag you to court. Always read the agreement and be comfortable and if you are signing and sending it back, insist on them signing and sending it back to you. When I worked with MyLang they sent a signed copy by courier, I had to sign and and send back. But many agencies never send you a copy of agreement with their sign. Beware of this trap.
6. Look for vague and tricky wordings. An year or two ago a Mumbai based company called Content Castling (now appears gone) mentioned "We will pay once clients pay" but went silent when I asked how will I know if their clients pay or not. Similarly words like "upon successful completion of the work" can be abused if definition of what constitutes a success is not called out.
7. Penalty Clause: While companies include several clauses to protect their interest, there won't be any compensation if payment is delayed. You should ensure to put some clauses/terms to this effect in invoice or otherwise- will you charge a late fee or an interest or something like that.

Part 2: Dealing with delayed payments
If you get a client who pays on time and promptly, treasure them. Most often you won't get paid on time. Reasons for this are many and mostly obvious.
- No one wants to part with their money. If they can afford to delay it, many will delay it.
- Many people have a built in sense of authority and get sadistic pleasure making others wait. A real estate company in Chennai had few officials who openly said "don't fall for vendor pressure- make them wait". It is often a tactic to squeeze more discount or get more work done for less. 
- Many agencies operate on shoestring budget and genuinely face delay if they don't get paid from their customers
- Person who coordinated with you for work has no authority on finance and can't help when their bosses or finance department drags their feet.

When payment delay happens, first thing to do is assess if delay is genuine or deliberate. Below is how you can identify this.

Signs of genuine payment delay

Signs of deliberate payment delay

  • Past several payments were on time, only this time it is delayed
  • You’ve built a personal relationship with the client and trust them when they say they are facing financial issues
  • You know for a fact that their client who was supposed to pay is in loss/trouble/bankrupt
  • You know that entire industry is facing challenge and hence delay may not be deliberate
  • Client is prompt and honest in their communications- not avoiding calls, not giving fake deadlines again n again.
  • They would still need your services and trying their best to pay

  • Only your payment is held up. Rest of the expenditures of the company seem to be going on fine.
  • There is no voluntary communication and your reminders are often ignored
  • No one is contacting to explain the situation and set realistic timelines
  • Giving excuses which are obvious lies
  • There’re no known causes of concern in the industry/company.
  • You realize they don’t need you anymore and at their mercy totally

Approach to follow in case of genuine delay
  • Ask for part payment and give some more time
  • Work with them to find a way out.
Approach to follow in case of deliberate delay
  • Stop work
  • Switch to contingency plan if you sense no payment is coming even after waiting for reasonable time (explained below)
Part 3: Worst Case Scenario- Not getting paid at all
You've waited for several months and no payment is coming through. There's no justifiable excuse and no timeline is given. Client is avoiding your calls and communications and you're now sure that non payment is deliberate as client has no intention to pay. At this stage you can switch to any of the following measures.

Option 1: Escalate. Find seniors of the company in LinkedIn/ social media etc and bring to their attention that you are not being paid. Any responsible executive will initiate an internal mail seeking clarification and action. If pressure comes from top those delaying your payment without reason will have to act.

Option 2: Send Cease and Desist notice. You can send a notice asking them NOT to use any of your work. This option is useful if you can re-use your work elsewhere and make some money (for example send same content to other magazines/websites or publish it in your own blog etc) but will not work if the work is already consumed (like magazine has been printed) or work is too customized and can not be reused.

Option 3: Public naming and shaming: You can take to social media explaining that the agency or client hasn't paid even after several months. This works with companies that care for their reputation but some stubborn firms may not budge. Still you will have satisfaction of alerting other freelancers not to fall for the trap of this firm.

There are several facebook groups, websites and other forums where you can share your experience and alert others.

Option 4: Legal notice. Get a lawyer friend to send a legal notice. They will have ready templates and can send a notice by changing basic details. A legal notice is a warning of a court case and hints that you are serious. Most genuine companies shake up and prefer to settle the dues when they can (have money) and your case is clear (you've completed work as per quotation and disputing it in court is tough)

Option 5: Court Case: Court Case is a lengthy battle not worth the time and effort. Should be taken as last resort if nothing else works. If you have proper documentary evidence of your quotation, work delivered and payment not being processed, you will have a strong case. Court case also causes media news and bad PR for the firm, so mostly they will try to settle it out of court.

Option 6: Cut your loses and move on. Sometimes the company that was supposed to pay goes bankrupt and there is no one to go to. Or you may lose the court case or amount involved is too small to spend lots of time and effort following up. If you're comfortable writing off the due and move on, you've attained Nirvana. 

Points to remember
1. Do not loose your cool. Never abuse an individual. Oral, written and social media- everywhere. 
2. Documentation and evidence is key. Before beginning any work think of things that can go wrong, have a plan in mind, document clear terms and conditions. Avoid over the phone agreements or undocumented deliverables- like you may have uploaded video and shared link on WhatsApp- best to follow up with an email stating you've completed your deliverable.
3. Your self respect is important. If you sense you're being exploited in the name of payment (asking more work, unreasonable rework, asking massive discounts) you shouldn't hesitate to pull the plug. Giving in to blackmailing will encourage someone to keep doing that forever and on everyone.
4. People who ask for work and person who makes payment could be different. Anticipating trouble and planning corrective action at regular intervals help. It is easy for anyone to say "We'll pay entire amount in one shot after 6 months" - but very likely it won't work out that way. Your responsibility to insist on advance/periodic payments.
5. If you've to spend on something on behalf of client, avoid putting your own money. Take an advance or make client pay directly. Don't fall for "You pay now, we'll clear everything together later"

Share your payment delay experience and how you managed to recover it. Any other tips and best practices?

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