The work is done. The invoices are sent. The rent is due. And the bank account is empty.

Entrepreneurs, small-business owners, and consultants alike all know that a predictable flow of cash can be hard to achieve. It’s especially difficult when you find yourself working with clients who don’t pay on time—or those who don’t seem to have any intention of paying at all.

Maybe it goes without saying, but running out of cash, including failure to secure payment on time, is one of the leading causes of startups failing before their time.

It doesn’t have to happen to you.

In this post, we’re going to explore several tips, tools, and actionable strategies that can help you extract payment from unreliable clients, and put a stop to future delinquency before it starts. We’ll be focusing on freelancers, independent contractors, and sole proprietorships, and we’ll be exploring several separate components you’ll want to keep in mind as you learn to tackle this problem. These include:

  • The organizational skills you need for vetting clients and keeping track of those who pay late.
  • Some of the common reasons a client might not pay on time, both accidental and deliberate.
  • How to talk to clients who make excuses, and how to remediate the situation in a way that works for all parties.
  • How to develop a timeline for addressing late-paying clients and, as necessary, escalating the situation or cutting your losses.
  • How to maintain your professionalism, including taking proactive measures to avoid late payments.

Ready to get started? More importantly, are you ready to get paid? After all, “If you’re doing things and not getting paid, that’s just a hobby.”

Let’s get down to business.

Client Didn’t Pay Me. Now What?

How many hours of high-quality work have you turned in for your clients? How much of that work did you dive into without a contract in the first place? Hopefully, the answer is none.

If you want to get paid, no matter what kind of hat you wear—ghostwriter, freelance SEO consultant, web developer—step one is taking the time to draw up a contract between yourself and your clients. You’d be amazed by how many independent contractors and even business owners don’t bother with this step. The truth is, not having a contract can make it difficult or impossible to take legal action if things go south.

A contract is something that protects both the freelancer and the client. If you find yourself dealing with somebody who’s giving you excuses about why they’re not willing to sign your contract, that should be a red flag and potentially a deal breaker.

Your contract should address these items and more:

  • The nature of the work to be completed
  • The amount your client will pay for that work
  • Clear deadlines for all deliverables or services
  • Clear deadlines for client payments
  • The steps you’ll take if the client doesn’t pay on time

If there’s anything else you want to define about the nature of your working relationship, include that in the contract as well.

One additional note about your contract: It’s probably a good idea to require your clients to pay a deposit upfront before you begin any of the work. Experienced freelancers often recommend a deposit of 25%. This is called “earnest money”—it helps your clients demonstrate they’re serious about working with you and are willing and able to pay for what they want.

Don’t know where to start with writing a contract? You can find some great examples online that you can modify for your own needs. There are other contract provisions you may want to consider, too. You don’t want a lack of information to result in a failure to pay later on because you had one set of expectations and your client had another. Don’t take anything for granted.

But most importantly, you need to make sure the language in your contract is crystal clear in terms of when you expect payment for your completed work. We’re not legal experts, but here’s a look at what this section of your contract might look like:

Description of Services

  • Describe service to be performed and what client will receive.

Project Schedule

  • Indicate your expected timeline for completion.


  • Describe the pricing model both parties have agreed on, whether fixed or per hour.

Payment Terms and Schedule

  • Lay out your deposit terms (e.g. 25% up front, non-refundable) and indicate the remainder is due upon completion (or before a certain interval, like one week, has elapsed).
  • If there’s a discount for payments made early, or a fee for late payments, say so here.
  • Indicate how payment can be received—including check, direct deposit, PayPal or something else.

If you end up having a problem with a client, you want to have a specific timeline to point to so they know exactly when they should’ve paid.

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Do Your Homework, Then Get—and Stay—Organized

Good organizational skills are an important part of addressing this problem and clearing the air with late-paying clients. It may also help you realize when it’s time to let a client go.

Part of getting organized as a freelancer involves creating your own set of realistic expectations for clients and knowing when you’re dealing with somebody who might not be a great fit. If you’re new to freelancing, you can’t always be choosy. However, even in the early days, you should vet your clients in advance and find out everything you can about how they conduct themselves.

You know as a freelancer that having an existing body of work, or a portfolio, is essential if you want to be taken seriously. You should hold all your potential clients to similar standards:

  • Were they referred to you by somebody you trust?
  • Do they have a presence online? Does it look professional? An online presence should include an official-looking and regularly updated website plus, ideally, LinkedIn pages for significant personnel, and active social media accounts.
  • Is this a brand-new company or organization, or has it been around for a while? Does it go out of its way to show off past work? Do they boast any awards or certifications? Companies are usually very quick to point these out.
  • Are there testimonials or reviews online, such as on Yelp or Google, and do they sound genuine? Do they have memberships with the Better Business Bureau, Angie’s List, or elsewhere?

If you’re chronically being underpaid, paid late or not paid at all, it means you need to start doing better homework.

Staying Organized

Staying organized involves tracking all your payments and when they arrive. We’re all guilty of getting caught up in the excitement of getting paid—even if it’s late. However, you should be keeping a record detailing when each of your clients pays you, and when, for each job you complete.

From small businesses on up, it’s common to use a type of software called a customer relationship dashboard or “CRM,” to keep track of critical information. Examples include Salesforce, HubSpot, Microsoft Dynamics CRM, Daylite, Zoho, and many others. Depending on the work you do, many of these could be more elaborate than you need. They can track tons of data points like email open rates, website traffic, online ad campaign metrics, eCommerce conversions, and much more.

If this is overkill for you, remember that independent contractors have options for staying organized too, such as good old-fashioned spreadsheets. This could be all you need for keeping track of information related to payments.

If you don’t have one, create a new spreadsheet. Do it now—we’ll wait!

Now, as you continue with your career, make a note each time a client issues a payment. Jot down the date and the amount. Make another note each time they’re late with a payment.

If you’re a spreadsheet fiend, or you just have a lot of freelance jobs at any given time, you could make a more sophisticated version with additional columns and conditional formatting. For example, you could have the “date payment due” change to a different color as time passes, as we’ve done above.

Then, if you see negative patterns emerging with the same clients over time, that’s something you’ll want to bring to their attention and work with them to resolve. It might also mean the uncertainty isn’t worth it any longer. You’re well within your rights to amicably go your separate ways if they’re putting your cash flow at risk.

How to Deal With Late-Paying Clients

So you haven’t been paid yet. But do you know why?

Having some idea of why your client’s payment hasn’t materialized is important because your next step is to talk to them about the issue. We’ve mentioned the word “professionalism” already in this piece, and we’re going to keep on mentioning it. The fact that you’re escalating the issue with your client or point of contact doesn’t mean politeness goes out the window.

However, trying to get a handle on their motivations will help determine the tone the rest of this conversation takes. Their reasons may not always be clear, but don’t be too quick to attribute malice to something that has a more innocent explanation.

If you reach out to a client after they’ve made their first late payment, they’ll likely offer you an excuse about why they were late. Maybe they just forgot, maybe their bookkeepers operate on a different schedule—a 90-day vs. a 30-day cycle—or maybe they weren’t happy with the work. Knowing how to talk to your clients after the first lapsed payment is critical, so here are some different scenarios you might run into:

1. The Unhappy Client

If your client says they weren’t happy with the work you performed, it means one of a few things. Either they’re pickier than they let on earlier, your work genuinely wasn’t up to snuff, or there was something about the contract that gave them the wrong impression.

Does your contract have a kill fee? This is sometimes offered as a last resort to compensate a contractor even if a client can’t use the final product. You don’t want to have your work go to waste like that, though, so you’re better off having a frank and polite conversation, preferably in person or over the phone, about where things went wrong.

Ask for a list of things they’d like changed. After a good-faith dialogue with one another, you’ll probably find your visions of the final product aren’t that far apart after all.

2. The Insolvent or Cash-Poor Client

There’s a chance your client is delaying payment because they’re having cash-flow problems of their own. Maybe it’s a slow season for them, they’re a new business and haven’t found their footing, or there’s another reason entirely.

If you reach out to them and they confirm this is the case, consider offering a payment plan that works for both of you. Lump-sum payments are preferable for obvious reasons, but sometimes you need to give a little ground, including spreading the amount out over a few weeks or months.

3. The Excuse-Giver

If a client claims they already made the payment, tactfully ask for proof they have done so. Sometimes, it’s as simple as a screenshot of a line item on their checking account or credit card statement.

A client might also claim they didn’t receive an invoice to begin with. If so, send it again and follow up with your point of contact by telephone. You may also consider automated invoicing software like QuickBooks, PayPal Invoicing, Microsoft Dynamics 365, and FreshBooks to take the potential for human error out of the equation. Try to send invoices right after you complete your work. In fact, consider adding another column in your client relationship spreadsheet to indicate when you actually sent the invoice, and when.

Put Together a Timeline for Addressing Late Payments

Reach out to late-paying clients as soon as you realize there’s a problem. The longer you wait, the less credible your claim may seem. There’s a certain level of confidence required to make it as a freelancer or business owner, and this is one area where it comes in handy.

This is where clear wording about deadlines in contracts is especially useful. You don’t want to say, “I haven’t been paid yet.” You want to say, “Payment is overdue by X days or weeks.”

Here’s a general timeline of steps to take to resolve nonpayment:

1. Three Days

Begin following up with late-paying clients three days after payment was due.

Hopefully, things won’t get this far. If they do, take the time to write a professional message you can reuse if you have to. Just like your freelancer contract, there are useful templates online that are good for inspiration.

You don’t have to follow this formula exactly, but here are some of the most critical points you’ll want to include:

  • A reminder of the services completed or products delivered
  • The date the work was completed and a reminder of when payment was due
  • A reminder of the amount due, minus the deposit and any discounts
  • An indication of whether they previously acknowledged receipt of the deliverables or completion of the services

Provide screenshots of emails and any other documentation you have to remind your client that there’s a paper trail describing what work was completed and the terms they agreed to.

Send this friendly reminder email to your POC, along with another copy of the invoice, so both parties know it was received. If you took the step of drawing up a contract in advance, include that as an attachment too. That should be all the reminder they need and, ideally, as far as this process will go.

2. 1 Week

If your point of contact doesn’t respond to your email, it’s time to move to the phone call stage. Remind them of the terms they agreed to and ask when you should expect payment. If your client falls into one of the three categories listed above, such as your companies being on different billing cycles or their business being in a slow season, explore options together.

As a last resort, depending on your reading of the situation, it might be wise to offer them a modest discount if they pay within the next few days. It means taking a hit on your profits, but could be worth it. Don’t make a habit of this. If things do go that route with one of your clients, you’re well within your rights to go your separate ways afterward and find clients who keep to their word.

3. 1 Month

If a full 30 days pass and you haven’t heard back or been paid, it’s appropriate to escalate the problem from your point of contact or account manager to the company’s bookkeeping department or accounts payable staff. At this point, it’s a good idea to send another formal collection letter, by certified mail this time instead of email. You want to know for a fact it was delivered.

4. 3 Months

Follow up once per week between the one-month and 90-day mark. After that, if 90 days elapse and there’s still no payment, it’s time to take legal action.

Read more: Write the Perfect Consulting Proposal: Tools, Examples, and a Template

How to Take Legal Action Against a Late-Paying Client

Let’s hope it never comes to this point, but sometimes you come across a truly bad actor or even someone who never intended to pay you in the first place. Good thing you have a contract.

Every state has a small claims court system with dollar limits on the amount of money you can sue a nonpaying client for. The majority of states have a $2,000 to $10,000 limit. If the amount due falls outside your state’s limit, you can still pursue your case, so long as you waive your right to the remainder. In other words, if you’re pursuing a $12,000 payment in a state with a $10,000 limit, you’ll get $10,000 but forfeit the final $2,000 due.

Debt collection proceedings like these are some of the most common cases seen by small claims courts. Many businesses and freelancers before you have had this problem and, unfortunately, many more will have to deal with this after you.

Pursuing legal action of any kind, even if you’re the claimant, can be scary. However, this is a well-traveled road, and the law is on your side. All the documentation we’ve been discussing so far is your ally here. You don’t even need a lawyer to make your case for you. In fact, several states don’t allow lawyers to get involved in small claims disputes. If the business doesn’t show up for the court date, you win.

This can be an emotionally trying experience, but it’s not usually a very complicated one.

In cases where the missed payment is small enough or falls beneath your state’s dollar amount for small claims, your best move is probably to accept the loss, cut ties with the company, and write a descriptive but professional review on a website like Yelp. You can also inform the Better Business Bureau, but their authority is more limited than you might think, and their constituency isn’t quite who you think it is, either.

Steps to Take to Avoid Late-Paying Clients

You’ll probably deal with this problem at one point or another in your career. Some studies indicate that as many as one-third of all clients pay late by two weeks or more.

As mentioned, when you take on a new client, it’s vital to clearly lay out terms describing when you expect payment for completed work. There are other steps you can take too that may help you sidestep this problem entirely:

1. Require a Deposit

We’ve said it before, but it bears repeating: You should require an advance deposit of around 25% when you take on a new job.

2. Invoice Timeliness

Send out invoices for the remainder of the payment due soon after you complete the work in question. You’re more likely to receive a timely payment if the project is fresh in your client’s mind.

3. Payment Flexibility

Meet your client halfway when you can, when it comes to receiving payment, by offering flexible options. Eliminate unnecessary steps for your client, such as sending physical checks through the mail. Electronic payment methods like PayPal—and there are plenty of others, too—are your friend here. You shouldn’t be opening a new account for every client, but you can definitely see what works best for the largest number of them. Compromise when you can.

4. Discounts

Consider offering a modest 2-10% discount to clients who pay within 30 days of project completion. This might be all the motivation they need.

5. Late Fees

The terms you draw up before the job should include action to be taken if payment is not received within the desired timeframe, including late fees of around 1.5% per week overdue. Coming up with punitive measures might go against your happy-go-lucky, free-as-a-bird freelancer spirit, but it’s a signal of legitimacy that your clients will probably take seriously.

Read more: Write the Perfect Consulting Proposal: Tools, Examples, and a Template

More Freelance Building Advice

One of the most important things you can do is make sure both parties have a clear set of expectations even before the work begins. There’s a reason why we keep mentioning this: It’ll help set both parties’ minds at ease and protect everyone involved.

Remember to maintain professionalism at every step. Don’t get angry. Make it difficult for your clients to see you as a fly-by-night operation or assume you’re too disorganized to notice a late payment. It’s also important to appreciate the difference between a well-intentioned nonpaying client—they just forgot, their business is struggling, etc.—and one who may be genuinely predatory or abusing your goodwill.

Knowing which type of client you’re dealing with ensures you can communicate with the appropriate tone. Watch for signs of shadiness. Read the room and remember that you’re under no obligation to work with a would-be client who’s aggressive, pushy, or demanding right out of the gate.

We wish you all the best in your continuing freelance career. With any luck, all this will remain hypothetical. Except for the contract part, seriously. If nothing else here applies to you or sticks with you apart from that, we’ll consider our job a success. Check out our selection of free business courses for more strategies for building your freelance career.

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