ASK US WEDNESDAY: “A client owes me nearly $20k. Help!”

by Leo Wiles
16 May 2018

I’m currently owed nearly $20k by one client only, with invoices dating back to Feb. I do a lot for this client, and they usually pay, but they are really taking their time despite frequent nudges on my part. What are my options? I don’t want to lose them as a client but I’m concerned that this (very) large amount is outstanding and I’m loathe to do any more work for them until they pay me! Help. Anon

Clients who delay payment can have serious repercussions for small business owners, as you’re finding. I speak from experience also – in my early days freelancing I was forced out of business by late payments.  Even so, I’m shocked you would be out by that much – and what’s equally worrying is that you’re probably not the only writer they owe money to. If everyone called in similar sums at once, they could they go under.

If that did happen, it would leave you with nothing to show for the experience but resentment, and with little or no recourse to recoup the money.  Being realistic, it isn’t just $20k anymore if you add in lost interest and wasted time worrying about it or chasing it.

To salvage the current situation, here’s what I would do. Firstly, tap your in-house contacts to find out what the hold up is (flaky deputy with invoices sitting in his/her in-tray? Publisher stoush? Accounts department down a team member?). At what point in the process from you filing copy, sending your invoice in and it going to accounts did the wheels fall off the trolley? By knowing the internal environment you will be able to best determine which debt recovery route will work best.

As we’re talking a serious amount of cheddar, it’s unlikely to be the standard of your work that’s an issue. Instead there are possibly quite a few bottlenecks to address. If this is the case, you need to locate them and start working out a work-around before the big boss gets involved and in all likelihood offers you a settlement sum to walk away.

At this point, you’re probably feeling a little hot under the collar – that’s not surprising. But stay polite, professional and open-minded to working out a payment plan with the client. Next step: call the person who commissioned you every single day to ask when you’ll be paid.  No joy? Escalate to their boss, the accounts department and heck, for that amount of moola, the CFO too.

If you can’t face the confrontation, pen an email – one of these templates from Business Victoria may help:

If you’re still not getting anywhere it may be time to bring in the big guns by writing a letter of demand, seeking legal counsel or pursuing the amount through the court or a collection agency like Collectmore – who are likely to recover it but take a 20 percent cut.

I would also be asking myself some hard questions too, such as how did I get here? How do I make sure this never happens again?  Keeping track of your invoices and marking dates on a calendar to chase invoices regularly is key.  You should also safe-guard your workflow and income by having a contract in place before you write one more word. I’d also be asking if you want to continue working for this client. They sound like a terrible investment risk and extra stress you don’t need.

Have you ever been owed close to $20k? How did you recover the money?

2 responses on "ASK US WEDNESDAY: “A client owes me nearly $20k. Help!”"

  1. David Braue says:

    If the company has been reliable in the long term but has suddenly stopped paying your bills, you will need to draw a line at some point and tell them you can’t do any more work for them until they bring their account up to date.

    I learned this the hard way when a publisher and regular client for 3 years, which owed a figure on the scale of what you are dealing with, began ignoring my calls. This went on for many weeks because I just kept my head down and continued working hard to meet my obligations, as we all do.

    In retrospect, some of the warning signs – management turnover, new Accounts Payable staff who dismissed my enquiries about outstanding invoices, and so on – were there for some time but I assumed they would eventually come good. When they declared insolvency I realised that I, as an unsecured creditor, was the last one in the queue who was ever going to get paid.

    If you are as unfamiliar with business administration as I was, here’s a tip: once administrators are called in, all previous contracts are suspended and administrators must negotiate in good faith with (and pay) any suppliers whose goods and services they use to operate the business during the administration period. Administrators who fail to do this can be personally liable for the expenses they incur.

    I was lucky because in my case, the administrators used new and unpublished content, which I had supplied the day after the insolvency, to produce and publish one final edition of the magazine so they could collect advertiser monies owing. The graphic designers got paid as part of this process; the printing house got paid; I did not.

    I argued, in numerous angry letters, that this was a breach of copyright: they had just taken my content with no intention of paying me. Whether because they knew I was right, or they were just sick of paying their lawyers to respond to my letters, months later I settled for a not-inconsiderable fraction of the outstanding invoice.

    Anyways, your supplier may be simply be having a few administrative issues and they will catch up soon – but if it feels to you like something fishy is going on, you are probably right. Particularly in publishing, insolvency is a not uncommon thing and it can be catastrophic for writers who have always just worked hard and in good faith. Rapid changes in payment practices should be a big red neon sign for you.

    In the first instance, don’t bother with your regular commissioning editor, since they have already shown they have no interest in paying you. Go straight to the Accounts Payable person and demand that the money be paid this week to avoid further action. If they stall and you know the CEO, consider asking that person to either personally guarantee the debt IN WRITING (they will not do this but it’s a good way to make your point), or to instruct it be paid to you in full by COB.

    Don’t be afraid to go big or go home: once the administrators are called in, you won’t have a hope of being paid for all your hard work.

  2. Good evening. Thank you… Really enjoyed reading this page.

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