It was one of my biggest projects, and I was about to get paid a considerable amount of money for three months of work. Little did I know, a client invoice dispute was on the horizon.
I was excited when I hit send on the invoice. A week passed, there was no response, and my bank balance was approaching 0.
I waited another week, still nothing. I emailed the client to see what the problem was but didn’t hear back from him.
I waited another week, and by now, I was bothered. I didn’t want to borrow money to survive. But finally, I got a response. It wasn’t good news, though. The client wanted to clarify some of the fees in the invoice.
There was a misunderstanding about what had happened two months back, and it was too late to rectify because I had already spent my hours doing that work. The onus is on me to make sure the client has a great experience, so I waived that part of the invoice. It was still a lot of hard work for which I won’t receive anything.
The client then approved the invoice and says I’ll get paid soon. Luckily, the invoice was paid a month later after multiple follow-ups, but there have been far worse stories from friends of not being paid for long periods of time.
Naive as I was as a beginner, I didn’t imagine that the payment would take months to get. I never knew it would be that much back and forth.
I don’t freelance as often anymore, but I work with a lot of freelancers so I understand the problem from both sides.
As a client, I do face the problem of unclear communications. There have been a lot of situations in which invoices I’ve received have been unclear, and I tend to work with people who are extremely clear about the scope of the work and how much it will cost.
What does it mean to receive a “dispute”?
An invoice dispute is a disagreement between the customer and the freelancer on the value of services provided by the freelancer. The client basically doesn’t agree that the services you’ve provided are worth the quoted amount on the invoice, or you’ve wrongfully charged for something.
Like any case of miscommunication and disagreement, both sides will have to find a middle ground somewhere to solve the client invoice dispute. This typically falls on the freelancer to find the middle ground because sometimes, depending on the person, the client won’t be willing to budge on their end.
Ideally, it’s best to avoid clients that cause invoice disputes, but even really good clients can sometimes dispute invoices. Work on resolving the invoice while keeping the client relationship intact, especially with good clients. But in either way, your reputation is on the line and harming that can be more damaging than an invoice dispute.
Most common reasons you’d receive an invoice dispute
An invoice dispute from your client can arise for many reasons. Here are the most common ones you might encounter:
- The amount of time spent on the project isn’t accurate: your client may dispute the fact that something didn’t take you as long as you stated on the invoice.
- Scope of work isn’t accepted upon: there may have been added scope along the way, not included in an agreement.
- Price per hour or per deliverable isn’t agreed upon: the costs stated on your invoice are not accurate to the client.
- Unhappy with the work: the client isn’t willing to pay you for the work they received because it wasn’t up to their standards.
- The client is unhappy with the deliverable or project result: the results projected did not pan out, therefore the client disputes the invoice for it.
- The invoice may have landed in spam: the client might state they never got the invoice, or never saw it, therefore shouldn’t be charged a late fee, etc.
- They may just be procrastinating: simply put, the client isn’t making your invoice a priority.
- The finance department has a lengthy protocol to clear invoices: your invoice didn’t properly outline all deliverables/scope of work completed as they need it to.
How to handle a client invoice dispute
As with any disagreement, staying calm is key. You want to maintain the relationship and never lose your cool.
It’s surprisingly easy to start blowing up at a person and demand, “YOU PAY ME NOW, OR ELSE!!!” but the moment you do that, you stand to both tarnish your reputation and lower your chances of ever getting paid.
The first thing to do is try and jump on a call with the client and understand where they are coming from. You should also genuinely explain to them how much time and work has gone into their project. Most clients are willing to pay you as long as you’re patient and willing to hear them out.
If you need some help reaching out, here’s an email template I put together to help you get on a call with them.
Trust this finds you well.
I want to say again how much I enjoyed working on [project] together. I truly enjoyed the process, and it was a pleasure working with you.
I had sent an invoice on [date] for the project at the discussed fee of [invoice amount]. I would love to get on a call and explain the invoice to you if it’s unclear. You can reach me anytime at [phone number] to answer any questions you might have.
Thanks again, and I look forward to potentially working together again.
Get on the call and if you think their ask is reasonable, then make whatever changes they’ve asked for and send them a new invoice.
If you think it’s unreasonable and there is evidence that they’re budging from what they’ve agreed to, politely share the evidence with them. If the client is honest, then this should help them remember and they should accept to pay the invoice at this point.
If there is no evidence in the form of an email or contract, then sadly, you will have to agree with what the client says. You could negotiate a bit and try to come to an agreement that works for you both, but that’s the best you can do in this situation. If you’re stubborn in such a situation, you may end up with nothing by the end of the negotiations.
If they’re simply unresponsive to your emails, try following up with these email scripts that prove to work.
What do I do if the client doesn’t pay after all of this?
So you’ve reached a point of hopelessness with the client invoice dispute. By now, you’re okay with the idea of breaking ties with this client once they pay this invoice. Here are a few last-resort options to get the invoice paid.
1. Send a Legal Notice
The last thing a client wants to be dealing with is a legal notice for not paying an invoice. It would also scare them because this could have long-lasting damage to their reputation as well.
You could do this via email by asking your lawyer to send a notice, or you could use something like Lawgood or Williams and Harricks.
A legal notice will make the client take you more seriously, but it will also cause some strain on the relationship — so be aware (and ready) for all scenarios.
2. Hire a Collection Agency
There are collection agencies that help with exactly this sort of problem. Search for one in your area, and inquire about their services and if they could help you in your invoice dispute situation.
3. Get short term credit if the client intends to pay but needs time
There are services like Fundbox in which sets up a line of credit for the client to pay your invoice over time, but you get paid upfront. They do perform credit checks, so if your client does not qualify, then a service like this would not work.
If all else fails, cut ties
Cutting ties is the least stressful option, but it also means you don’t get paid. You do this only if the amount is insignificant to you, and you’ve exhausted all your resources to this point.
Here’s the harsh reality of the situation: if you’ve followed all the steps here, and the client still doesn’t pay, you’re probably not going to get paid. The reality is there’s very little you can do now that’ll get the money back.
If the client has their mind set on not paying, would you rather spend hours stressing or just let it go?
I’d choose mental peace, to be honest, but this isn’t true for everyone— especially if the amount means food on your table and rent for a few months. If you do choose to cut ties, be sure to do it as gracefully and peacefully as possible.
Just make sure you never get a client like that next time by isolating client characteristics. Did you find them on some random forum? If yes, don’t use that forum for gigs again. Use this scenario to learn from in the future, and check for the same red flags you’ve experienced.
Ways to avoid an invoice dispute in the future
“Prevention is the best form of medicine”
Ideally, the best way to handle invoice disputes is to not have them at all. Easier said than done, right?
Most freelancers with a lot of experience have a few standard things they do to avoid invoice disputes. The best way to nip this at the bud is by filtering the right type of clients to work with. Here are some pointers.
Get clients that you trust through referrals
Disputes can be avoided 99% of the time by finding quality clients and understanding the basics of freelancer invoicing. What was the common thread with whoever paid me on time as a freelancer? I knew all of them through a referral, or there was some trust established. Either because they were an acquaintance, a friend from high school, or a friend of a friend. So there was always an element of trust on both sides.
Most freelancers with experience get their clients through word of mouth. Because of this, these clients pay better and have lesser reasons to create disputes. Using a word of mouth marketing tool can help you track your leads and who you’re connecting with.
Once you find a good client, to avoid a future invoice dispute here are some tips:
Having all deliverables agreed upon via email is very important. Some people have bad long-term memories and can easily forget specific details. They aren’t trying to lie, they just don’t remember what they agreed upon. This is true for both the freelancer and the client. So having a clear communication trail from the start of the project is very important.
Having a proposal that clearly lays out the scope of work and a rough estimate of what it’s going to cost is very important. Letting the client know what is going to get done and how much it is going to cost at the start of the project is key. Though the scope may change a bit, it shouldn’t drastically differ from what was agreed upon.
Avoid scope creep
If a client wants to make major changes to the scope, stop working on anything. Agree upon the new scope, redo the proposal, share the new estimate and take things from there. Clients assume scope change won’t cost too much and have no clue about how much extra work it may cause. The onus is on you to explain to them what the new changes will cost them.
A basic contract that lays out the scope, payment terms and other terms and conditions helps avoid any issue in the future. It acts more as a deterrence for the client to diverge too much from the initial scope. In any case of disagreement, the contract can be the ultimate source of proof for agreed-upon services, rates and other terms.
Clear invoices with a detailed breakdown
An invoice is less confusing when everything is broken down in terms of how your time was spent, and what was delivered in that time. By doing so, the client has lesser reasons to dispute the invoice. Here are the key details you should have on your invoice, or check out the top invoice software that will automate this process for you.
A few freelancers I know take full payments upfront. The thinking is quite clear, it’s less hassle for the client and the freelancer to get done with the logistics of payments and invoices. Plus you don’t have to worry about the awkward moment later when you ask for payment. If there’s trust in the relationship, this should be easy for both parties to agree upon especially if the proposal is very clear. This also is an easy way to say no to scope creep. If not fully upfront, most clients are willing to pay at least a 50% deposit.
If the project is long term and requires an ongoing relationship across months, it’s best to get paid monthly. This gives the client a monthly breakdown of how you’re spending your time vs a lump sum being asked for months of work. It’s just easier to digest the former type of invoice. If a client has a problem with this, it may be a red flag and you can stop work until they clear the invoice. This way the disputed amount is much smaller if there is ever a disagreement.
Start off with a smaller scope of work
With new clients, where there is little trust, the best way to start is to have a mini project before you take up any larger engagement. This helps you understand the client better and also establishes more trust before you take on larger projects. A big benefit of this approach is that it helps you and the client see if both of you can collaborate effectively. Sometimes working styles may be very different and that can drive each other nuts. So it’s better to start the project off small and grow into larger projects with more established trust.
Communicate with clients about the invoice very clearly, make sure you agree upon a payment method and frequency at the start of the project and work with clients that you have some sort of anchor of trust. It’s better to avoid the situation than to be stuck with invoice disputes.
Without trust, it’s very hard to freelance. You need to have clients that you trust so that these kinds of situations don’t arise. Trust takes time to build, so find clients through channels you are familiar with and make sure you experiment (and do research) with a client before you go all in.
So to prevent invoice disputes in the future, build a good pipeline of clients through word of mouth. Once you do that make sure you have clear proposals and contracts when starting out, avoid scope creep during the project and get paid upfront or monthly. Have a proper trail of communications, which will be extremely helpful in case of a dispute. Do not wait until the end of the project to get paid.
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