** This is an excerpt from a column I wrote for Premium-Green, More Than Your Magic 8-Ball (Sept '08)
Steps to get paid
Step 1: If you have sent an invoice and the client hasn’t paid you within the time frame, send him a notice with a late fee. Include another deadline of 15 days for payment and let him know that he will be charged another late fee if payment isn’t remitted on time. You may also want to remind him that copyright does not transfer to him until the work has been paid for in full. Make sure you include all your contact information: your phone number, mailing address, and email address.
Step 2: If the client hasn’t made any effort to contact you within 15 days, give him a call. Be polite, professional, and firm. Most people want to pay their bills. If he asks to set up a payment plan, make sure you are prepared for this or he may walk all over you. If he wants to break it up into 2 or 3 payments, make sure you calculate your late fee into each payment. Whatever you do, don’t let him talk you into paying $10 a month, or something ridiculous like that. It could take him a year to pay you!
If you are unable to get a hold of your client by phone, send a certified letter with return receipt requested. Hopefully, you won’t need it, but it’s good to be prepared. It lets him know that you mean business. Unfortunately, if you did not have him sign a contract before the work was completed, you won’t win in small claims court.
Step 3: If the previous efforts have been fruitless, it’s safe to say that the bridge is officially burned. But don’t worry; there are still a few things you can do.
If you’re a member of a National Writer’s Union or another organization for writers, it’s time to make a phone call. Your union representative can help mediate disputes with clients. You may also want to report his business to the Better Business Bureau.
Another option to consider is hiring a collection agency. If you choose to go this route, there are a few things to look for:
- Look for an agency that works with small or home-based businesses.
- Make sure the agency is licensed in the state your debtor is located.
- Verify that the collection agency employs skip tracing. Skip tracing allows the agency access to various databases to locate the debtor in case he’s moved with no forwarding address (skipped town).
- Make sure the collection agency has Errors and Omissions insurance. This insurance protects your business and the collection agency in case the debtor decides to sue.
- Compare costs. Collection agencies earn income based on either a set fee or on a contingency basis. The contingency is based on a percentage of the debts collected. Before choosing whether to agree to a set fee or contingency, find out the collection agency’s success ratio and contingency fee percentage.
Step 4: If none of the above has worked, it’s time to cut your losses and move on. Yeah, it sucks, but without having drawn up a contract in the beginning, there is not much you can do. You’ve just learned a valuable lesson...the hard way.
The best way to protect yourself is to have a contract in place and signed by both parties before you do any work.
Now I want to know: have you ever been stiffed? Do you use contracts?