December 2, 2020
When clients don’t pay, it can push your graphic design business (and you) to the edge.
The anxiety and stress of outstanding, unpaid invoices is real. It can cause you to start resenting your graphic business and leave you wishing you worked for someone else.
In this episode:
– Kris shares when her client did not pay and she had to use a last resort secret weapon…and it worked!
– Don shares where she successfully negotiated with a large client who had unrealistically long payment terms.
– We also share our key tips and scripts that have ensured we have been paid 99% of the time throughout our careers.
With over 4 decades of combined graphic design experience under our belts, we are pretty good at getting paid. We can count on one hand (collectively) the clients who didn’t pay up.
Interestingly, these problem client issues were early on in business when we were quite green and didn’t have the systems we needed in place to protect us.
Here’s our top tips to help you get the same results.
Payment terms should not just appear in your contract. Mention it in as many places as possible—for example, your proposal, your welcome packet and during your discovery call. The more touchpoints the better, as the aim here is to educate the client and increase their awareness of how you operate and what you expect.
In your brief, it’s a good idea to ask the question:
“Who is responsible for the payment of accounts?”
as often it can be a different person to your main point of contact. It’s important to gather their contact details so you have the right person to send invoices to and follow up with if there is an overdue amount.
Also open up the conversation about payment terms in this early stage . Find out what their expectations are and let them know your terms.
Here’s a question to ask about payment terms:
“What are the typical payment turnaround times in your company?”
We always request a 50% deposit prior to the commencement of the design project. If you’re quoting with a value percentage on top (check out our free pricing guide for more about this concept!), you can even ensure that your 50% deposit covers all the time required to complete the project at a decent hourly rate. And if in the unfortunate (and unlikely event) the final 50% does not get paid, you are losing profit only.
We like 7 days. If you have clients from larger companies, this can be tricky, but it can always be negotiated through liaising directly with a key player in the accounts department. Explain that you are a bespoke design studio servicing a select list of clients and cash flow is essential. Some larger companies have 30 days from the end of the month terms…or even longer!
Gone are the days where payment by cheque or bank transfer are the only ways to receive payment. Many businesses prefer to pay by credit card and this needs to be an easy, clickable option on your invoice. The peace of mind that quick payment brings is well worth the credit card processing fees. Also, why not simply build these fees into your pricing? No problem.
Don’t spring a surprise invoice on a client for additional work completed that fell outside of the initial project scope. Always seek permission prior to commencement of any additional work that will attract an additional charge and always get a signature before proceeding. Clients should only receive invoices they are expecting.
If you want to learn more about client changes, scope creep and setting boundaries, check out Episode 19 of the Design and Prosper Podcast https://designandprosper.co/clientchangessuck/
Final invoices should be sent out before the project is fully wrapped up and finished. Don’t wait until every t is crossed and every i is dotted, because in reality, sometimes it’s those little details that will drag on a project. Receiving an invoice will certainly help to move clients along if they are dragging out the supply of deliverables etc. Make sure you receive final payment before releasing files, granting full access to websites, transferring ownership and changing log-ins etc.
Are your terms 7 days? Then don’t wait 14 days before you touch base with your overdue client. Touch base day on day 8 and then continue to contact the client consistently until the invoice is paid.
This strategy is to be so damn annoying they’ll pay just so you’ll be quiet. 🙂
Email your client reminder after reminder. Don’t be embarrassed, don’t worry about coming across as a nuisance and certainly don’t worry about what they think—you are not desperate. You are worthy of being paid for your work. Remember, what other people think of you is none of your business.
It doesn’t have to be complicated. Here’s a simple email script you can use:
“Just touching base about your unpaid invoice, which is now _____ days overdue. Can you please give me an indication of when this will be paid?”
You could make this process really automated by setting up an email schedule until payment is received.
Make your overdue invoice a bit scary. The alarm bells should be going off! For example, bold OVERDUE text in red and OVERDUE INVOICE in the subject line—in caps of course.
If you have a VA, bookkeeper or accountant you can ask them to call persistently to follow up the invoice.
You could even ask a kick-arse friend who is would happily make the phone calls on your behalf (maybe for a nice pressie in return).
Either way, the point we are trying to make here is to outsource it. Take the pressure off of yourself. You are too close to it. You need people who are less emotional to look after this.
Here’s a phone script that could be used:
“Hello, this is ________________ calling from ________________., we are following up invoice ________________ and would like to know when payment can be expected.”
As a last resort, you may need to use a debt recovery service or get your solicitor or lawyer to write a letter of demand.
Should it be taken further than a threatening letter? It really does depend on the amount outstanding. It is under $10,000 it may be something that would quickly be eaten up by legal fees.
Weigh up whether the return on investment (R.O.I) of your time, money and stress is really worth it. In the end, you may decide to let it go and chalk up to experience.
One thing is for certain though, if it does get to this stage, doing an audit of your client journey touchpoints would be essential to see if there any holes in your systems and processes that allowed this to happen.
We are firm believers in the idea of ‘blame the system, not the person’. Is there a root cause of why this has happened—something missing from your processes and communication?
Yup, it happens, some clients who have overdue invoices may ask you to do more work for them. Often when this arises there is a disconnect between the person you are dealing with and the person who is paying the bills.
For larger clients be sure to CC all invoices to your point of contact and their accounts department. Don’t fall victim to the ‘oops I forgot to forward it to accounts’ line.
Absolutely do not continue to do more design work when design invoices are left outstanding.
And what if you simply don’t want to work with this client anymore? It is completely acceptable for you to politely fire the client. You are in control beautiful designer. We love to think, letting go of a troublesome client is an opportunity for you to practice your assertiveness.
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