Design Domination Podcast Episode #70: How to Deal With Late-Paying Clients (and How to Avoid Them in the Future)

Dealing with late-paying clients and collecting on late invoices is a huge pain. If clients often pay you late, it may be a symptom of a bigger issue. Find out how to deal with late-paying clients and how to avoid them in the future.

Dealing with late-paying clients and collecting on late invoices is a huge pain. It’s time consuming. It’s mentally draining. You feel like a nag. But, darn it, you need to be paid on time!

If clients pay you late often, it may be a sign that something needs to be fixed on your end. It could be a symptom of a bigger issue.

Stick around to understand why clients might pay late (a couple reasons may surprise you!), how you can help prevent clients from paying late, how to protect yourself from late-paying clients and how to deal with late-paying clients.

Why Clients Pay Late

Let’s look at a few reasons that clients might pay late.

Client misplaced the invoice.

A client might have inadvertently misplaced the email with the invoice or printed out the invoice and misplaced it. They might have sent it to their bookkeeper or their accounts payable department to pay it, and they overlooked it.

With the COVID situation, you may have found that some clients have been paying a bit later because they’ve had to change the way they work. Some things are more difficult for them to deal with since they haven’t been able to be at the office in their normal work environment. Their processes may have had to change. They may have distractions at home they didn’t have before.

Client is experiencing cash flow issues.

Another reason is that they may be experiencing cash flow issues. This could happen regardless of how much the invoice amount is, but it may be more likely to happen with larger invoices.

Client is having trouble getting the invoice approved.

The client may be having trouble getting the invoice approved. This is more likely to occur within larger companies or organizations, where they have multiple departments and have certain requirements for what needs to be included on an invoice. They might require PO numbers, for example, or your vendor ID number.

Your contact may not be the one to look for these details. They may just review the invoice amount and then forward your invoice to their accounting department to pay. That department may not review the invoice right away. Once they do, they might bounce it back, and that just eats up time.

Client may not be happy with your work.

The client may say they are unhappy with your work and ask that you redo a portion of it before they make a final payment. This could be a legitimate concern, so hear them out.

You or they may have failed to communicate an important piece of information. If it’s on you, then fix the work as needed. If it’s on them, ask them what needs to be corrected and advise if there will be an additional charge or not.

Client may be surprised by the invoice amount.

The client may be surprised by the invoice amount. Maybe that’s because you never gave them an estimate to begin with, or you never told them that the additional work they requested would cost more.

So  now they need to find out why and potentially justify that to a higher-up.

Client is showing disrespect.

Another reason is the client is showing disrespect. Now this is a major point, so please listen up.

Disrespect doesn’t always occur in the form of rudeness. Clients who don’t pay on time on a regular basis are showing disrespect for your process.

Now, I’m not referring to clients who’ve been affected by COVID, a major life event or health issue. I’m talking about the chronic late payers.

It took me many years—many years—of working with several particular clients—repeat offenders—to realize that was only one symptom of a problem in my business—and that is that I was putting up with bad clients.

I didn’t perceive them as bad clients right away, but there were other red flags and I ignored them:

  • entitlement,
  • expecting priority but never willing to pay for it,
  • completely disregarding my late fees on invoices,
  • often questioning my invoices, and
  • everything always being a rush, etc.

I know of other designers who’ve fired clients for far fewer infractions. But, again, I made up excuses:

  • “But they are so nice when I speak to them.”
  • “But they give me a lot of work.”
  • “But I like the type of work they give me.”
  • “But they’re my biggest client.”
  • “But what if I can’t find another client to replace them for a while?”

So I’ve heard it all, and I’ve said the same things myself.

Example 1

One client who paid late all the time felt entitled because of the amount of work he gave me. It was an OK amount—nothing to write home about. It really wasn’t that much.

One day, after a few years of being fed up with him and contemplating firing him, he called me with an ultimatum:

“If you insist I pay the couple dollars in late fees, then we’re done. Otherwise, I’ll ignore them and we can continue working together.”

That made me sick to my stomach. No way was I going to let this client bully me out of something that he had already agreed to and that I had the right to do. Plus, I had already overlooked the late fees so many times before and I was sick of chasing down payments.

I finally decided to assert myself against this bully and enforce the late fees my contracts had always mentioned—contractual terms who he had agreed to.

I stood firm and I said, “Well, then, we’re done.”

While it felt great to say that with such conviction on the phone, I was also really upset for a moment after hanging up. This was a client who had always praised my work, then suddenly he was telling me he’d find someone better and cheaper.

I think I was actually more upset with myself—that I had allowed the situation to have occurred in the first place—rather than being upset about losing the work, although I didn’t see it that way in that moment.

I realized later that had been his way of trying to control the situation, because I had taken the control from him. He had wanted me to just waive the late fees again, and because I didn’t, he wasn’t in control.

So he resorted to baseless insults. Like a bully!

But the joke was on him: several years later, his new website still wasn’t launched, and I quickly replaced him with awesome clients.

Never let a client tell you how to run your business!

Remember I said: usually there are other red flags, and late payments are just a symptom of a larger problem sometimes.

Example 2

For another client, for close to a decade, I worked every month on a large publication. They usually had two to three invoices outstanding at a time. I had agreed from the beginning to their net 60-day terms. They paid on time for the most part until the last year that I worked with them.

I sent several emails alerting my contact to the past due invoices, and she said that she’d pass it along to accounting.

I emailed again and then later emailed accounting directly. I didn’t hear back. So I called and left voicemails and I still didn’t hear back. I then sent invoices in the mail. I didn’t hear back.

At that point, it was almost 120 days, I think—maybe longer—since the date of one of these invoices. I was really worried!

Then I discovered that Dun and Bradstreet (at that time anyway, I don’t know if they do this anymore) had this service where they would send out what they called a “Duns Demand Letter” on your behalf for only $35 or so. Because it was so low cost, I did that before considering other avenues.

Well, that worked. I actually got a response in the form of a nasty call from the accountant telling me:

“You shouldn’t have done that and you should have known you would be paid at some point.”

I mean, really?!

At this point, I had more confidence, so I was not willing to put up with that kind of crap, despite the fact that they had been my biggest client and accounted for—I don’t know—a good 40% of my income at some point (that’s a whole ’nother podcast episode!).

So I told my contact that I was done after the issue I was working on and to find someone else from then on.

Again, there had been tons of red flags: being praised gratuitously by my first contact there (even telling me she told “everyone” how “great” I was) for having been able to lay out and edit a several hundred-page publication in two weeks’ time when I first took it on, only to then call me at my full-time job and yell at me and ask when she’d see a proof. Was it ready yet?

But it was like, wait… This was the same person who had complained the publication never got done on time in the past by someone else. This was the first time it was getting done on time, and she still wanted me to hurry up and get it done sooner than we had agreed and sooner than the set schedule.

My contacts after that point weren’t as qualified for the position in terms of skillset and experience, but the nice one who I actually enjoyed working with left after a short while, and the other one, after her, was like dealing with someone with amnesia on a daily basis.

I could think of a lot of unpleasant things I’d rather have done than to have continued dealing with that person.

OK, phew! That was a lot. Reliving these scenarios is a bit traumatic! Thankfully, I don’t have PTSD from them.

I’m also so glad to be in a completely different headspace now where these things don’t happen anymore, and I’ve had a completely different, more enjoyable business. It took a lot of difficult mindset changes to get there though.

How to Protect Yourself from Late-Paying Clients

There are several ways you can protect yourself from not being paid on time.

I want to give a disclaimer since I am mentioning contracts: I am not a lawyer and I don’t play one on TV, so be sure to seek legal advice from a legal professional for what you should do in your situation and in your jurisdiction.

Set expectations.

You want to set expectations in your work terms. So revisit your agreement.

Does it talk about:

  • late fees,
  • when payments are due,
  • what happens when payments are past due (meaning, collections, arbitration or court)?

If your contract doesn’t address these things, I suggest addressing those items and having a lawyer review your contract.

Now, for late fees, what you are allowed to charge varies by state. You usually can’t just slap a $50 late fee on something because you feel like it. In Maryland, I can charge 1.5% per month, which is 18% APR.

State if your invoices are due upon receipt, 10 days, 30 days, 60 days or whatever. Larger organizations may dictate these terms, unfortunately. You will have to decide if it’s worth it to deviate from your usual terms.

Retain your rights.

My contracts also state that the client does not get any reproduction rights or copyrights—whatever the situation may be—until they have paid in full. That means they can’t legally use the work until they’ve paid up.

Get money up front.

For all new clients and for most existing clients, I get 50% up front, with the balance due prior to providing the final PDF or print file or launching the website, whatever is the case.

Again, some larger organizations may not pay up front, but it may not be a risk. So you’d need to consider if you’re OK with that.

If new clients won’t agree to this, it’s a deal breaker for me. It’s about lowering my risk and about getting respect.

For clients I’ve worked with for years, I sometimes invoice at the end of the job if it’s not that large a fee.

But if it is a larger project fee, I will send another incremental invoice in the middle. So maybe 50% up front, 30% at a certain point in the process and 20% at completion.

Hey, nothing motivates you—or a client—like the requirement for you to have payment in hand before starting work or handing over final files.

By the way, I never base any payments on client acceptance or approval—of a design, proof, etc., because that is subjective, and they could potentially drag out the approval process so as to not pay.

Get money prior to delivery.

Like I said, earlier, ask for the final payment to be made prior to delivering final files or launching a website, especially for new clients.

If a client still needs 30 days to pay, you can sometimes still accommodate this by sending the invoice in advance, rather than waiting until the last moment.

Help Prevent Clients From Paying Late

Did you know you can actually help some clients pay on time? You can! There are actually several things that you can do to help prevent clients from paying late.

Provide due dates.

When you send an invoice, put a due date that aligns with your terms. Again, nothing motivates like a deadline.

Provide required information.

Provide whatever information the client requires for you to be paid.

That’s typically:

  • Date of the invoice
  • Business name or your name
  • Address
  • Contact information
  • Project name
  • Details about the work, potentially including the dates the work was performed
  • Your tax ID number (business EIN or personal SSN, for example)

They may also require you to include your vendor ID, if you’ve had to register as a vendor with their organization, and/or a PO number or a billing code.

Keep in mind that the invoice may be sent along to someone else, and they might only process payments on a certain day of the week or twice a month. The longer it takes for them to get the proper information, the more likely there is to be a delay.

Don’t surprise the client with the amount.

Another thing you can do is to not surprise the client with the amount. If the client added to the scope of the work in the middle of the job, you should always let them know right away about any additional costs.

If you wait until later and assume they will just understand that it’s going to cost more but they don’t know what that amount is, and they’re just going to be willing to pay, you could be in for trouble. They often, understandably, take your silence as meaning the estimate hasn’t changed.

Send invoices promptly.

Don’t wait to send an invoice, especially for a big job. Sometimes what happens is that, over time, you or the client forgets the details of all the work. This makes it more likely that they will question the invoice, unless you’ve given them an estimate and it ends up being the same cost.

Offer a discount for paying quickly.

You could offer 10%, let’s say, off the invoice if they pay within 10 days. Another great motivator.

Make it easy to pay.

Offer several payment methods and list them.

If you want them to pay via credit card, Zelle, bank transfer or PayPal, for example, provide that information on the invoice. The client may not assume your email address or phone number are the same ones used for those accounts.

Providing this information up front alleviates a string of emails asking for confirmation and you having to dig up the information and reply back to them.

If you offer bank transfer as an option, what I do is have a separate account just for payments, so that I am not giving out my main bank account information.

A lot of times, you’ll get paid faster if the client can just click a link and pay, rather than send a check in the mail (although I’m happy to take checks from clients, unless they need to be paid right away, because there are no fees).

A check in the mail is more work for some client. It’s something they have to remember to go back and do later.

If you need options for sending invoices online, consider:

There are quite a few others.

Provide a central location for invoices.

If you have a client who tends to misplace your invoices, consider giving them access to a client portal or Dropbox or Google Drive folder that gives them access to invoices all in one place. Then you don’t have to be bothered with resending them.

Ask them to acknowledge receipt.

If the client doesn’t acknowledge receipt of the invoice within a few days, send them a friendly email asking how they are and then “By the way, just wanted to make sure you got my invoice.”

Something might have come up. They have a life. Things happen. Act like a human but casually follow up with them.

Send out reminders.

For those clients who might need prompting, you could send out a friendly reminder before the invoice is due.

My project management system, Pancake, will allow me to do this, and it’s really awesome. I have custom email templates set up in the system. In the list of outstanding invoices, I can simply select one of the email templates—the one I have set as a courtesy reminder—and it gets sent out with the invoice that I select.

I might do this a week before it is due. Thankfully, I haven’t needed to use it in a long time.

Again, though, that’s if you feel like sending out reminders, because that is more work for you. Plus, if the late payments are just one sign of disrespect, then do you really want to continue dealing with that client?

How to Deal With Late-Paying Clients

All right. So what do you do when a client pays late?

Of course, there are exceptions to every rule, and, while I give out tough love advice to you—things that I wish I had done sooner than I did—I believe in having compassion when it’s warranted too.

If a client were to contact me and let me know beforehand they are going to have an issue paying on time and they want to negotiate terms or a payment schedule, I’d be more willing to consider that, especially if they have rarely paid late and this is an anomaly for them.

Enforce late fees.

Freelancers are still businesses, and businesses charge late fees, especially when the client has agreed to your terms and those are in there.

If you don’t enforce them, then the client may not care about paying on time now or in the future. They might see you as always crying wolf and not take you seriously.

Charging them even once can send a message.

Send the invoice again.

Email the invoice again, saying: “Payment of $______ is past due. Please remit within 5 business days/immediately to avoid paying late fees.“

Some clients will be apologetic. “Sorry. I didn’t realize! I’ll get it to you immediately.”

No problem. But how about the chronic late payers?

Being firm and clear is important. Give a deadline and state the consequences.

The tone of my emails go from friendly and firm to more serious in nature.

Follow up.

Follow up by phone, email and/or mail if you still have not received payment by that time. Always keep it professional, unassuming and unemotional.

In the subject line, put “second notice” or “third notice” or “final notice,” depending on which one it is. This stresses the urgency.

At some point when you send these invoices, send one that includes late fees and remind them of the terms they agreed to. My contracts say I retain rights until receiving payment in full, so I would also remind them of this and that if they are using the work, they are in violation of my contract.

When you calculate late fees, you go back to the date of the initial invoice. For example, for a $1,000 invoice that is 15 days past due and your terms are 30 days (that would me it’s been 45 days since the date of the invoice), I would calculate late fees by multiplying the invoice amount by the percentage I am allowed to charge per year, which is also 1.5% a month, dividing that by 365 (days in a year), multiplied by days late.

So I would multiply 1000 by 0.18 (APR), divide that by 365, multiply that by 45 to get $22.

Send a demand letter.

If they still don’t pay, then it’s time to bring out the big guns. They’ve already been warned.

Like I said, you could try something like a Duns Demand Letter, if they still offer that, contact a lawyer to write you a letter or contact a collections agency. This tells the client you mean business.

A lawyer will probably charge you a flat fee (not a big one), while a collections agency usually takes a percentage. However, you’ll get something out of it, hopefully, and you’ll have made a point.

That will also likely be the end the relationship, but that’s a good thing.

Go to court.

Court should be a last resort. Many freelancers won’t take it this far because of the effort or because maybe they don’t have a formal contract, which, from my understanding, is not a deal breaker for court.

There are some really bad clients out there who are betting you won’t take them up on this option too.

I hope you never experience that, and, thankfully, I haven’t, but for invoices over a certain amount, I would take it to court.

Check out the show notes for an article by Freelancers Union on how to file in small claims court.


I hope this has been helpful. I also hope you never have to experience any of these scenarios. I see way too many stories online from freelancers who start work before getting payment; do work then don’t get paid; do work, get praise, then don’t get the rest of the payment because the client suddenly doesn’t like the work just to try to get out of paying.

I can’t stand it! It doesn’t have to be like this, and you don’t have to be treated this way. But part of the responsibility lies with you to take preventative steps and to stand up for yourself.

Just because you’re a freelancer doesn’t mean you’re not a business. You are, so act like it.

If this episode helped you, I would love to hear from you. Please subscribe and share it with friends and on social media to help others avoid these scenarios.

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