Freelancers, do you feel guilty asking for overdue payments?

Do you often feel anxious when you have to call a client about a late payment? You’re not alone…  Tom Valcanis shares his top tips to help you change your money mindset so you can get paid on time.

One of the bestselling self-help books of all time is When I Say No, I Feel Guilty by Manuel J. Smith. It helps soothe anxieties around “people pleasing” and encourages healthy boundary setting.

Above all, it teaches people who feel bad saying “no” to people in fear of being disliked.

However, as freelancers, we hear “no” a lot. We pitch clients, call up leads, and all but get ready to pounce on new work until we hear a “thanks but no thanks”, a “not right now”, or the good ol’ “we’ll keep you in mind for future projects.”

How do we feel when we ask for what we’re entitled to, though?

I’m talking of course, about that all-too-persistent dread: overdue invoices.

I know many of us – me included – feel a gut punch of nervousness insisting that delinquent clients make me whole. I am definitely not alone.

With interest rates rising and inflation still running amok, we are all but in the grips of an economic downturn (not quite the “R” word just yet!) As far back as 2016, Australian businesses were ranked among the worst in the world for paying invoices on time. The average back then was 26.4 days overdue. In a 2019 study by Xero, large businesses pay 53% of invoices by an average of 23 days overdue.

For a soloist with their own bills to pay, this is an eternity.

Of course, our accounting apps are brimming with beloved clients who pay early. Then we have some that pay more or less just on time. After a while, things go south. Their payments become a little overdue, then very overdue. A once-sweet relationship turns sour – something we’re loathed to do by constantly “nagging” for payment. Do we need to blow up inboxes or voicemail to get our needs met, though?

Though this isn’t a fully fledged book, we need to reconsider our mindset around asking for what we’re owed. “When I Ask For What I’m Owed, I Feel Guilty,” perhaps.

Many soloists do indeed feel guilty asking for what’s owed – and at a certain point, they may want to go in all guns blazing and seize their prize. This could mean sending letters of demand, threats of default, and launching legal challenges.

The overdue payment issues

Professional negotiator Nicole Davidson of Nicole Davidson Negotiation says our mindset shouldn’t be one of shame or anger, but more of curiosity.

“A lot of people talk themselves out of a negotiation before it even starts,” she says. “The mindset you need to bring is curiosity. If it’s a long-standing relationship and you’re suddenly not getting paid, I’d be curious. ‘What’s changed?’ At that point, you need to have a conversation with them. ‘I notice you usually pay by X date but there’s a change in the pattern. I’m curious to what’s happening.’ Are they not paying because they don’t feel like they’re getting value anymore? Is it due to cash flow issues? Perhaps they’ve changed accounting software. You have to understand why you aren’t getting paid; that’s the first step.”

Remember – a business relationship is still an interpersonal relationship and deserves a similar approach.

“It’s really important to actually listen to the client, to understand why this is a problem for them, where they’re coming from,” Nicole says. “And before you get in it, it’s easy to just go straight into defensive mode. Before you do that, actually listen to them completely understand their perspective and why they’ve got an issue with it before you go there. At a psychological level, if we’ve actually done them the courtesy of listening to them and being willing to acknowledge their perspective – not agreeing with it but acknowledging it – we can work towards a solution.”

With all that in mind, you still need to have a firm hand. Former accounts manager for an accountancy and copywriter at Web Content Cube Melinda Torr says that “you need to be compassionate and have empathy without being a pushover.”

“When I was working for the accounting firm, we had the usuals who just didn’t want to pay, and they’d lay a guilt trip on you. You need to stick to your processes. These might be adding interest to overdue invoices. You may want to outsource your accounts person. You may even invent an accounts person with a separate email, so they’re not dealing with ‘you’, but someone separate to you.”

Having someone else be the bad guy, even if it is just a fictitious “accounts@” email can push the mental burden off a debtor being “upset” with you personally and instead have them deal strictly with “the business.”

Even then, it may not be enough.

Sometimes, you just gotta call the cavalry – Or do you?

Having guardrails in place when it comes to asking for what you’re owed can help bolster your position – you’re no longer just one soloist tilting at windmills. Signing up for CreditorWatch or having debt collectors and lawyers on standby can feel empowering, but it turns the situation adversarial very quickly.

“Some people will pay up because they got a letter from a lawyer, but that relationship is now damaged,” Nicole says. “You have to sometimes accept the Best Alternative to a Negotiated Agreement, or a BATNA. Can you negotiate a certain payment date? Can you work out a payment plan? Going to court is not only time-consuming, but expensive.”

Nicole says that freelancers can approach their State small business commissioner, which can offer low-cost mediation services, where two parties in conflict meet with a qualified mediator to resolve the dispute.

“Going to mediation shows you’re serious and you want to resolve the issue. A mediator will facilitate a conversation instead of you trying to force something. People will immediately get their back up if they’re forced into a corner. I had one client trying to chase up twenty or thirty thousand dollars from someone that owed them. Instead of going to court, they went to the commissioner. The negotiation went so well he got paid in full.”

Always set boundaries

Just like the namesake book, setting up boundaries and expectations is vital to doing good business.

You have to be really clear and upfront with expectations about what the client is going to get and what you can expect from them. You may know your product or service, but they may be building it up into something way bigger. Taking the time to do that can help avoid conflicts instead of trying to solve them later.

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