When a client doesn't pay an invoice, it's more than just annoying for freelancers. Of course, no one likes to run after their money, but beyond that, a large unpaid invoice can quickly put you in a bad place financially. Here you can find out what options you have to get your money. The legal aspects focus on Germany, but our general tips can be used anywhere.
Possible reasons for late payment by the client
You have issued an invoice after completing your services, but even after the payment deadline has passed, no money is received in your account. When a client doesn't pay, it can be for a number of reasons:
- The invoice has not arrived: Especially when sent by mail, but possibly also by email, it can happen that the client has not even received the invoice. Or possibly it arrived, but did not end up with the person responsible for the payment.
- The client has forgotten about the invoice: It has simply gone missing, but nothing stands in the way of payment.
- The client is not happy with the invoice: They are dissatisfied with the service or think that the invoice is too high. It is possible that they want to pay only part of the bill in this case.
- The client can’t pay: They currently or even generally have no money available to pay the invoice.
Depending on the situation, you have different chances of receiving your money quickly (or at all).
Here you can find out which mandatory information should be included on an invoice.
Client doesn’t pay: First steps
First of all, you should simply ask your contact person whether the invoice has perhaps been forgotten. However, wait until the payment deadline has passed. For example, you can call, email, or send a message via a service like Slack if you use it. It's best to stick to your regular communication channel and to word your request simply but firmly. For example, you can write or say:
- "I'm sure you're very busy at the moment, and it can happen quickly that an invoice goes missing. Can you please check if the transfer is already on its way?"
- "I just wanted to check if my invoice from xx.xx.xx has arrived. So far no payment has been received and maybe there were problems somewhere."
- "I'm sure you understand that as a freelancer I rely on invoices being paid on time. Can you tell me when I can expect the amount for my last invoice? Or give me the name of the responsible person I can check with?"
In the beginning, it's best to assume that the payment was simply forgotten. That way, you'll avoid getting too confrontational too quickly and putting the client on the spot. It is your right to remind the customer of the payment, but you should not jeopardize your good relationship with the client.
You may be able to tell by the reaction to your question what the reason for the lack of payment is. For example, if your contact tells you honestly that the financial situation is difficult, you can offer them to pay in installments. This way you will see at least part of the money sooner and the client will be happy about a trustful business relationship. And if they were dissatisfied with your performance, you might get the chance to make improvements.
Payment reminders as a freelancer
Your inquiry has not shown any success after several days? Then it's time for a payment reminder. You ask the client in writing to pay the invoice within a certain period of time. You should remain friendly and not threaten legal action at this point.
When sending a payment reminder, it is helpful to attach the invoice again. In this way, you make it very clear which invoice this is about, and you increase the chances that the client will pay directly.
If this is not successful, you can send a more urgent reminder (in German: Mahnung) and follow it up with one or two more reminders (if necessary). In Germany, you are also entitled to reminder charges and interest on arrears. Whether you want to make use of this depends, among other things, on whether you still want to protect the relationship with the client despite everything, or whether you don't care.
Good to know: You are not obliged to send a reminder or to stick to the often customary three reminders. Your client is automatically in default immediately if they have missed the payment deadline on the invoice. Nevertheless, reminders are advisable because they are a simple tool and show the increasing urgency.
In addition, if the client wants to continue hiring you, you can declare that you won't do any more tasks until the outstanding invoice is paid. This could give you leverage.
If nothing helps: lawyer, debt collection or dunning procedure
If the client still does not pay the invoice despite reminders, you have various options to enforce your claim (please note that they focus on the situation in Germany):
- Lawyer: A lawyer's letter shows the client that you are serious. In case of a later lawsuit, the lawyer can also support you. Keep in mind, however, that you will have to pay the lawyer. For example, in the case of insolvency of the client, you are stuck with these costs.
- Dunning procedure (Mahnverfahren): A judicial dunning procedure is relatively simple and inexpensive. You also do not have to appear in court. The dunning notice can be applied for online and will be served on the client. Ideally, they will then pay, but if this does not happen, you can apply for a writ of execution and court proceedings will ensue.
- Lawsuit: Instead of a dunning procedure, you can also file a lawsuit directly. However, this is much more complex and lengthy and you should consult a lawyer.
- Collection agency: With this method, another company comes into play that enforces your claim for you. With the classic debt collection route, you remain part of the process and pay a success commission to the company. Alternatively, there is the option of factoring, where you sell your claims to the company. You receive your money minus a lump sum for costs, and the company bears the risk of losing the money.
Which option makes sense for you depends on your preferences and your individual situation.
Avoiding payment delays
Of course, it's even better if you don't get into such a situation in the first place. With these tips, you can do your part to ensure that unpaid invoices don't become a problem for you:
- Make payment due date clear: Write the date the payment is due clearly on the invoice. This may help ensure the client keeps it.
- Know the company's payment procedures: Does a specific person need to sign off on invoices before they are paid? Are they to be addressed to accounting, the contact person, or both? Find out ahead of time, so you can do things right yourself and know where to follow up when in doubt.
- Use down payments: For a large project, you can agree on a down payment or partial payments with the client. In this way, you avoid being left high and dry for months on end. In addition, you will notice early on if the client has a poor payment record.
- Gather information: With a good network of fellow freelancers, you will be warned in time about difficult clients and can carefully consider whether you want to work with them.
9am supports you in all areas of your freelance life – including finances. Invoicing is quick and easy via the platform, and you always keep track of all open invoices. Automatic payment reminders make your life easier. And with the pre-financing option, you'll receive your money within 5 days – no matter when the client pays. More about 9am Payments.
