New client - late payments - wwyd?

[LMW1990]

I have recently returned to freelancing - relevant because I am still trying to build my client base and turning down work is something I would rather not do. But I also can't work for free...

I have a new client. As with all new clients, my payment terms are strictly 7 days and I have clients agree to this prior to me starting work.

So far I have invoiced this client 3 times for relatively small amounts. All 3 invoices are overdue.

I have politely chased and request payroll contact details. On Tuesday I was told a payment would be made. Then on Wednesday it couldn't be paid Tuesday as they could not print my invoices (but they could view them on a screen so I'm unsure what difference that made) and asked me to provide it to them in a different format, which I did. Then yesterday I was told Payroll had left early (this was at 3pm) so they didn't know the status of the payment. This morning they stated that payment was made yesterday - so it stands to reason that the payment must have been made prior to 15:30 if they left early?

I have just chased the remittance to be told that NO payment has been made. Payroll are behind. So why the blatant lies?

Since the first 3 invoices, I have undertaken a larger batch of files, in good faith, for them which are due back to them today and due to be invoiced today. They also asked me this morning to take on more files!

I have emailed to say this is not acceptable. The money must be in my account today. So far no response.

I'm at a loss what do I do? Do I continue to work on the files due back today (minimal work left to do) or do I hold them effectively hostage until they make at least one payment to me?

I understand this comes with the freelancer territory but it's the lies that have made me most angry. I cannot afford to work for hours and hours for free.

I know that industry very well. If you like them and can afford it, I would wait. Once you are a regular, they'll keep on using you. Also once you are in the payment system, payments will come in regularly. They might be 2 months behind but when you are working all the time, it doesn't make so much difference.

Finding new clients for you takes time, and the risk is always there.

@greenandbluebutterfly - that's the quandary I am in. I used to be in the industry years ago, old clients have moved on and I'm having to start afresh. It's a fine line between wanting the work but making the work pay. It's been a tough few months getting started. No one employed there would accept being paid a salary months late, so I find it so disrespectful that it's OK to treat freelancers this way. We have bills to pay and families to feed like everyone else. It's interesting to get some views from different people though. And I appreciate all the advice thus far!

Hi @LMW1990 it does apply within the EU. The 1998 Act came about due to a European Directive. Idea was to encourage prompt payment. ec.europa.eu/growth/smes/support/late-payment_en

As for outside the EU, I've always found that jurisdictional issues and late payment charges end up being in the company's t&cs.

Re your t&cs. If you're in England, give serious thought to adding clauses re interest, entitlement to compensation on each invoice, entitlement to recover costs (eg legal costs) incurred due to non payment. Clause re Jurisdiction ie England and that any legal action is before English courts (easier and cheaper for you in the long run rather than having to instruct local agents).

@greensgreens

Thank you!!

And (last question I promise!!) do I need to have made them aware that I will charge interest on late payments prior or can I do this now retrospectively?

I think GreenandBlue has it. The PM is probably desperate to get payroll to speed it up but hasn't the authority or is being stonewalled by them - happens to me often enough.

If anyone I work with asks for 7 days, I would advise that that's just never going to happen - I would say 30 days is standard, start chasing for a confirmed payment date at 14 days (squeaky wheel gets the grease).

No one employed there would accept being paid a salary months late
Undoubtedly true, but also most employees are paid in arrears of between 14-30 days, and on a fixed date. Being paid weekly is unusual, which is effectively what you're asking them to do for you.

Find out what days they do 'payments runs' and time your invoices to those.

You do not need to have notified the existing company as your entitled to the payment by law. Off the top of my head I think I recall that The entitlement / interest only kicks in after 30 days. Perhaps say something along the lines of:

A balance of x is now immediately due. This figure includes interest and compensation for which you're liable pursuant to The Late Payment of Commercial Debts (Interest) Act 1998. A breakdown as to how this figure has been calculated is attached. - and then give a breakdown as this will thwart a delaying tactic such as them asking for a breakdown.

@nosquirrels this is true and I understand where they are coming from. I'm just asking for honesty from them. I'd rather know I'm not getting paid till x date and plan accordingly than be say waiting for payments they say have been made, which haven't. No matter the position of the PM, which I sympathise with, it's disingenuous and unprofessional. In my previous industry it was extremely common for new clients to be proforma for at least 3 orders and sometimes 50/50 thereafter if we even sniffed that they would be difficult payers. As per my terms I am more than happy to discuss month to month accounts once regular business gets going and the company prove they can and will pay me. I'm cautious about doing a months worth of work for people I effectively do not know and being stung with no payment after the 1st invoice. If they, for example, gave me enough work to be my sole focus for that month, how would I or my business survive should they decide not to pay? I guess because I'm newly established I'm being over cautious maybe, but I work to earn a living.

Thanks again @greensgreens that makes total sense. I've told them no more work will be returned until I am paid.

Although greens is legally correct, sending that message will surely mean you've lost the client. We are not short of freelancers in this industry, but in reality it's a small industry.

You are only starting again, so I would be careful. PMs move often to another company, and they have good memories. If they decide you are a difficult person to work with, you might do more damage to your business than it's worth it in the long run.

I still have freelancers in my mind that I will absolutely not work with, as they made my life so difficult when I was more junior.

I'm cautious about doing a months worth of work for people I effectively do not know and being stung with no payment after the 1st invoice.

Absolutely right, of course.

If they, for example, gave me enough work to be my sole focus for that month, how would I or my business survive should they decide not to pay?

That's the risk you take in pricing the job, I suppose. It is tough to begin with, no doubt.

The PM shouldn't have fobbed you off - definitely unprofessional. If you have a contact for the owner/higher up, I'd certainly cc them and withhold any more work now until paid. Whilst reiterating politely of course that you'd be more than happy to discuss terms again once you have been paid. I'd probably tell them I needed to take on other work to fill the payment gap and therefore would not be available until X date...

I wouldn't do any more work for them until they've paid - but I would couch it in terms of "Unfortunately I need to hop onto another job for a different client to plug my cashflow problem, because as you know I'm still waiting for the 30 day + invoice to come through and I was expecting it within 7 days - but if you can speed that payment up I'll be able to return your work by X date and hopefully we can sort out what the best payment schedule is for both your needs and mine".

I agree with greenandblue that if you go in with late interest fees and legalities you will shoot yourself in the foot. Everyone needs some give and take and goodwill is essential.

They just emailed me double checking my BIC number for my bank account.

Maybe my downing tools email worked?

Fingers crossed. Thanks for all your help. It's very much appreciated

One PM I work for has emailed to say she understands completely and to only continue with her files once I've been paid and to let her know that it's been done.

The PMs are lovely. I get that it's out of their hands. I just wish they as a company had been honest with me.

I've replied to say I'm more than happy to continue once payment is recieved and I think we should discuss more suitable payment terms for everyone involved going forward.

And it's being paid as we speak...

Makes me feel somewhat better that they must value my work enough to sort it on threat of downing tools as it were.

Thanks to all!

Good outcome! Squeaky wheel etc...

Fantastic. Great outcome!

Great news!

Glad it's sorted, so frustrating. I've been self-employed and it can be a right nuisance getting paid sometimes.

If you are invoicing them, then it shouldn't really have anything to do with the payroll department, it would be 'accounts payable' that you are after, wouldn't it? You should be treated like any other supplier and paid through the purchase ledger.

Hopefully things will go more smoothly and they pay you quicker next time

I may have got my hopes up because an hour after the the payment was being made... nothing. I'm still on strike

Oh how annoying OP. :(

And still nothing. They said they could no longer instigate a same day transfer due to the cut off time but could PayPal me. No skin off my nose at all. I'd rather be paid in some way! I provided my PayPal details as request. And... radio silence

And the stand off continues - despite 'making a payment as we type' on Friday... nothing! I've held back the work I did last week and I haven't done the work they asked me to do on Friday.

Yes, don't do any more now. Up to them to sort it.

Delays in payments are one thing, saying you're doing something and then ... not. Not good.

Paid!!! Hallelujah!!

I've said I'll crack on with the work they gave me now. Any advice on how to approach the next invoice?

Thanks for all your helpful info and guidance last week.

I am currently composing my most recent invoice and wonder if I might pick you knoweldegable brains once more?

How should I word the terms and conditions on my invoice?

Have you asked them what their usual payment runs and invoice processing time is “to avoid the unfortunate situation we had last time”? If you start with what’s possible then it should make setting your terms for this client a bit easier.