chapter 9

Getting Paid: How to Prevent (and Handle) Client Payment Problems

Getting Paid: How to Prevent (and Handle) Client Payment Problems

The growth potential of the web design and development industry is exponential, the work is stimulating and challenging, and the client base is potentially endless — what’s not to love? We realized very early on that no matter your talent or how hard you work, a creative studio’s success or failure depends primarily on its ability to build and maintain healthy, mutually beneficial client relationships, with clear expectations on both sides.

Easier said than done, right?

Luckily for us, our roots in the corporate world (and the counsel of an incredibly talented intellectual property lawyer) have accustomed us to working with lengthy legal contracts for each project. We benefitted from strong counsel and solid advice from the onset, which we recognize as an absolute key to our success and rapid growth.

If you’re relatively new to this industry, the pitching and invoicing part of the job might seem intimidating, and you might be tempted to rush through it as fast as possible so you can move on to the fun, creative part. As we’ve previously discussed in this guide, if you keep that mindset, you’re setting very serious limits on your potential. Boosting your business savvy is vital, not only for protecting yourself and your work, but for the ultimate growth and sustainability of your business.

Boosting your business savvy is vital, not only for protecting yourself and your work, but for the ultimate growth and sustainability of your business.

This chapter offers valuable insight and tools you need to cultivate healthy client relationships, by teaching you how to avoid the common pitfalls and red flags that can steer these relationships off course. It will also prepare you to navigate any payment problems you might encounter with composure and professionalism.

Before we dive in, it’s important to remember that we’re part of something truly amazing and brand new. We’re a voyaging generation of developers, designers, and engineers in a young industry with lots of possibilities and very few established rules to lead the way. Finding a solid foothold in this world means giving yourself a lot of breathing room to discover what works best for you.

It takes awhile to get it right. The key? Use what you already have — then build on it. Use your knowledge, your common sense, your intuition, your deep consideration, and your experience, as well as the experience and advice of peers in your industry. We are fortunate to be a part of an online community that is so supportive and open — take full advantage of it!

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From pricing projects to invoicing clients, this comprehensive guide will show you everything you need to know to drive sales, get paid, and ensure your finances are in order so your agency is as profitable as it can be.

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Refining your focus and recognizing your worth

If we were to boil the message of this chapter down to one sentence, it would be this: to avoid payment problems and maximize your earning power, simply take on projects that are a good fit, and deliver great work. It sounds so simple, but that crucial first step — finding that “good fit” for yourself and your business — can take a lot of trial and error.

It sounds so simple, but that crucial first step — finding that “good fit” for yourself and your business — can take a lot of trial and error.

Remember the rules of economics: businesses can compete in one of two ways — on price or exclusivity. In web design and development, the price game is a tough battle to win. If you try to grow your business by underbidding other studios, there’s a high likelihood that you’ll be seen as the “budget option,” and attract clients who are less concerned with quality than they are with price. Don’t be surprised if all of a sudden you struggle to find work as more and more budget options pop up. If you’re looking for quick cash or to build your portfolio, you might get lucky for a while by offering an aggressively competitive rate, but this should never be viewed as a long-term strategy. Now that more and more work is being outsourced, being the cheapest option and staying solvent will soon enough be virtually impossible.

The better solution? Compete on exclusivity. As mentioned in previous chapters, you should find a niche, stick to it, and become the very best at it. Don’t try to be a jack-of-all-trades in such an all-encompassing industry; draw on your other interests to light the way. Do you like fashion? Travel? Design? Take your passion and experience outside of the job, and use it to be the go-to studio for that industry. You’ll be even more committed to your work, have better insight to offer your clients, and the refined focus will also narrow your field of competitors.

When we faced this question ourselves, we chose to compete on exclusivity within the high-end lifestyle category and it has most definitely paid off. We’ve established a reputation for delivering great work within this sphere, and as a result, one of our major sources of new work is referrals. When new technologies come out that are relevant to our client base, we are the first to learn and implement. Because we have refined our creative focus to a world we’re passionate and knowledgeable about, we spend our time pushing creative and engineering boundaries, rather than playing catch-up with a less familiar industry. Clients trust us because they see themselves in the aesthetics and execution of our work.

So you’ve found your niche, you’ve got interest from a new client, and now it’s time for the money talk. Your business depends on satisfied clients, and thrives on happy ones, so in order to explain your value, it’s vital that you’re fully aware of it yourself. When you sign on a new client, you enter into a partnership that should be based on mutual respect. Remember that your clients have a business too, which also depends on the success of this project. If you ever need a little confidence boost, remember this: just as they are offering you an opportunity to work on their project, you offer them an opportunity to take their business to a higher level, access a wider customer base, and increase their sales.

Understandably, your client is going to want to get as much as possible out of their budget, but there’s no reason why defending your prices should make you lose sleep at night. When you present them with a quote, expect a few questions. Be ready to stand behind your pricing, and explain how you got to that number. Nothing in your proposal should be a surprise. If you are fair and reasonable in pricing your time, intellectual labor, and knowledge based on the deliverables they are requesting, you should be confident and firm in the defense of your rate. Resentment can arise in your working relationship if you feel that your labor isn’t being valued or properly compensated, so be assertive about your worth from the very beginning to prevent this.

Good communication is key — remember this is a new industry, and an enigma to the vast majority of people. The amount of work it takes to build something seemingly simple will not always be apparent to your client, so if they question your prices or process, first assume they are simply inexperienced in this area. Many genuinely don’t know what a project entails, and the level of difficulty for something seemingly minor. Try to explain, in human language, as honestly as you can. Never take the approach that the client is trying to stiff you. In most cases, a thoughtful conversation can clear up any misunderstanding.

Have a fisherman’s eye

To us, having a fisherman’s eye means knowing when the catch is just right, and to always watch for storms brewing ahead.

Even when you’ve found a client and had a promising pitch meeting, there are unfortunately many factors that could still make this project a bad fit. Have the fisherman’s eye, and look out for the good catches and troubled waters when you move forward with a new client. If your intuition is ringing, and you see any red flags before the project has even begun, make sure to address them immediately and in complete transparency. If the problem is greater than a simple misunderstanding and you cannot come to an agreement, you should politely decline the project to save yourself a lot of trouble down the road.

If the problem is greater than a simple misunderstanding and you cannot come to an agreement, you should politely decline the project to save yourself a lot of trouble down the road.

If it comes to your attention during the pitch process that your client had a bad experience with their website or past development team, it’s crucial to find out why. After all, how can you guarantee you’ll do a better job if you have no clue where the previous collaborators fell short? A stormy relationship with former designers can be a potential warning sign, but not always. Sometimes the fault falls on the previous studio — perhaps they were not equipped to take on the work in the first place; they didn’t understand the project details; it wasn’t aesthetically a good match; or the team they were working with changed mid-project and the client felt cast off.

This possible warning sign may actually become an opportunity to further strengthen your chance of getting the project. Occasionally, we hear from clients that the work their last designers delivered wasn’t what they were expecting. This provides an opportunity for us to emphasize our assets; we start every project with an in-depth creative brief to achieve consensus on the aesthetic, and we keep every aspect of the project in-house to avoid miscommunications.

This is the best case scenario, but unfortunately, you might also discover the problem was with the client. If they start bashing another team or freelancer, or mention they are currently in a heated legal battle, it’s probably not a good sign.

Walking away may result in a waste of efforts, but if your rapport is poor, it diminishes your ability to deliver your best work. It’s important to remember that passion generates the best work, and creates the absolute ideal working environment. It is far more difficult to force yourself to care about a brand’s message if it’s in conflict with your ideology or interests.

Control the creep

You won’t have to be in this industry for very long before you encounter the term “scope creep.” Scope creep refers to subtle changes made to a project that go beyond the agreed-upon scope, such as an increase in the number of deliverables or a condensed timeframe. Scope creep is enemy number one of your workflow, profitability, and sanity, so it’s crucial to begin each project with a very concrete definition of your terms and their expectations.

The details of the project, including what you will be delivering as well as how many revisions a client receives and when, should be clearly outlined and agreed upon before starting the project. During the project, when the time comes for sharing work and eliciting feedback from your client, guide them in doing so. Everyone involved will benefit from a shared understanding of the project scope, as well as what type of feedback is most valuable.

Be realistic, and remember to respect yourself and your client by drawing boundaries for what can and cannot be accomplished within the budget and timeframe. You can’t assume your client will know where the boundaries are if they are not clearly defined, and you can’t assume they will understand your design process unless you take the time to walk them through it. What you can assume is that both you and your client want the project to be a success. As we mentioned previously, the vast majority of the public is unaware of the nuances of this industry, and they simply need to be educated.

If a client requests something which falls outside your scope once the project is underway, let them know immediately. Sometimes you can meet them halfway with relatively minimal effort, and sometimes their request will require an additional quote. If it will cost more, explain why. It’s your job to help them make the right choice, ensuring that they understand what additional resources are needed to achieve their request, what value it adds for them, and if there are any alternatives. Most of all, make sure you have their approval on any additional fees before proceeding with the work. No one likes a surprise bill in the mail!

It’s your job to help them make the right choice, ensuring that they understand what additional resources are needed to achieve their request, what value it adds for them, and if there are any alternatives.

If you have already fairly outlined what will be accomplished, keep your word and remain professional if they try to pile on additional work. This isn’t a charity — stay firm. Work it out with the client, and see if there are any reasonable solutions or compromises you can offer to make them happy. The only way to truly avoid the perils of scope creep is to ensure that you clearly define all deliverables and prices before you begin the project.

Knowing the right solutions

So you’ve perfected your pitch, set a reasonable fee, come to an agreement, and now the client is wanting to alter the agreed-upon terms of payment. If you already shook hands on one thing and they are requesting further changes, take a moment to reassess. Most of these situations can be resolved with a simple and clear conversation. Suggest  walking through the project details together again, answer any questions that arise, and reiterate how the proposed project fits their needs and their budget — that way, everyone involved is confidently on the same page.

Doesn’t seem to be as simple as this to solve? Consider what the best next step is. If you put a lot of time into a pitch or proposal, it can be difficult to walk away, but it’s better to take a step back and decide if it’s worth it to take the chance if you see any warning signs in the early stages. As always, clear lines of communication are crucial to keeping your client relationships on track.

If you’re interested enough in their project to give them a discount on the fee you agreed on, be sure to scale back on the deliverables as well. As mentioned before, it’s about respect, and you should demand the same amount of respect from the client as you give them. If there is still an air of negotiation about payment despite your best efforts, hold your ground and intellectual property until they hold up their end of the bargain. This isn’t the easiest scenario to navigate for even the most seasoned entrepreneurs, but we would advise you to stick to your guns. You know your worth, you know how much your time costs, and there is no reason for you to compromise on that.

It’s about respect, and you should demand the same amount of respect from the client as you give them.

What about a situation where the client, for whatever reason, is unsatisfied with the work and unwilling to pay the final invoice? You must remember one seemingly obvious but crucial detail: your time is non-refundable. They requested your services and you provided the agreed-upon deliverables in a timely manner — the rest is subjective, and never warrants a refund or refusal of final payment. There are certainly strategies that can be employed earlier in the game to prevent this scenario. Surprise reveals are for game shows, and your client should not be seeing your work for the first time after it’s already completed. You should keep your client in the know at all times. Have them review your work several times throughout the design process, and elicit their feedback.

As important as it is to keep in mind how to handle these situations with professionalism and respect, the most valuable piece of advice is to limit the possibilities of them ever occurring. The only way to do this is, again, with clear communication and a contract. A contract is legally binding, keeps both parties liable and responsible, and must be signed before any work begins.

Your contract with your client should unambiguously outline the deliverables and payment schedules, and detail the execution of everything you discussed in the pitch phase. We like to include an overview of our process in our contracts to create transparency, and give our client a firm grasp on the value of our services. Additionally, we stipulate that we only grant license to use the intellectual property created during a project once the client has paid in full. This is very fair, and ensures that both teams share the responsibility of the project’s success. Be sure to ask if they have any questions or need clarification, and then ask again. It may not be the sexiest part of the job, but a good contract ensures that you and your client start on the same page. It’s worth putting in the time to get it right.

For anyone that finds themselves with a client refusing to pay despite your best efforts to remedy the situation, stand up for yourself. Legal action should be a last resort, but if it comes to that, do not hesitate.

For anyone that finds themselves with a client refusing to pay despite your best efforts to remedy the situation, stand up for yourself.

An absurdly high percentage of freelancers have experienced non-payment at some time in their career. This is not okay. If you have done the work, you deserve to get paid. Whether you’re working for another individual or a corporation, you should be compensated fairly. Plan ahead, make sure you’re taking on the right project, and make sure you have agreed on a scope of work. If they default on payment, take legal action. In October 2016, New York City became the first in the nation to legally protect freelancers from nonpayment, allowing them to file complaints against late or non-paying clients with the Department of Labor Standards, and levying fees on delinquent clients. Hopefully more states and countries will follow New York’s lead.

TL;DR: Be clear, be confident

Yes, payment problems can be challenging, but luckily they’re also relatively easy to avoid. If you establish clear lines of communication, set reasonable rates for your experience level, stand by your boundaries, and keep your client informed throughout the design process, you’ll be able to avoid many of the pitfalls that can result in nonpayment. Always remember that ours is a service industry, and successful businesses run on referrals. If it’s your work or demeanor that is the recurring issue, you first need to work on yourself and your approach to become the kind of business your clients are eager to recommend to their peers.

As long as you carry a strong belief in what you do, what you create, and what you’re worth, and you hold a healthy amount of respect for the people that pay your bills, navigating these issues is actually quite simple. Be honest — tell it like it is, and don’t be afraid to raise your hand if you see something fishy. Use your wealth of knowledge and experience to anticipate problems before they happen, and approach any issues that arise with clarity, professionalism, and confidence.

About the author

Sara Mote is the Creative Director and Co-Founder of Mote, a design-driven software engineering studio based in Venice, California. Always exploring the intersection of art and science, she harnesses the experience and talent of her team to create innovative solutions, through a tested and proven process. Mote partners with brands ranging from disruptive startups, to Fortune 500 companies.

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