Whoa, am I glad I waited a week to write this post. (Actually, I’m writing it in bits and pieces while trying to hit a novel deadline and an editing deadline. I love how busy I am in this new world even though I occasionally bitch about it.)
When I wrote my “Mush Brain” post last week, I knew I needed a clear head to write this post. Because I don’t want you to misunderstand me and get overzealous.
When writers get overzealous, they sometimes burn bridges that don’t need to be burned. I saw that last December as one writer who, in trying to deliberately burn a bridge, burned at least five other bridges, probably unknowingly. Editors, writers, and other publishers do work with each other and talk to each other, so realize that when you burn one bridge, you often torch bridges you can’t even see.
All of the tools I discuss in this post can lead to bridge burning if handled incorrectly. You should not burn bridges except in an extreme situation—no matter how much money someone owes you.
So do not misuse the tools I’m listing here.
Warning made. I’ll explain more about in a post next week on burning bridges.
In the last Freelance Scramble post, I discussed the worst case scenario for a freelancer: when no one pays and it looks like no one will pay for some time. If you haven’t been following these posts, then start with the first one, and continue to the next business post. They do build on each other.
Before I go too deep into this post, let me address two of the misconceptions I saw over and over again in online discussions of Freelance Scramble: The Unthinkable.
First, a lot of people say my earnings numbers when discussing freelancing are unreasonably high. No, sorry. Successful freelancers often work in those numbers. I know hundreds of writers who do. And there’s no point in discussing American taxes at the lower earnings numbers either, because if you have a good accountant and you know what you’re doing, you won’t run into major tax issues when you earn $20,000 to $30,000 freelancing. It’s when you get to the higher numbers that taxes should become a major issue.
Second, a number of people said that they would never become freelancers without having a day job in reserve. Not only is that silly, it also shows that the person making the comment should never freelance.
Think of this way: do you have another day job lined up in case your current day job goes belly-up? Because that’s the attitude you’re expressing about freelancing.
Day jobs are no more secure than freelancing. If you believe your day job is secure, then you are deluding yourself. If you work for a major corporation, the office in your area could close without warning. I can cite example after example of company towns that get wiped out economically when the big company pulls its stakes with less than two weeks notice.
If you work for a small company, then you might want to figure out who owns the company and what happens in the event of that person’s death. Because anyone can get hit by a bus tomorrow. Just because someone else pays you doesn’t mean you’re secure.
And even though the laws are different from state to state, your safety net (unemployment) will only last so long. If you qualify at all. In many states, if you get fired for any reason or if you lose your job during the probationary period, you’re not entitled to unemployment.
The difference between long-time freelancers and people with long-time day jobs is that the long-time freelancer knows how to handle personal economic ups and downs, and people who lose their day jobs often don’t. Unlike long-time freelancers, people with day jobs have no idea how to function if their primary income source disappears.
That’s what this entire series is about: how to survive the economic ups and downs of freelancing. Which is why I call it the freelance scramble.
How do I know these things about other businesses? It’s not just because I own several businesses and have owned many others (some successful and some utter failures). It’s because, as a freelancer, I’ve watched a lot of businesses come and go.
Many, many years ago, I was discussing whether or not it was wise to work with a new company with a writer who has been writing freelance longer than I’ve been alive. He said he believed freelancers should run to the money and keep a wary eye on the company at the same time.
As a man who has owned businesses other than his writing business, he knows what I know: that a new business is often flush with cash. That new business might not survive five years, however. Most don’t—no matter what industry the business is in. So his advice was to get in early, get paid, and leave if it looks like the business isn’t going to make it.
The problem is that most freelancers don’t know the signs of a business in serious trouble. Good, established businesses will often have cash flow bumps, and payments will sometimes be late. (Usually with explanation.) Sometimes businesses need to revisit their internal models and make course corrections.
In other words, healthy businesses lay off employees, get rid of departments, cut underperforming product lines, and change focus to growth areas. If I thought that every business I’d ever worked with was going out of business when it laid off an employee, I wouldn’t work in publishing any more.
Every single publisher I’ve ever worked with has laid off employees (sometimes en masse), cut book lines, chased new areas of profit, and reorganized entire departments. But let’s leave publishing for a moment.
If I look at the long-established businesses in my town—the large ones, like the supermarkets, the casinos, and the resort hotels—I see a history of employee layoffs, interior redesign, expansion of some areas, and total demolition of others. Sometimes those expansions are physical—a new wing to a hotel, the demolition of a warehouse—and sometimes they’re internal, like the way some grocery stores continually rearrange the way they place the food departments (I’m looking at you, Safeway, you annoying company).
It’s almost impossible to tell from the outside whether layoffs, shut-down departments, or abandoned product lines are something to worry about. Generally speaking, they’re not, because healthy companies always need to move and change and grow, and sometimes part of growth (as any good gardener knows) is pruning off the dying branches so that the healthy branches can thrive.
But sometimes the layoffs, shutdowns, and reorganizations are signs of a company in trouble—ironically, because the company hasn’t been making cuts or changes up until that point. In other words, the company put off making the hard decisions, and then, when it’s probably too late, they throw the kitchen sink at everything and hope it will work.
Again, impossible to tell if that’s happening, unless you’re involved in the decision-making
So, if most people can’t tell how a business is doing from the outside, then why am I telling you that freelancers should know? Or at least, should be able to guess?
Because there are some signs. And most of those signs involve payment.
For the most part, freelance writers work with other companies on a per-product basis. A contract governs that relationship. The contract—which varies from job to job, even within a company—outlines due dates, payment times, and payment amounts.
A good contract also gives both parties guidelines as to what to do when things go wrong. For example, some contracts specify dates when payments should be made. Those contracts also mention that late payments will be subject to interest if the payments are more than 60 days late.
Other contracts are vague as to payment times and even vaguer about what should be done if the payment is late. (Most traditional publishing contracts are like that.)
Other deadlines exist in the contract. The writer often has to turn in work on a particular schedule, and respond in a timely fashion to contacts from the company. In return, the company promises to publish on a set schedule or the rights licensed in the contract revert to the writer.
And so on.
All different, all contract specific.
What isn’t contract specific is something that most people who work in business have learned over the years. To maintain good relationships with the people you do business with, you give the opposing party the right to cure the problem.
The right to cure is a legal term that I might be misusing, since I’m not a lawyer. But the theory behind the right to cure is a good rule of thumb when you’re dealing with a contract.
Here’s how it works:
(Note that I’m going to do my best to avoid legal terms here, so that I’m not giving you the wrong advice just by using the wrong legal term. I’ll try to keep this simple and clear.)
Whenever someone fails to meet one of the terms of a contract—turning a book in by a certain deadline, making a payment on time—the contract suddenly comes into play. The contract has been violated, but not fatally so.
In fact, if you were to take the problem at this stage to a court specializing in contracts, you’d be laughed at by the judge. There’s fudge factor in all contracts—the human factor, in my mind. Payments get missed, deadlines go whooshing by (as Douglas Adams used to say), and sometimes we don’t notice.
There’s an implied few days or few weeks in which the party who has screwed up has time to make things right without anyone making a fuss.
Unless the contract has some language that penalizes the parties for missing the exact date and time.
(Some contracts do have this language. About ten years ago, I contracted with a new publishing company whose lawyer had put language in the contract declaring the contract null and void if the company missed a payment by as little as 30 days. The company had to pay on time or the contract was automatically canceled. I laughed, signed the contract, and used that little tiny clause all the time to ensure payment. I should have used the little tiny clause to break off the contract, because as I type this right now, I realize the bastards owe me a royalty payment and I’m going to have to go after them—again.)
The fudge factor is important. There’s a nod-nod-wink-wink aspect to all contracts, even the ones governing your mortgage and car payment, that assumes human error. The contract adjusts accordingly.
So, let’s pretend your contract on this project is a standard publishing contract, one that lays out payments and deadlines, but doesn’t ascribe penalties (like late fees for missed payments or automatic cancellation for a missed deadline).
How do you handle it when a payment gets missed?
You write a polite letter, reminding the company that payment is now overdue. The letter should be pretty casual. You should get a response—with a new timeline for payment.
Your letter should say something along the lines of:
I’m rather stunned that it’s May. I’ve come out of my latest project and as I put my business affairs in order, I noticed that the contracted payment for [title of project] has not arrived yet.
According to our contract of [such & so date], the payment for [title of project] was due on April 10. [Then you do an update here—you turned in the project on such & so date…]
I’m sure this was just an oversight. Please let me know the status of the payment.
All the best,
Polite, friendly, with a bit of an edge. The implication here is that you’re looking at the contract, and you will take action if the contract terms aren’t met. But you haven’t threatened anyone, and you’re not angry. We all make mistakes.
The response you want from the company is pretty simple: You want your payment. And you want them to want to pay you. At first, you do that with honey. Honey also keeps the relationship intact because, chances are, someone did screw up.
The ideal response from the person you contracted should go something like this (only with polite business language): “Oh, crap, we screwed up. Sorry. The money is being sent/deposited into your account right now.”
Generally, though, your contact at a publishing company doesn’t have the right to issue checks, so the response you’ll get will be more along the lines of, “Oh, crap, we screwed up. Sorry. I’ll make sure the check gets sent/deposited in your account within the week.”
If you don’t get a response at all, then you need to send the letter again, maybe to someone else, maybe through a different account (if you’re using e-mail only).
If you’re forwarding an e-mail, you simply say, I suspect you didn’t get this the first time, so I’m resending, and leave it at that. (With snail mail, you can do the same, only on letterhead.)
If you only get an automated response (e-mail again) or you can’t reach someone by phone or you haven’t heard within a week from the resend, check your calendar. In the United States, many companies close over the two weeks around Christmas. In New York publishing, many smaller companies are closed for the Jewish holidays in September. In many European countries, publishing companies are mostly shut down (like everyone else, it seems) in August.
You might not get a response because there’s no one in the office to give you a response.
You don’t give the company a full pass during those off times. You send a snail mail letter so that it’s on someone’s desk when the business reopens. You also call or email the first day that someone you need to do business with is back in the office.
And frankly, folks, if you’re doing business with companies that follow such schedules—and you’ve done business with these companies before (so you know the schedule)—then it’s up to you to send a letter before the company closes for the month of August or the last two weeks in December, reminding the company that payment is due while they’re out of the office.
Generally, someone will either tell you the payment will be made the week that the company reopens or just before they close. Make sure you get a timeline.
Here’s a sample early letter:
I just noticed that our current project stipulates that you must send me a payment in August. In the past, your offices have been closed in August. Is that only editorial? Will August payments be sent as usual? Or must we make some kind of plan to accommodate the upcoming vacation schedule?
And then add friendly stuff, depending on your relationship.
You should get a response that will either reassure you or make you scramble to cover August’s bills another way.
It also puts the company on notice that you’ll be one of those writers who does not tolerate late payments for any reason.
But…back to our scenario. What happens if you get no response at all to your first letter and the resend?
You send a second letter, still friendly, mentioning the date of the first letter, and saying perhaps it went awry. If you’re using snail mail, then attach a copy of the first letter.
And if there’s silence again?
You send a third letter. Yes, a third letter. This one is less friendly. You might want to send it to someone else.
Dear So & So,
I’ve been trying to contact [Name] about a payment owed to me under contract [signed on this date]. The payment is [30 days] overdue.
Can someone in your organization get back to me immediately, preferably with a payment?
If you still get no response, then you’re in trouble. Serious trouble. Because this company is, for some reason, ignoring freelancers.
Freelancers are usually the first ones whose payments are late when a company is in trouble. We freelancers have to get in line with all of the other unsecured creditors.
When payments are late, the power company shuts off power. The cable provider stops providing internet service. The landlord evicts. But most unsecured creditors have no recourse.
But you might—depending on what stage you’re at in the project.
If you have just signed on to do the project, you turn nothing in until you receive the signing payment.
Frankly, if you’re having this much trouble getting your signing payment—and you’re working with a small to mid-range publishing company—seriously rethink doing business with these people. If they can’t make the first payment, I can guarantee they won’t make the royalty payments five years from now. They might not even be in business five years from now.
If you’re working with one of the Big Five, then something else is going on. Call your editor and find out what’s actually happening here. Are they canceling the project and not telling you? Are they delaying because you don’t have an agent?
Remember, the big publishers pay on 90 to 120 days after the payment is due. So take harsh action only after those dates. No editor should go silent on you, but if the editor does—especially at this stage—the project is in trouble.
Generally, though, payments are often late after you’ve completed the work. The company got what they wanted, and they think you have no leverage.
But you do have leverage. There are a number of points along the way that allow you to put pressure on a publisher. You can hang onto the copy edits and not return them until you get payment. Or the proofs.
Be a squeaky wheel and continue to press for that payment. If the project isn’t published yet, and the company is refusing to pay you, you can withdraw your piece. But again, make sure you really want to do this.
Withdrawing is a really big gun, and one that should not be used lightly.
I’ve only done twice in my entire career. The first time was with a short story, and a small press that I knew was going bankrupt. I knew the publisher personally, which was why I sold her the story in the first place. She was putting out as much product as she could to pay the bills. This was in the days before print on demand (and ebooks) made changing content quick and easy. She had to pay a printer a lot of money to produce the books, but she couldn’t afford $500 to pay me. She urged me to wait until the book was published, and then she’d pay.
As a friend, she was sure I would understand.
I said, as a friend, I was sure she would understand that I made my living by selling my work and if she exercised the rights to my story, I couldn’t sell it anywhere else. I offered to substitute a reprint. I would take less money and I would lose no valuable first-time print rights to the story.
She said no.
So, I pulled the original story before she sent the book to the printer, because I didn’t completely want to burn a bridge. (If I pulled the story afterwards, I would have cost her thousands of dollars.)
She could have solved the problem quickly and easily by simply paying me what she owed me. She didn’t, because she didn’t have the money.
She also could have solved the problem by letting me substitute a reprint. She would have had my name on the cover still and actually owed me less money. (Money that I assumed would never come.)
She had declined that option as well, wanting only brand-new stories in her anthology.
The anthology came out six months later and not a single author in that volume ever got paid. I went on to sell my story to a bigger (brand new market) for five times what she had initially promised to pay me. She went bankrupt and, in addition to harming the writers in the anthology, she took nearly a dozen writers’ book careers with her.
Note that we were negotiating up to the very last minute. We were trying to remain businesslike and friendly, even though she was angry at me for withdrawing, and I was angry at her for hurting all the writers she had under contract.
We kept it civil. And that’s what you should do. Yes, there are often hard feelings. But if your relationship is governed by a contract, then both parties need to respect that contract.
I will deal with the second time I hauled out the withdraw card in the burning bridges post that’s upcoming.
It’s very important to understand something about threatening to withdraw a work from a publisher. Withdrawing is a very, very, very big deal.
Realize that I have published over a hundred books through traditional publishers and at least 400 short stories (not counting books in translation, reprint stories, and other auxiliary rights), and I have only hauled out the big guns twice at this pre-publication stage.
Because if you make the withdrawal threat with one late payment, you’re using a tactical nuke to kill a spider.
Whenever you run into issues with your publisher or with someone else, be polite. Work with them. Negotiate. However, keep that contract firmly in mind.
If they want to change the terms of the contract, then you need to amend the contract, and put those changes in writing. When you insist on that, many companies will baulk. It means they never intended to honor the change.
They respect the contract, because they know they could end up in court. You have to remember that as well.
So…unsecured creditor…what happens if you have a publication payment on your book that’s seriously, seriously overdue or, even worse, royalties owed that the company is not paying?
The book has been published. It’s in print.
What do you do?
Let’s deal with the publication payment first.
You start the same cycle. You write a polite letter mentioning the publication date, the contract terms, and so on. You continue to write polite letters until the third or fourth.
If you get no response, you need to turn yourself into a debt collector. You write emails weekly (then daily). You call.
Eventually, a company with money who doesn’t like to make that final payment (and there are several small to mid-range publishers like that) will pay you to make you go away.
If the company is having financial trouble, they will pay you to make you go away as well. They have more than enough other creditors to deal with. They’re going to get rid of the tiny problems, while they figure out how to deal with the big ones.
And to them, you’re a tiny problem.
If you had this much trouble getting your on-publication payment out of this company, and they owe you royalties as part of the contract, then you start writing letters the day after the first royalty payment is due.
You’re letting the company know that you aren’t going away.
Eventually, they pay you first because you’re annoying.
You will never do business with these people again—but why would you want to?
If you’re dealing with short stories or articles and the publisher published without making that contractual payment, then you nag, nag, nag until you get the money.
Yes, there are other things you can do. All of them involve burning bridges.
I’ll discuss some of those things next week, when I discuss bridge-burning. But I’ll only discuss a few. You’ll find out why in a week.
I always feel a little odd writing these posts because I know a handful of you will abuse the techniques I put in here. But most of you, especially those of you new to freelancing, need to know how to collect a debt and how to get money from someone who doesn’t want to pay.
Tread lightly with these techniques, and always remain polite. Before you do anything, read next week’s post on burning bridges, and think before you act—no matter how angry (or desperate) you are.
I’m in the middle of some hellish deadlines right now, so I probably won’t be able to answer most of the comments. I will monitor them though. Please do not mention the names of companies you’ve had trouble with. Keep it general.
And, as always, if you find something useful or you learned something new in this post, please leave a tip on the way out.
Thanks so much for the support!
“Business Musings: Debt Collection (The Freelance Scramble Part 4)” copyright © 2015 by Kristine Kathryn Rusch.