One of the challenges of working as an independent consultant is that you will meet bad clients. Some clients will probably look like they are from hell with a specific mission to make your life as hard as possible. Knowing what to do with clients who refuse to settle your well-written independent consultant invoice is something worth learning. If you run a small consultancy, chances are that some of your clients could be planning to refuse to pay what they owe you. It’s important to be ready to face such clients head-on.
Before proceeding, learn how to prepare an independent consultant invoice first.
Now that you know how to prepare an invoice and what it looks like, you are ready to proceed with the lesson. The first thing to do is standardizing business practices. At no time should you commence any project without a contract. Prepare a new contract for each client. The contract should be as detailed as possible. A well-written contract has specific features. The contract indicates terms and methods of payment. It indicates dates when clients should settle their invoices too. It leaves no room for defaulting. In summary, such a contract must include:
a) description of the project/work
b) payment information
c) payment schedule
Nothing works better or more effectively than taking action. Send the independent consultant invoice out to the clients on timely. Billing clients on time is a sign of professionalism. Do not postpone the need for addressing non-payments. Tackle such issues right away. Sending a notice of late payment to the clients letting them know of any legal action that you will follow up with is a highly encouraged step. You have several legal options of following up non-payment. Some of these are:
§ small claims court
§ collection agencies
Know Your Rights
Knowing your rights is as important as anything else you will ever do. Additionally, be ready with all the legal resources you need to make the situation better for your consultancy. Legal resources could mean keeping a lawyer in retainer – if you can afford one. Alternatively, you could keep a few referrals nearby for when you need legal representation. Familiarize yourself with lawyers who have a reputation of specializing in contracts. Since rights vary depending on jurisdiction, work with local lawyers.
Many independent consultants have benefited greatly by joining professional organizations or associations catering for their particular trades. It’s worth mentioning that many consultants go through similar problems. The group you join might be full of members who have dealt with clients who refuse to settle independent consultant invoices. Better yet, the members might know 1-2 places where excellent legal assistance is offered. Moreover, independent consultants can now file complaints to the Department of Labor under the Payment Protection Act.
Every other action you take should only arise if you already examined the contract and resent the independent consultant invoice. The contract should explicitly state when you expect payment from the client. It should also mention the fees the client would be required to pay for late payment or settlement of the invoice. Feel free to send the invoice again a third or fourth time. Eventually, let the client know that you’re about to take the matter to the next level for quick resolution.
Remember, it’s your right to get paid for services rendered through your independent consultancy. Do not allow clients to intimidate you in any way or overstay with the payment. A law that protects all independent consultants against non-paying clients is now in place. However, do not ignore the fact signing a contract makes your case more likely to be settled in your favor. Avoid clients who ask you to do work for them without signing any contract. A written contract is better in this case.