Freelancing feels like the Wild West sometimes. There’s no HR department for personnel issues and no accounting team for payroll. While this has its benefits, it comes with downsides, too. You might be one of the 54% of freelancers who haven’t been paid by their client. Or you receive a late payment eventually, as 74% of freelancers report.
Unfortunately, resolving payment issues is a rite of passage in this business. The good news is there is a process to get paid. Here are six easy-to-follow steps to follow in non-payment situations.
Step 1 – Gather Evidence
Collect all relevant invoices, emails, texts, and other paperwork related to the work you did and the compensation promised. This evidence will be crucial in proving your case if you need to escalate the matter. Deal Memos are the ideal piece of evidence as they show executed and approved rates, days of work, terms of payment, etc.
Step 2 – Contact Who Owes You Payment
Send the person or company who owes you payment another copy of your invoice, with a reminder that the payment is past due. Include how many days it’s late. If you got paid for the wrong amount, resend the invoice and explain the discrepancy.
Be sure to communicate with the appropriate individual. For example, if you’re a PA, it may be better to first speak with your department head rather than going directly to a Producer.
Step 3 – Following Up
Sometimes, one payment reminder isn’t enough. If you don’t hear back after the first email, continue to reach out with reminders. Be persistent. At the very least, send a reminder when the payment is:
- 30 days late
- 60 days late
There is a correlation between payment reminder emails and timing of the payment. Typically, after the second reminder… they will make a payment a few minutes after that email. If emailing doesn’t work, don’t forget the power of a phone call. You may have more luck reaching a resolution on the phone.
Step 4 – Late Fee Policy
If your client is repeatedly late with payment, let them know you’re implementing a late fee policy. A 1% to 5% fee usually nips the problem in the bud and sets the tone for future payments. And you can always remove the late fee as an incentive for prompt payment.
Step 5 – Small Claims Court
If your emails/calls go unanswered, or if the Producer does get back to you and refuses to pay, you can file a lawsuit in small claims court for breach of contract.
Note… small claims courts only deal with cases below a certain value. In Colorado, individuals can only go to small claims if their lawsuit is under $7,500. In California, the maximum amount is $10,000.
Step 6 – Civil Court
If the amount owed is larger than small claims court limits, or if you are experiencing ongoing issues with the Producer, you may need to pursue civil action. But before initiating any legal proceedings, consult an entertainment lawyer. They can advise you on your legal options and help you take further action if necessary. Keep in mind that legal battles can be costly, so you’ll need to weigh the potential benefits against the risks.
Sometimes, the only thing to do is to walk away from a bad client. But depending on the state of your finances, that can be hard to do. Weigh the cost of the decision, financially and in peace of mind. You might find it allows for better opportunities to come your way.