9 ways to get clients to pay their creative services bills (no kneecaps involved)
If you've been working on your own as a creative for a while, you have undoubtedly encountered a colorful array of excuses, elisions and outright lies relating to why a project has been cancelled or why a client won't pay for your services. They can vary from the time-honored "the budget was cut" to the rather specious "we weren't really happy with your work," which always chaps my biscuit. Thankfully, the vast majority of clients are honest, smart, helpful people who consider you an ally and are fully committed to working with you to help them solve a business challenge. However, it's those few weaselly clients who ruin the stew and cause you to have to protect your best interests at all times because, hey, you're in business to do good work and to make a fair profit, and if you don't make a fair profit, then you won't be in business very long. So here are 9 steps to take to make sure you get paid for your hard work and to gain the respect of a new client. 1. Don't underprice yourself Many graphic designers, web designers, writers and other creatives who are new to being in business for themselves will naturally set their prices lower in order to attract clients. Although I understand the temptation to do this, I would strongly urge you to reconsider this tactic, mainly because by setting your prices low, you are telling clients that your services aren't as valuable as those offered by your peers. Hence, there's the perception that your services are lacking in some way. This isn't an optimal way to get started with a new client ... essentially signaling to them that you aren't supremely confident in your abilities to charge a fair price for them. They may read this as a sign of weakness and later try to take advantage of your So just start out by charging a fair price and stick to your guns. 2. Never blindly accept a handshake or someone's word I've been in marketing and advertising for more than two decades, and if there's one critical thing I've learned, it's that I never trust someone who says "trust me." Trust is earned, and a new client, as pleasant and good intentioned as they might be, is still a relative stranger who has not had a chance to earn your trust (and you have not had the chance to earn theirs, either). This is why a contract is so vital in spelling out your relationship at the outset of your new business relationship with a client. 3. Have a tight contract Contracts aren't just for starlet pop singers or corporate behemoths. A creative services contract essentially lays out the terms for a business relationship and establishes expectations and protections for both parties, and thus it's an essential component to running a business. Look at it this way ... without a contract, there's nothing that defines who owns the work that you do for a client, how and when you will get paid for the work, who is legally liable for any errors or missteps, etc. It's never a good thing to leave yourself hanging out in the wind like this, so But don't try to get a contract on the cheap. Find a good local lawyer who is versed in intellectual property law and have them draft a terms and conditions contract for you as well as a work order document (which you can use to outline the scope of each project). Having a good lawyer at your back is like having airbags in your car ... you hope to god you never need them, but you are forever thankful that they are there when you do. A good creative services contract often has language that defines ownership of intellectual property, payment terms, limitation of liability, indemnification, contract termination and other important topics. You and your attorney should discuss your business priorities and how your contract will protect them. Oh, and make sure that every client signs a contract before you begin work for them. It can be tempting to rush into the work and forget about the contract, and it's always much easier to get a client to sign a contract upfront (when they are eager to get the project started) than later on (when they are distracted and have less incentive to sign the document). Note: This post is not intended to be legal advice, and I am not an attorney (although I play one in my fantasies sometimes), so I encourage you to find a local attorney who knows your state and local laws. Shameless plug: Planning Pod's online creative services software has a tool that lets you create contract templates, modify them for each client, collect e-signatures for each contract and store each contract electronically. And in the United States, when properly executed an electronic signature is just as legally binding as someone's hand signature on a paper document. 4. Collect payments upfront and/or ongoing Never, ever, ever wait until the end of a project to get paid, mainly because it reduces your leverage in getting your full payment. Look at it this way ... if your client only has to pay for the finished product at the end of the project, they have no financial investment in seeing the project through. If they have paid nothing along the way and decide they want to bail at the end, you now have to fight them for the lump sum. However, if they have already paid for half or three-quarters of the project, they will most probably pay the rest because they now have a financial incentive to see the project through to the end. So either charge half of the project fee upfront or set up a schedule of progress billing where you charge the client for weekly/biweekly/monthly work on an ongoing basis. This not only helps with cash flow but also ensures you will get most of your bills paid by your clients. 5. Turn over native files only when the project is finished and you have been paid in full Your creative work is your primary leverage. If your clients could design or write, they wouldn't need your services; but they can't, so they are dependent on you to help them achieve something they can't do themselves. This means that what you produce is of value to them. So why would you turn over your one thing of value - your native files that contain your designs, code and copy - before you have been fully compensated for it? By holding your native files until after you have been paid, it gives the client incentive to pay all their bills. 6. Don't cave to your client's terms I have worked with many small clients, most of whom sign our contract without changing a word, and I have also worked with a few dozen large corporations, many of which have large herds of attorneys and their own creative services contracts they want you to sign. It may be a bit intimidating to go to battle with a corporation over the terms they are asking you to agree to, but you have to stand your ground to ensure you are paid for your work and treated fairly. I have had fair and mostly positive negotiations with our larger corporate clients because our negotiations have started by both of us outlining what our business priorities are in regard to the contract. Once you each know where the other stands, you can then start to negotiate in earnest. I recommend you get your attorney involved in these situations, mainly because when attorneys start throwing around all that legal language, you want someone on your side of the table who understands the mumbo jumbo. 7. Have a "kill fee" in place Many design firms and web design shops have a stipulation in their contracts or work orders where they are paid a kill fee or termination fee for when a project is stopped or cancelled. This fee can be structured as a flat rate or based on when project milestones are reached (i.e., if half the project has been completed, then your kill fee is half the total project estimate, and so on). Simply put, a kill fee is just another way to ensure you are paid for your time, and it can be used in combination with other payment terms. 8. Spell out your services and scope of work clearly in the statement of work Each time you are preparing to start a project for a client, you should create upfront a statement of work (SOW ... essentially a detailed estimate) that outlines exactly what work you will be performing for the client, the time it will take to complete each item/segment of work, what each item/segment costs and how you will be delivering the final product. It can also detail revision rounds as well as any details about how you will be charging for the work (half upfront/half on completion, progress billing, etc.). This document is an essential cover-your-ass instrument because it should remove all doubt as to what the client is getting and how you will be providing it. In addition, it removes all doubt as to the cost of the project. You should not start the project until the client signs off on the statement of work. I would also recommend attaching hours to each item/segment of work and stipulate that, although you make all reasonable efforts to stay within a certain percentage of your estimates (say 10% or so), any additional work not outlined in the SOW or any hours that you go over due to unforeseen circumstances (extra revision rounds, change in scope, general cluelessness or indecisiveness, etc.) will be billed as out of scope. This helps to ensure you will be paid for any additional time it takes to complete a project. I would also recommend creating a creative brief for each project in which you get upfront guidance from the client as to the objectives and parameters of the project and the creative direction they want you to pursue. Such a document can come in handy when the client 9. Take a client to collections or court if you have to Usually a scary letter from your attorney is enough to get most horribly delinquent clients to pay. However, for those who simply refuse to pay your bills, you can and should send them to collections or pursue them in the courts. I've found that this usually signals the end of a relationship, which is unfortunate. But who really wants to maintain a relationship with a client who doesn't pay you? Not me, and not you either. A collections agency or attorney will also need to be reimbursed for their services, so make sure that you include in your contract a stipulation that the client will be on the hook for any collections or attorney's fees involved in pursuing payment. A final note ... Ray Liotta's character in Good Fellas has a very succinct way of phrasing the non-negotiability of debt ... "fuck you, pay me." Mike Montiero, co-founder of SF's Mule Design Studio, has used this phrase as a title for his fantastic video about creatives getting paid. It's truly fitting, because anyone who is trying to screw you out of a payment that you are rightly entitled to not only needs to pay you promptly, but they are also showing you and your profession great disrespect. And such blatant disrespect should be met with an equal measure of directness and candor. ___________________ Keep track of your client contracts, electronic signatures, work orders, estimates, proposals and all your other client documents with Planning Pod's online business management tools for creative services firms and freelancers. Try Planning Pod free for 30 days.