Dealing With Deadbeat Clients

January 8th, 2008 | Posted in Freelancing

I love being a freelance illustrator. While it is challenging in many respects the work is interesting and the deadlines intense, and it’s seldom boring. I don’t punch a time clock every day, collect my paycheck every other Friday and have to conform to anyone’s routine but my own. As I have said many times, financially it is a little more exciting that it needs to be, what with the constant uncertainty about the next job, and how much income will be forthcoming in a given month (or week, or year for that matter). I have been very lucky in that I have other resources to fall back on if the freelance work has been slim, but there is no denying that when the work is plentiful the checking account is a happier place. Making a living as a freelancer is hard enough when you are only worrying about marketing yourself, finding new clients and pursuing and securing new jobs and projects… let alone when you may run across the occasional problem of doing jobs for clients that take a long time to pay, or never pay. Deadbeat clients are a serious risk to your financial well being, because they not only can cost you money but also very valuable time in both doing the project itself and in efforts to collect payment.

In this matter I again have been very lucky. I can count on one hand the number of jobs I have done that ended up being a serious problem in getting paid. Actually luck is only part of it. Mostly it’s because I follow a number of guidelines and policies that minimize exposure to potential problems and maximize the likelihood that any issues will be favorably resolved. Here are my guidelines for preventing problems with and dealing with deadbeat clients:

Preventing Problems-

An ounce of prevention is worth a pound of cure, as they say. Doing what you can to prevent having a problem in the first place is always the best policy. There are many things you can do to prevent having collection problems.

1. Use a good invoicing/accounting system– This is by far the most important thing you can do to prevent losing money or having problems with invoicing, billing or payments. It can be as complex and all-encompassing as a serious accounting software program like Quickbooks Pro, or as simple as a tray labeled “Outstanding Invoices” on your desk that uses gravity as it’s aging system (invoices at the bottom of the pile are the oldest). The bottom line is that you have some way of keeping track of who you have billed, when you have billed them and when things are getting late.

I use Quickbooks Pro but mainly because I have other accounting needs that require a full accounting program. There are lots of other programs out there that will do the job, including some designed specifically for freelancers. For years I used the “tray” method. Keeping notes in a datebook also works well. All you really need is a system for quickly identifying outstanding invoices and tracking the dates involved. This information is important when it comes to identifying and resolving issues that might arise.

2. Get to know your client- In most cases the payable procedures of clients are set and predictable. Clients I work with often usually follow the same pay schedule and are very regular in their payments. These can vary wildly, from immediate payment to sometimes taking up to 60 days. It”s the new clients that are big question marks.

Knowing the payment procedures of your regular clients and keeping notes on them can be very helpful in preventing mistakes or letting things fall between the cracks. It isn’t unheard of for invoices to get misplaced, or for you to forget to send one. Knowing client X usually pays within thirty days means that if it’s been forty days it would be wise to contact that client to see if there is anything amiss. It’s also very wise to know what you are getting into as far as length of time for payment, especially if the job you are undertaking is a big one that will take up a lot of your time.

3. Agreeing on payment arrangements upfront-
Some people are a little uncomfortable talking about money and payment before any work has been done. I know I would rather get the details of the job and get busy on it needing nothing more than an agreement on total payment, but this is not a smart way to do business… especially with clients you do not know. I get over it by knowing that once the money part is settled the client will get 100% effort on my part on the actual job. Still I want things to be very clear with no room for misinterpretation between myself and the client when it comes to all aspects of the job, including payment. Agree on how long after you invoice them you can expect payment, whether they have an internal contract or purchase order they need in addition to your invoice, etc.

4. If in doubt, get an advance- In some cases you don’t need to worry much about non-payment of your invoice because of the nature of the client. If it’s TIME Magazine or Coca-Cola, you can be pretty sure they pay their bills. Other clients you might not be so sure. In some cases, if I get any kind of bad vibe from a new client or if it’s a particularly large job, I may require a payment schedule. This is not unusual, especially for jobs that pay a lot of money. 25% of the total fee in advance, 25% upon completion of the pencil stage and the balance upon completion of the final art is a typical arrangement.

I have found that asking for this kind of arrangement from shady new clients often prevents taking on a job at all that likely would have meant a nightmare. If a client is serious about hiring an illustrator, they should not balk at an advance payment for their services. I’ve had a few clients, usually the local type looking for some illustration work for their website or company advertising, back out of a deal when such an arrangement is asked for. They would likely have been a deadbeat client, and such a job was better off avoided in the first place.

Handling Problems That Arise-

No matter how hard you try, you are going to eventually encounter problems in this area. I’ve found there are ways of dealing with them that preserve your relationship with worthwhile clients and maximize the probability you will get your payments.

1. Don’t live paycheck to paycheck-
More easily said than done, but it’s the best way to prevent being seriously damaged by late or non-payment is not to need the money immediately to pay your bills. It’s typical financial advice to have at least three months worth of bills/living expenses saved up in case of disaster for anybody, but in the case of a freelancer it’s doubly important. Few people have that luxury, though. It’s a lot easier to stay cool and professional about collecting unpaid invoices if you do not have creditors knocking at your door. If you can manage to put some money aside for that purpose, then do.

2. Be patient- That goes hand in hand with the last point. I’ve found that it is far more productive to be patient with clients who have very late payments than to threaten them or get angry about it. Polite, professional and patient communication will result in your getting paid a lot sooner than if you yell and threaten. Most of the time the problem is human error along the way. A misfiled invoice, lost paperwork, whatever. There are sometimes a lot of steps needed to do something as simple as write a check, and the more steps the easier it is for someone to drop the ball. That is where both a knowledge of the typical pay habits of a client and a clear paper trail of you end of the process will be of great value in solving the problem.

Once payment is late (and I give it at least two or three weeks from the time it was expected), send an e-mail reminder that is more about the job than the payment. This is an example:

“I just wanted to touch base and say thanks and that I really enjoyed that last job we did on (add details). I’m looking forward to working with you again sometime. Incidentally, I have yet to receive the check for that job, and it’s several weeks overdue. I’ve attached a copy of the original invoice. Let me know if there is anything I missed or did wrong that might be holding things up. Thanks again!”

Always keep communications polite and apologetic. That always gets better results.

3. Use your information- Be armed with exact records as to dates the work was delivered, when and how invoice was submitted and all communications involved. E-mail really makes that easy, and e-mail is my preferred method of communicating with clients for just that purpose. There is nothing worse than being unable to find the original invoice or have any clear idea of when or if you submitted it. Produce that information when you open a dialogue about late payments right away, so the client knows they are not dealing with some scatterbrained artist… even if they really are dealing with a scatterbrained artist. At least it’s a scatterbrained artist with a file and datebook.

4. Use escalating persistence-
I start out with that first polite reminder, and as long as I get a satisfactory reply (usually “sorry, well get right on it.”) I let things go for another few weeks. If I don’t get that check, then its another reminder, this one a little more to the point. At that point I will start sending a weekly e-mail and will start also making phone calls. Some of the best strategies in getting them to make payment is to ask questions like “What can I do to get this process completed?” and “Can you help me understand the process and why things are being held up so long?”. Eventually you will become a pain in the ass, and in the case of a problematic client that is sometimes the only way to get things done. Usually once you become an annoyance, you will not get another job from that client, but by the time things have reached this point why would you want to work with them again? Just keep it professional.

5. Collection-
I’ve never had to resort to this yet, but in the end there are bad debt collection agencies out there that will use the threat of bad credit marks and some serious annoyance to get you your money. They take some of it, of course, but if it has reached this point any payment at all is better than none. A client would have to either tell me they aren’t going to pay or stop replying to my communications completely for me to resort to this. I have twice had to threaten to go to a collector and both times that apparently was enough.

I don’t like using the term “deadbeat client” because that insinuates the client is being purposeful in withholding payment. That is almost alway not the case. Usually it is an error of some kind, or just the slow machinations of accounts payable in the finance department of the client. Often your biggest ally in getting paid is the art director you worked with. They are just trying to get their job done and usually get more upset by problems with their freelancers getting paid, as it causes them problems in their job. Keep the AD in the loop, especially early.

I have several horror stories about getting paid by clients, especially involving the notorious NOW Comics, who went out of business owing a lot of creators a lot of money. By using the steps above I escaped the NOW black hole only being owed for about 6 pages of pencils on a Married with Children issue that never saw publication. Many others were not that lucky. If you are patient, you will almost always get yoru money eventually. Once you have identified a client who has a problem with accunts payable, however, you only have yourself to blame if you do more work for them and encounter the same problems. The most effective way to avoid payment problems is to refuse to work for those clients that are a problem. I’ve got a few on my blacklist.

Whenever you have your own business, no matter the focus, there will inevitably be customers who have trouble paying their bills. Some steps to prevent problems and some to aid is solving them will greatly improve your odds of not being stiffed.


  1. SteveH says:

    Sound advice Tom! I usually have one or two issues each year but in the main, everything runs pretty smooth. I have a system I designed myself for creating invoices and tracking them, its simple but effective! I make a note of bad clients so if they want to use me again, I just tell them I’m fully booked out! Now where’s that twenty you owe me….. hehehehe

  2. Mark Hill says:

    An interesting topic, with terrific advice, Tom. Your advice on this is just like that I received from my accountant…and for the first time recently, his advice was needed.

    Oddly, a few months ago I was looking back over the past several years of business, feeling fortunate that I had never had a true ‘deadbeat client’. Sure, a few clients took 60 days to pay, including a couple Fortune 100 companies (whose accounts payable departments know they can get away with it — and they do pay eventually.) But until two months ago, I had never had a client actually ignore invoices and “late payment’ emails and then phone calls from my accountant.

    This client hired me to illustrate a book…and after we finished, asked me to delay invoicing until after they added one more illustration. It took two months for them to finalize that last illustration…and then after I sent the invoice, promised immediate payment. Well, after waiting 100 days more, (and following steps much like those outlined above), I went to the next step: threatening collection with the aid of an attorney. I didn’t expect much of a response, since it was simply another email on top of several previously sent and ignored. Guess what? Full payment arrived within 24 hours, with a request to please consider working for them again. (Like Steve said above, I’ll be booked that week.)

    As you mentioned, however, the time and energy spent dealing with the pursuit of that payment was considerable. It was time I wish I’d spent writing or drawing cartoons.

  3. cedricstudio says:

    Great post, Tom! I liked your sample follow-up email when a payment is overdue, polite and friendly IS key. Although personally I wouldn’t wait 2 or 3 weeks past the due date before jogging their memory, but that’s just me.

    Something else to consider: On the bottom of my invoices, in the memo line (I use Quickbooks Pro too), I write “Late Payments are subject to a monthly late fee of 3%.” I have no way of knowing how much of a difference that has ever made, but on two occasions after the first “reminder” email I’ve had clients include the 3% in a late payment without my even mentioning it.

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