Tuesday, December 2, 2008

Charging Freelance Clients Late Fees

My freelance writing business operation is never quite as tight as I think it is. For instance, last week I waited much longer than I should have to get paid for projects I worked very hard to turn in on deadline. Now to be fair, these clients have never been late paying before, so I'm sure the holiday had a lot to do with it. But my bills could care less about Thanksgiving.

Are Late Fees Really Necessary?

On the one hand I want to be understanding. These clients have never had a problem paying on time before, and they did pay me immediately on yesterday. But on the other hand my business pays the majority of our living expenses right now. I don't expect my money the same day or the next day after completing a project. I provide a generous grace period of 14 business days to receive a balance due. I am open to negotiating that time period based on individual circumstances (e.g. a corporate client who invoices monthly, etc.). However, until I build up a surplus of income, I cannot afford to be left hanging when the bill is due.

Late Paying Clients Can Cost You

I'm fortunate that I haven't had many problems with deadbeat clients who never pay. I once had a client who only managed to pay me once on time. The rest of my time working with him was spent trying to get the balance due before we could start on a new project, or getting the down payment in time to start a project and meet his projected deadline. Needless to say we soon parted ways. But that experience helped me tighten up my client contract. I just didn't realize there was still more work to be done, so I have once again updated my contract.

Protect Yourself from the Unexpected

Most of my clients pay by Pay Pal, which aside from those pesky fees I pay to receive my money is very convenient. I do have one or two clients who prefer to send checks. Can you believe that I had never included a returned check fee on my contracts? Thankfully I've been primarily dealing with professionals. As of this past weekend, I have now added a late fee. Now all I need to do is add this information to my rate card and I'm all set.

I had never considered including a late fee before because it had never been an issue. But why wait for something to become a problem before addressing it? If you charge late fees, how has it affected your client relationships? How often have you had to charge clients for making late payments?


Valencia Higuera said...

I think freelance writers should be able to include an addendum in the contract that states we can add a late fee if payment isn't received by the agreed upon date. I've been dealing with a lot of late payments lately..and honestly...it's starting to get on my nerves. I've been here before, and late payments often signal financial problems on the client's end.

Kimberly Ben said...

Valencia, it's funny that you mention late payment could be a sign of a client's financial problems. Good point. That certainly crossed my mind, especially with my client who had always made a point of prepaying or paying immediately after the project was complete. I have NEVER had to wait for him to pay, but because there was a holiday involved I decided I shouldn't jump to conclusions.

Late payments can cause a lot of problems - especially if you depend on that money to live.

Devon Ellington said...

I've occasionally had to charge late fees to a few business clients. Usually, it only needs to happen once, and everything is clearly spelled out in the contract,so it's not like it's a big surprise.

The problem comes when you work for publications rather than clients, where you sign THEIR contract and there are no late fees included.

I just got majorly screwed. I'm tired of having late fees on my bills because I have clients who don't respect contracts.

Kimberly Ben said...

Devon, I'm also dealing with a late fee because I did not receive payment from my clients in a timely manner.

I sometimes get the feeling clients think I'm playing "business" while being a stay at home mom, but as I've said I'm the primary breadwinner right now. I don't think I need to reveal my personal finances to my clients to get them to understand how their late ayments affect me. It would be nice if they just assumed I need to get paid on time to make a living.

BTW, you make an excellent point about working with a client's contract instead of your own. I do that with only one of my clients and their have been no problems, but I wonder about negotiating to reach mutually agreeable terms. Is this possible?

Lori said...

Never included returned check fees, either! Never had one returned. I did have one that came in unsigned - they sent a replacement by overnight delivery.

I charge late fees. However, despite sending out quite a few invoices with late fees, I've never had one client pay them. It ticks me off, but my goal has always been to secure the payment they owe me. I'm not wasting time running after late fees. Frankly, if they get to the point where they owe me late fees, I'm also not interested in working with them again.

Kimberly Ben said...

hmm, I never thought about not getting the late fee. And you do make a good point - do I really want to work with someone who owes me late fees?

Rebecca said...

You know, there really is nothing more frustrating than pouring your blood, sweat and tears into a piece only to have to chase down the client for payment. I've been finding a lot of work through oDesk, primarily because they offer guaranteed payment. Can't beat that.

Designed by Lena