If you’ve been a graphic or web designer for a while, chances are you have encountered the non-paying client. Most often, it has merely slipped a client’s mind and they promptly pay you when you kindly remind them their invoice is overdue. Other times, a client will disappear off the face of the earth, leaving you wondering if they are going to pay at all. So how to avoid this trap? Here’s 7 tips to help protect you from dreaded non-paying clients
1. The ‘3 Strikes’ system
The best way to avoid the late payers in the first place is to make sure you have a contract that clearly states when payment is due, and what will happen if the client misses a due date.
You could offer a ‘3 strikes’ reminder system – after the due date is missed, the client receives 3 reminder emails or calls, and if no contact is made after a certain period, the matter is handed over to the legal system. Hopefully it would never get this far, but simply stating clearly on your contract that action will be taken should a payment be late should be enough to make clients take your demands seriously (as they should!).
2. Charge Interest
It is quite common among designers to set a time frame in which if the client fails to pay, they are charged interest for every day the payment is late. Again, this has to be crystal clear in your initial contract.
3. Use automated Reminder Emails
Or at least, set them up to look automated. This is where tact comes in. We all hate writing that nagging email asking for payment, trying not to come across as confrontational. Use a prewritten reminder email template that you send out. Whether you actually set up an auto-email, or send them manually to clients doesn’t matter, as long as they think it’s automated. The client will get their reminder, but feel less embarrassed or attacked if it appears to be just an automated email. The pitfall of this is that chronically late payers might simply not take them seriously, so make sure that the last email you plan to send has slightly sterner undertones and reminds the client what will happen if they do not pay by x date.
4. Withhold Files
Unless you have a longstanding relationship with a client, it’s a wise idea to withhold files until receipt of payment in full. This may not be ideal for larger clients who work on pay schedules, but provided you state in your contract that payment should be received in full before the release of high resolution files, most smaller clients will find this an acceptable agreement. After all, you wouldn’t expect a cashier at the local store to let you take home a bag of oranges with the promise that you’ll be back sometime next week to pay for them. Remember, you are a small business too, and should not be expected to had over your product until you have been paid.
When using this method be sure to use low resolution watermarked proofs, and use security settings in PDF exports to set a password to stop the file being edited elsewhere or you may find your client suddenly disappears only to find that have taken your artwork to be printed or recreated elsewhere without paying you! which brings me to…
5. Retainment of 100% copyright until payment received in full
This is probably one of the most important clauses to have in your contract. If like me, you’ve ever had a nightmare client who has paid a few deposits on the project, urgently required print files with a promise to pay the final invoice asap and then disappeared off the face of the earth – you’ll understand why! State clearly in your contract that the artwork copyright ownership lies 100% with you until the final balance is paid. Therefore, if the artwork is used by the client (or taken elsewhere to another designer or print shop), that will technically be a breach of copyright law and you will have strong grounds for legal action until the final balance is paid.
6. Deposit up-front
It’s common for designers to ask for an upfront deposit these days. Some designers fear that up-front deposits will scare clients away, but in my experience, they only scare away the clients that don’t want to pay you in the first place, leaving you only with clients who respect you and your time. In order to make your client feel at ease with an up-front deposit, it helps to have a clause protecting them in your contract as well. For example, I like to take all of my briefs in writing from the client that we both agree to. If the work supplied is way off the mark or has mistakes, your client should be entitled to refund. This also protects you somewhat from clients who don’t supply much of brief or can’t seem to make up their mind. As long as you have met the requirements asked for in the brief, you should be compensated for your time, regardless of whether the client has decided at the last minute that they are actually going to use their cousin who “is a good painter and and said he could make them a logo with guache and colored pencils.”
You might lose a few tire-kickers or shady clients, but you will ensure that you are building a respectful client base who love your work and treat you as a professional. A 25% to 50% deposit of the final amount is good range, or if working on a large project set agreed payments at certain stages of the project.
Sometimes a non-paying client is an unhappy client avoiding a confrontation. Be sure to be warm and open to client’s opinions throughout the design process, and although you might provide your professional opinion and try to steer the client in the right design direction, NEVER be too pushy during the design process. Try a different approach and ask your client if everything is alright and if they are happy with the work provided. You might find that there is an issue they have with your services that they haven’t been upfront about, or they are having some genuine financial difficulties that they are embarrassed to admit.
I hope these tips will help you to protect yourself and your business, but always remember that happy clients are paying clients, so combine these steps with great work and customer service to build your client’s trust for best results!
What are your non-paying client stories, and how did you deal?