Unfortunately, it’s not uncommon for freelance transcriptionists to encounter clients who don’t pay their invoices on time. While some clients may genuinely forget or have temporary financial difficulties, others may intentionally avoid payment. In this article, I’ll share valuable tips on ensuring you get paid on time, as well as steps you can take if a client does not pay you as they should.
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What leads to payment delinquencies?
Clients fail to pay transcriptionists for various reasons, creating challenges for freelancers who rely on timely payments for their livelihood. By understanding the potential reasons why clients may not pay and taking proactive measures to address these issues, you can take steps to avoid non-payment and maintain healthy business relationships.
Some clients might have cash flow problems, making it challenging for them to pay invoices on time. You might consider working with these clients to establish payment terms that will work for both of you. In my case, all of my clients are government entities that only pay once a month. To ensure that I get paid on time, I give my clients 30 days to pay my invoices.
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In larger organizations, the person responsible for processing your invoices might not prioritize freelancer payments, leading to delays. And sometimes, your contact at the company needs to get invoices approved before payments will be sent. To avoid administrative delays like these, ask if your client needs a quote or purchase order before they sign your contract for transcription services. Getting payments to you approved in advance can prevent late payments.
Miscommunication or lack of clarity about payment terms and deadlines can lead to delayed payments as well. Make sure your contract for transcription services clearly states your rates, payment due dates, late fees, how invoices will be sent to the client, and how payments should be made. Also, include the name and contact information for the person at your client’s company who is responsible for paying your invoice.
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Clients may intentionally withhold payment if they are dissatisfied with the transcript, leading to disputes that delay payment. Perhaps the client did not like the way you formatted the transcript or they changed their mind about the way they wanted the transcript done. I once had a client who requested a clean verbatim transcript and after reading the document, decided she wanted strict verbatim. My contract with this client stated I would send my invoice upon completion of the project, so having to produce a second transcript delayed her payment to me.
Unfortunately, some clients may intentionally avoid paying invoices, hoping freelancers will give up or not pursue legal action. In a situation like this, a strong contract for transcription services, documentation of conversations with your client, and professionalism are key to letting clients like this know they cannot take advantage of you. Fortunately, there are several steps you can take to incentivize payments from clients who refuse to pay.
Can I prevent late and non-payments?
The best way to avoid non-payments and late payments is to be proactive. Have policies and procedures in place that protect you and enforce them! Including late fees in your contract does no good if you never actually charge those fees to late-paying clients. Implementing your policies and procedures shows your professionalism, making it less likely that a bad client will try to take advantage of you by refusing to pay. And be sure to maintain professionalism and good communication throughout the transcription project. Building a good rapport with clients can lead to smoother payment processes.
First and foremost, always, always, always require your clients to sign a well-written contract outlining the scope of work, transcription rates, payment terms, fees, and deadlines. This helps protect both parties and ensures everyone is on the same page. Your contract should clearly outline payment methods, payment schedules, and any late fees for overdue payments. I use this contract template because it’s written by an attorney dedicated to helping freelancers, it’s affordable and easy to customize.
For larger transcription projects, consider breaking down payments into milestones or accepting partial payments upfront to mitigate the risk of non-payment. I know one transcriptionist who charges 25% upfront, sends a thumbnail of the finished transcript, and once the work shown in the thumbnail is approved, she sends the completed transcript with an invoice for the remaining 75%. Other transcriptionists bill monthly for long-term projects.
Second, create professional invoices that include all necessary details such as your contact information, the client’s details, a project description, itemized charges, the payment due date, and accepted payment methods. Your invoices could also include a note reminding the client of the late fees they’ll incur if the invoice is not paid on time. Keep track of all invoices and payments using accounting software as well. This helps monitor payment statuses and identify any outstanding invoices so that you can respond right away.
Do not hesitate to follow up on overdue payments promptly and politely. Sometimes invoices can slip through the cracks, and a friendly reminder can prompt clients to settle their dues. A good invoicing software will automatically send payment reminders to clients for you. Waiting to reach out to a late paying clients only further delays the payment and may be seen as unprofessional. Start by sending a polite follow-up email or making a phone call to inquire about the status of the payment. Sometimes, invoices can get lost or overlooked, so it’s essential to give the client the benefit of the doubt initially.
What can I do if I don’t get paid?
Sometimes, you can do everything right, be as proactive as possible, and the client still won’t pay. Here are several things you can try to get paid:
1. Resend the Invoice: If the initial invoice was overlooked, resend it to the client with a friendly reminder. Include a note mentioning that the invoice might have been missed and that you’d appreciate prompt payment. You could also remind the client of the payment terms and any late fees they could incur.
2. Charge Late Payment Fees: If you included late payment terms in your contract, add those fees to the invoice the day after the payment was due. Also, be sure to mention the consequences of continued non-payment. I stop doing transcription work for a client the moment a payment is late, and I remind them that no more transcripts will be produced until they are paid in full. Do not hesitate to enforce your contract or you may end up doing quite a bit of work for free if the client never pays.
3. Escalate Communication: If the client still hasn’t responded or paid after follow-ups, escalate your communication. Send a more formal email outlining the situation, including details of the work completed, the agreed payment terms, and the outstanding amount. You can always copy your client’s boss on the email as well. Basically, start sending your requests for payment up the chain of command that your client is subject to. If emails and phone calls don’t get you anywhere, you could also file a complaint with the Better Business Bureau.
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4. Take Legal Action: If all attempts to resolve the issue amicably fail, consider legal action as a last resort. This could involve filing a claim in small claims court, especially if the amount owed falls within the court’s jurisdiction. However, this will cost you time and money. If you decide to file a lawsuit, be sure to document all communications and evidence of work completed.
You could consider hiring a debt collector as well. This is also referred to as selling your debt. A debt collector will do all of the work for you, so this won’t take up any of your precious time. However, the debt collector will keep around 50% of the amount owed as payment.
5. Use Freelancer-Specific Programs: Depending on your location, there may be freelance-specific programs or resources available to help transcriptionists recover unpaid invoices without resorting to legal action. Explore these options as they may offer mediation or assistance in recovering payments. If your client is located in New York, for example, you can file a complaint with the Freelancers Union who will help navigate the state’s Freelancing Isn’t Free Act.
6. Protect Future Income: If the client remains uncooperative or repeatedly fails to pay, consider ending your working relationship to avoid further unpaid work. My contract for transcription services states that work stops when invoices are not paid in full and on time. As soon as my client is paid in full, I’ll begin working on their transcripts again. Letting go of non-paying clients frees up your time to create transcripts for clients who do pay. You could also implement stricter payment terms with clients to prevent similar situations.
7. Take Advantage of Tax Strategies: If you’ve given up on trying to collect or you’ve decided that collection efforts are not worth your time, you can write off the bad debt as a business expense. (If you do your own bookkeeping, your journal entry will be a debit to the bad debt expense account and a credit to the accounts receivable account.) Additionally, if your non-paying client owes you $600 or more, you could send them a 1099-C Cancellation of Debt which would essentially require your client to pay taxes on the amount owed.
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Sometimes, your clients just need a reminder. Other times, you have to teach clients that you don’t work for free. Either way, maintaining professionalism, implementing protective policies and procedures, and enforcing a well-written contract are essential to ensuring your clients pay on time. Do you have experience with a late or non-paying client? Share your story in the comment section below.
