A little common sense goes a long way in vetting customers.
Every case we see is different, but there a few rules of thumb that every independent contractor and small business should use with new clients:
1) Trust your gut with people. If something about a new client seems fishy, there's probably a reason. Don't be afraid to turn away work if you think they won't be a good client. A client who doesn’t pay is worse than no client at all because you’ll lose time you could have spent pitching and working for good, paying clients.
2) Follow The Google Rule. Do a quick Google search on a new client before you agree to work for them. If they're a company with a decent number of employees, you can learn a lot from employee reviews on glassdoor.com. Lots of the debtors we deal with are repeat offenders and there are posts on various scam alert sites about them. If those red flags come up, run away as fast as you can!
3) Use a contract. There are great, free platforms for that. A couple we like are hellobonsai.com and and.co. If your business uses lots of contracts, Lawgood is an amazing resource to have them reviewed.
4) Get payment upfront whenever possible. For an ongoing project, half of the first month's fee is reasonable. For a project with a set deliverable instead of a time-based one, get half of the total fee upfront.
5) Don't let accounts "go stale." If your customer falls behind on payments, first send them a friendly reminder, but don't hesitate to bring in the professionals if they don't quickly move to get you paid. In the debt collections world, accounts less than 60 days overdue are collected more than 80% of the time, but that goes down to around 50% at the 6 month mark and drops below 25% after a year. We have a whole post on this here.
6) Just use common sense. The fact that you're proactive enough to read this post probably means you already do. :)
Hopefully you’ll never need our service, but we're here if you do.
About Freelance Collection
Freelance Collection is the last resort resource for independent contractors and small businesses when their clients fail to pay. The best collection agencies and law firms don't want one-off business, but they work with us because we aggregate smaller accounts. We manage the entire collections process so our customers can focus on the work they love, and we're 100% contingency based so there's no upfront fee.