It is not entirely uncommon for clients to feel like they do not have to pay independent contractors in a timely manner, or at all in some cases. Unfortunately, there is no governmental agency dedicated towards helping small business owners and independent contractors collect the payments that clients owe them. If clients aren’t paying their bill, it is completely up to the contractor or business owner to do whatever needs to be done to get payment.
Even more unfortunate is that some clients are totally aware that collecting payment can be especially difficult for independent contractors, and they will use that knowledge to their advantage. Some clients will try every excuse, scheme, lie, or manipulation to get out of paying you for a completed project.
How to Demand Payment from a Client
There are a few keys to getting paid as an independent contractor. Hopefully, the client is just late on the payment and has no intention of stiffing you on the bill. Take the following steps and you will know what kind of client you are dealing with.
- Notice Letter – Often, businesses will send a letter reminding a client of a payment that is past due. Most independent contractors typically wait until the 60 or 90 day mark to send a notice letter. In some cases, the client may have just forgotten that they did not send payment, or in other cases, they themselves are having financial trouble and were simply waiting until the last minute. In either of these cases, a notice letter will usually prompt them to send payment shortly.
- Get Personal – if the notice letter does not seem to have helped, it may be time to up your game. Start calling the client. If the client is a big business, it is likely you will have to talk to people in the accounts payable department at first, but do not hesitate to call people in management or higher. If phone calls do not seem to be working either, make an appointment with someone at the company, someone high up the totem pole.
- Small Claims Lawsuit – Nobody wants it to have to come to this point, but if a client refuses to pay you what they owe, then filing a lawsuit against them may be the best option. If the amount you are owed is less than $10,000, you can take your complaint to the small claims court.
- Superior Claims Lawsuit – In cases where a client owes you more than $10,000, your lawsuit will be filed in the municipal court.
- Arbitration – Prior to filing a lawsuit, double check to see if there is an arbitration clause in your contract agreement with the client. If there is an arbitration clause, sometimes called a dispute resolution clause, then you may be required to file your complaint in arbitration instead of in court. This means that an arbitrator will oversee your case instead of a judge.