by Monica Davidson

Oh no, that sinking feeling, when you realise that the payment your client was supposed to make has not appeared in your bank account. It doesn’t appear the next day, or the next. You, my friend, have not been paid. 

There are a few steps you can take at this point, but let’s press the rewind button. The best way to ensure that a client pays you on time is to establish clear boundaries about money right from the beginning of the relationship. 

Step 1: Have the Talk

Make sure you have at least one conversation, followed by an email, about the expectations of payment before the work has begun. Ideally a few conversations will help you and the client to create a payment schedule that you both agree on, with clear amounts and payment dates, so that any confusion can be cleared up before you start. This can be uncomfortable if you’re not used to talking about money, or if you’re just starting out,  but it’s a professional approach that establishes good communication and will make the whole process easier. 

Also, your client will probably appreciate your clarity and directness – unless they had the intention from the outset to exploit you. It’s always best to know that up front! 

Step 2: Get to Know the Paperwork

You’ll probably need to create an invoice in order to get paid. An invoice is a formal request for payment, and needs to contain certain types of information to be legal.  Business.gov.au has great resources and invoicing templates. 

Also establish if a purchase order (PO) is required before payment, a formal document issued by the client (or buyer) that outlines the specific products or services they wish to purchase, including quantities, prices, delivery dates, and payment terms. A PO can make the whole process smoother.

Step 3: What Payments Are Due to You?

You don’t have to wait until the end of a contract to get paid. For a longer project, or for larger amounts of money, you might want to set up a schedule of payments.  For larger projects,  an upfront payment for significant projects is also good practice.

You might also want to request an upfront deposit (e.g., 10% to 25 or more) from new clients. This shows their commitment and covers your initial time and resources.

Step 4: Know Who is Who

Make sure you also know who the invoice should go to. Sometimes clients don’t honour invoices because the person you have a working relationship with is NOT the person who pays you. That is most likely a mysterious stranger in a magical place called “accounts”. Find out the details of that stranger early on, including name and email. 

Step 5: Get a Contract

The steps so far can also be turned into a contract, or legally binding agreement, that includes things like the details of the project or services, how much the client owes you and when payment is due. 

Also include the methods of payment. If it’s Direct Credit to your bank account, double check the details! You might also consider Stripe, PayPal, Square, or Wise. The easier you make it for clients to pay, the more likely it will be on time.

The contact should also include information about what happens if the client pays late, and you might consider including a clause about late payment fees or interest. This acts as a deterrent and compensates you for the inconvenience if payments are delayed. However, you can’t charge a client any late fees or interest unless this has been explicitly stipulated in your contract or terms of service.

Review the contract with the client at the beginning of your relationship and require them to sign it before you begin any work.

Step 6: Send Reminders

Once you’ve established your payment schedule, send your invoices on time – they are much more likely to be paid. Include the ‘terms’ agreed on in your initial discussions.  Terms are usually between 7 and 90 business days, and you can find out more here. 

That will hopefully be enough, but if you’re worried, send the client a reminder about any upcoming invoices, say a week before, so there’s really no confusion. You might want to add an incentive, such as a discount, for paying on or before the due date (but make sure that’s in your contract, and it won’t leave you out of pocket).

Step 7: Use a System

Consider using an online account system, like Rounded, which can issue professional-looking invoices, send payment reminders, and add a late fee if necessary. 

If you take these steps, the chances of a client not paying are greatly reduced. However, sometimes it’s too late to rewind a relationship, or things have escalated beyond these measures. Time for the next steps.

Step 8: Contact the Client

Email or call the one you’re dealing with, AND the person in accounts, if they’re separate. Be friendly, and send them any outstanding invoices, contracts or previous correspondence about the money owing. 

If they don’t answer your emails, call. Sometimes the person in that role has moved on, or your email went into spam. folder. A phone call can be scary, but this is usually enough to get a payment moving. If it doesn’t, onwards.

Step 9: Letter of Demand

This is a letter, sent via email, to use when you’ve tried unsuccessfully to get your invoice paid and it’s time to take more serious action. The letter allows you to put your concerns in writing, and gives the other party a chance to fix it before further action is taken. You can find more info, and a free template, here.  

Step 10: Mediation

You might not want this step, but mediation is a process of dispute resolution which encourages you and the other parties to isolate the issues, and (hopefully) negotiate a resolution that suits everyone. If the client is disputing the payment or if you’re being accused of something problematic (or both), this can be a possible solution. You can find out more at the Arts Law Centre of Australia.

Step 11: Debt Collection

If you’ve tried the methods above to recover what you’re owed, it may be time to use a debt collection service. This is a business that tries to recover the money for you, for a fee, and it signals that you have handed the matter over to professionals. This could further strain your business relationship, but if you haven’t yet been paid, it’s pretty bloody strained at this point. You can find out more at Business.gov.au

Step 12: Get a Lawyer

This is the most expensive option, and probably your last resort. You can find a list of lawyers working in creative industries here. 

Best of luck – and next time, start at Step 1 and see if it makes a difference!