What to Do When Invoices Are Overdue

What to Do When Invoices are Overdue

As an independent business owner, you must take charge of all aspects of the position. That sometimes means dealing with overdue invoices. If you’re a shy, slightly socially anxious person who tries her best to avoid conflict at all costs like me, this can be intimidating. You start with the maybes. “Maybe he’s just busy today.” “Maybe she doesn’t get her paycheck until Friday and is waiting to pay me then.” While those are highly plausible maybes and are more than likely true at one time or another, it doesn’t wash away the fact that you have a monthly quota to meet. It doesn’t change the fact that your client agreed to a payment time frame that has now slipped by. It doesn’t change the fact that you did the work as promised but still have not been paid as promised. You have to take action.

This week, as the end of the month drew near, I had about $300 worth of overdue invoices. Using the tactics I’m about to share with you, I got them all paid in full. Of course, because this is just how life works, another invoice for $100 became overdue on the last day of the month, and though I sent a reminder, it was not paid, but there was a very short time frame to work within, so I still feel pretty accomplished.

Without further hullabaloo, here are some strategies you can employ when faced with overdue invoices.

The Gentle Nudge

This should always be your first reaction. Don’t get pissed and send a demanding message right off the bat. You remember those “maybes” we just talked about? Well, like I said, they are often the truth. People get busy. They have other, more pressing bills to pay. It doesn’t mean you shouldn’t be getting paid, but you must be understanding or you’ll burn bridges beyond repair for no serious reason.

The tone of that first email reminder should be very casual and upbeat. If you are doing continued work for that client, combine your payment reminder with an update about the other work you’re doing. I really like this tactic because it simultaneously reminds the client that you need to be paid and reminds them of the continual great work you’re providing them with. You remind them why you need to be paid. I like to give the update or ask a question first and then say something like, “Oh, and just a friendly reminder, there’s an outstanding invoice for the chapter one ghostwrite. I will be happy to resend it if you need me to, so that you have it right there at the top of your inbox. Just let me know. Thanks.” I invoice through FreshBooks, and the software makes it really easy go in and resend the invoice with two clicks. The client can pay through the invoice, so I like to put it at the top of their mailbox so they can easily go in and pay in about three minutes. I’ve done them another favor, reminded them of why they like me, and gently nudged them to make the payment.

(Want to learn more about FreshBooks? Read my recently updated review: Professional Invoicing and Financial Tracking for Freelancers: FreshBooks Review)

One of my longest running clients is a very energetic but somewhat distracted person. This tactic works wonders on him because in 9 out of 10 cases, he just honestly forgot that he didn’t pay yet. Putting the invoice right in front of him usually elicits a swift payment.

FreshBooks allows me to set up automatic payment reminders that resend the invoice, but they are an impersonal, automated message and I haven’t had much luck with them. Sometimes they go to people’s junk folder for some unknown reason. Typically an email is the best way to do the nudge.

Business Person to Business Person

Many times I think that clients don’t associate the business owner title to our names as freelancers. We are labeled “writer.” I am a-okay with that label, but it is sometimes necessary to take charge and remind the client that this is not your hobby. It is your job, and you must be paid for it.

One of my clients had three unpaid invoices lingering in cyberspace. They weren’t for very large amounts individually, but they added up, and it was getting a bit ridiculous that I hadn’t been paid for any of them. I remembered that this client also runs a small business and uses FreshBooks for his invoices. I decided to use this to my advantage. I sent him a few gentle nudges with no response, and then in my last email, I got more formal and adopted a no-nonsense tone. I listed the three unpaid invoices by their numbers (invoice 000320) and noted the amount of each. If you want, you could even take this a step further and make note of how many days each invoice is overdue. This puts it in perspective for a fellow business owner. It’s a sort of slap in the face. It subtly asks, “Could you imagine if you had this many overdue invoices out? What would you do?” I ended the email by saying something along the lines of, “I will need to receive payment on all three of these invoices by month’s end to meet my monthly quota.” The thought process was that this sort of jargon would jar him awake, reminding him that I run a business, too. For extra effect, I combined this tactic with the one I’m about to share next and received payment about an hour later.

Line in the Sand

This tactic works best when combined with another because it’s really only a single line. Tack it onto the end of an email, and you let your client know you’re getting a bit annoyed and that you aren’t playing around anymore, without being impolite.

After reminding the client that there are outstanding payments, and reminding them what the payments are for, say something like, “I cannot provide any more work until this invoice is paid in full.” Of course, this line isn’t going to have much of an effect on a one-off client, but I’m sure that as a freelancer you have a good number of recurring clients, and this can work wonders. Sometimes recurring clients get a little too casual. They’ve paid you before, they provide you with steady work, they get comfortable with you, and they get lax on their payments. It happens. This is how to fix it. They’ve stuck with you for a reason. They don’t want to lose you. They need your services. They probably have already assigned you something else, and if they want it on time, they’ll realize they need to make that payment now.

This tactic works best if you get specific. Say something like, “I can’t get started on chapter seven until I’ve received payment for chapter five in full.”  Want to pack an even bigger punch? Let them know that you’ll have to push back the deadline on the next assignment if you don’t receive the payment for the overdue one by a certain date.

It’s a mild threat, but it isn’t impolite. It’s standard business practice. It gives you control over the situation, presents you as a put-together expert, and it works most of the time.

There is a last resort version of this tactic, too. Instead of saying you can’t work on the next assignment until you receive payment, you can let the client know that you won’t take on any more work for them in the future if you don’t receive payment by a certain date. This should be reserved for a client who has received many reminders of varying degrees of seriousness but who has completely ghosted you in response. I’ve had to do this, and I actually did end up severing the relationship.

Legal Threat

I’ve never had to get this far. Technically, that last client I mentioned, with whom I had to cut ties, could have justifiably been the recipient of this type of email (especially since this was the last straw in a pattern of late payments). However, her outstanding invoice was only $20 (a small part of a larger ongoing editing project) and she had mentioned some family medical issues to me before I started that last assignment for her, so I didn’t feel I needed to take it this far.

Please note that I have no personal experience with this tactic, as a result, but I have read many group threads involving pros who have done this, and I have read multiple freelancing books that discuss this (my favorite is Kelly James-Enger’s Writer for Hire).

If you’ve been ghosted by a client who has a large outstanding invoice (or invoices) and you’ve tried all other tactics, it’s time to get serious. Know that if things get this far, it means the end of your relationship with the client. You don’t need to deal with a client like that, and there will probably be too sour of a taste in both your mouths to move forward afterward. But you should still get paid for work completed.

Hopefully you have a contract of some sort, whether that be a long document full of legal jargon with dated signatures or a simple written-up agreement outlining the details of the project via email with the client’s written consent. Either will do just fine. Attach a copy to your email, remind them that you have a legally binding agreement detailing when and how much they are supposed to pay you and that you will have to seek legal action if you don’t receive payment by a specific date. That will often light a fire under that person’s heels.

(Want to learn more about when to use which type of contract? Read: To Contract or Not to Contract)

If not, get in touch with a local lawyer. Many will give you a free consultation to discuss what your options are. Hopefully, though, all you’ll need from that encounter is that person’s business card. Then, send an email saying you have been in discussions with [name the lawyer] at [name the firm], and he or she has agreed to take on your case should you not receive payment by X date. For extra oomph, say something like, “You can contact [lawyer’s name] at [lawyer’s phone number] if you wish.”

I’m betting you get a response. In fact, in all the discussions I’ve read, I’ve never seen anyone who actually had to hire the lawyer. The threat of a lawsuit usually gets you paid. If not, don’t be afraid to stand up for yourself, hire that lawyer, and make sure you get what you’re owed.

Final Thoughts

Most of the time, an overdue invoice is just a nuisance. Take it in stride and realize that it is just a part of being a business owner. Remember that you value your clients and give them the benefit of the doubt for as long as you can, but don’t be afraid to step up and take charge. This isn’t a fun after-school activity; this is your career. You work hard, and you should always be paid accordingly.

2 thoughts on “What to Do When Invoices Are Overdue

  1. clairejones323 says:

    Really good advice Hannah. My partner does freelance work (for lawyers) and is very good at keeping on top of things. I know of others in his line of work who have thousands and thousands outstanding. Once things start to slide it is very hard to recover – it requires more time and also the clients have pretty much forgotten about work done long ago. To my mind, getting paid should be a priority though; the chasing isn’t much fun but it just HAS to be done. I did a job through Freelancer once and I didn’t get paid, but I couldn’t work out how to chase it properly through that platform and I simply got no response from the client. Very frustrating.

    • IJustWanttoWrite says:

      Oh wow, that sucks. I signed up for Freelancer back when I started getting serious about freelancing, but I didn’t like the way things were set up. I didn’t ever really use it; maybe applied to two jobs tops. However, I was under the impression that they were like Upwork and would help make sure you got paid. I suppose not. They don’t let you talk directly to the client, everything goes through their platform, so I can see how it would be really difficult to follow up without the platform’s help. I definitely stepped up my “chasing” game this month, because at the end of May, I had like $850 outstanding, and because of that I hardly made it halfway to my monthly income goal. I decided I wasn’t going to deal with that again. Thanks for reading, Claire. I always enjoy reading your thoughts and insights on the post topic.

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