In my last post, When Clients Don’t Pay: Part II – How to Get Paid without Hiring Muscle I outlined some steps to take that should help you get your cash. If your cupboard is still bare, then this post is for you.
I posed the question to my freelance people in my networks: Have you ever hired a collection agency or lawyer to get paid?
The most interesting answer I got was in the silence. I interpreted the cricket chirping to mean that taking the extra step into the formal collection process was either: A. not necessary or B. not worth the effort.
I did get an e-mail from a VA/CV who went to some extreme lengths to get her money, including swearing out a warrant for a wayward client’s arrest. She got paid after two years and felt that it was worth the effort.
That’s the real question, isn’t it? How much is the invoice amount worth to you in time?
I’m assuming that readers here equate time with money. Most consultants understand that conversion theory very well.
The question of worth is as individual as your business and the invoice amount. For an invoice of under $500, some consultants will write it off (did you know that you can claim some of those write-offs on your taxes?). On the flip side, a freelance copy editor might consider anything over $200 as something worth pursuing through an agency or attorney.
Is the cost of hiring a collection agency worth it based on the invoice amount? Some attorneys get 40% of what they collect. It’s one thing to be right in principle and get justice, but it’s something else to remain a profitable business. It’s you, the captain of your ship, who decides which is more important to you and has to act accordingly. If collecting is what will keep you afloat, then hiring an attorney may be your best course.
Life coach Shannon Wilkinson offered some sound advice as a first step before diving into collection agency waters. She suggests sending a demand letter to the client and cc’ing an attorney. That way, the client gets the impression that you mean to collect (you’re not joking) and that you have somebody backing you up. It doesn’t cost you any fees since you’re not involving the attorney at that point.
Some clients will pay without any further hassle.
Speaking of hassle, here’s something you want to avoid: harassment.
There are laws against harassment and they vary by state. It’s in your best interest to find out what those laws are and understand them before going to the mattresses.
You might think that a collection agency works to represent you in the best way while attempting to collect client debt. You would be wrong.
If you decide that an agency is the best thing for you, be choosy about who you hire. Even large agencies break the rules and can make you look bad. Here are some links with great insights on the ins and outs of collection agencies:
http://rubyhoneymarketing.blogspot.com/2008/07/hiring-right-collections-agency-for.html
http://hubpages.com/hub/clientpay
Thanks to Angie Haggstrom of Freedom Freelance for the excellent links!
Whatever you decide to do, remember something, okay? It’s important to get paid for what you do. Your work has value and shouldn’t be given away. Collecting on overdue invoices shows that you really do mean business, that you’re not just in it as a lark. Don’t let yourself be walked over by a deadbeat client because they don’t see the value. You deserve to be paid.
That said, collecting on debts should not ruin your rep. Maintain a businesslike bearing and never make it personal. Don’t collect out of spite or desperation. Collect because you’re a professional and collect like a professional.
Even eccentric artists like me do it that way. Business is a marathon, not a sprint. Enjoy it and keep running!
David Billings is an illustrator, animator, and writer. He currently runs two businesses from his home studio near beautiful Mount Hood, Oregon.
Sparky Firepants Images is focused on building kids’ brains to ginormous sizes while they have a crazy time. David creates fantastic, colorful images that complement books and educational media for preschool and elementary-level kids. A unique perspective on children’s publishing and the business of illustration can be found on his blog.
He also uses his technical expertise in creating corporate graphics and presentations to consult with and assist presenters of all types, keeping their audiences rapt with attention. Prepared Graphics focuses on helping individuals and small business owners with great content who don’t want to mess around with that PowerPoint stuff.
David lives with his wife and children on an alpaca farm. No, they don’t really smell that bad.
You are most welcome Mr. @SparkyFirePants. I’m glad you found the links helpful.
I will admit that in the time I have been doing this, I have never been unfortunate enough to need those services. I spend a lot of my coaching/consulting time teaching others how to avoid them as much as possible.
I suppose if the bill translated into several hours worth of work, I may consider collections, but you are right though. It is just as easy to write it off on your taxes and chalk it up to experience. I do find Ms. Wilkinson’s idea intriguing. I have bookmarked this post in the hopes that it will be helpful for many I’m sure.
Thank you!
Angie Haggstrom
Angie Haggstrom’s last blog post..Even A Writer Can Help…An Appeal For Australian Bushfire Victims
It is too easy for a client to put a bogus counterclaim with their answer. I have a $2500 deductible and the most that I am ever lost was $500. My malpractice carrier has a question on the application as to whether I have or would sue a client for fees. They also ask whether I would wait until after one year had passed before I would sue. I answered that I would not sue for fees and I wonder whether if I had answered in the affirmative they might have charged me more for my premium. If I do not know the client than I usually get a very substantial retainer up front and I am not sure about them and include any replenishment requirement in the agreement. If they do not replenish the retainer when it draws down below a comparable level and as a good indicator that when the retainer is gone you will probably have a collection problem with the future fees. This works very well if the matter is not in suit or your withdrawal will not do the client damage. It is a lot easier to terminate the representation, due to the client’s breach of any replenishment clause, while you still have some of the client’s money in your trust account that you have not earned. Then you simply write the client a check for the refund. Of course you need to make sure that you put a replenishment clause in your retainer agreement. If the only way that the client can afford to hire you is to make monthly payments then you are begging for a fee problem anyway. It is better to not get the work than to get the work and have a collection problem from it. Just my two cents.
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