Payment disputes have become more common recently with a lot of businesses revising their budget and making cuts.

We have noticed that more clients than normal are asking for refunds, possibly due to the impact of COVID-19. Usually it’s something along the lines of “We’re not happy and want our money back. If you don’t give us our money back we’ll take things further”.

It’s a scary threat to receive and many freelancers would respond in a way that benefits their client just to make the situation go away. Nobody wants to be sued. Nobody likes confrontation.

Insurance is designed to help you in these situations. Whilst your professional indemnity policy doesn’t cover refunds, a threat of legal action will trigger your policy and the insurer will help you defend the claim.

What does that mean? Every claim is assessed on a case by case basis, but generally the insurer will appoint legal experts to help you negotiate with your client.

Sometimes the legal experts will do that directly. Other times they’ll assist you with drafting emails to be sent to the client. The end goal is always the same—to get the best outcome for you considering the circumstances.

If you can show that you’ve adhered to the terms of the contract then a refund is not due, but if you’ve failed to deliver the work your client expects, the insurer may advise on negotiating a settlement and a repayment plan if needed.

This is why it’s important to document everything. Contracts are useful for highlighting what terms have been agreed to and can be key to diffusing problems quickly. The contract should outline the terms around payment and what happens if one of the parties wishes to terminate the project or doesn’t adhere to the terms.

If you’ve provided work to the agreed timescale and adhered to the terms of the contract, it will be difficult for the client to pursue a refund.

A lot of times it’s a straightforward case of reminding the client what they’ve agreed to in black and white and highlighting that you’ve adhered to the terms of the contract therefore no refund is due. It’s vital to be a confident freelancer in situations like this.

Sometimes clients make threats with no intention of acting on them, knowing that with a threat of legal action most freelancers will do what the client asks out of fear.

We’ve seen plenty of situations where the freelancer receives a threat and once the insurer is involved the client backs off and withdraws their claim. If you receive a threat like this it’s important to contact your insurer immediately to ensure the best outcome.

A lot of the claims we see follow the same patterns. There are common mistakes that lead to problems usually around poor project management. Some of these problems escalate to unhappy clients which is when insurance becomes useful.

Pattern one is missed milestones and delayed projects. Whether it’s a client dragging their heels with deliverables or providing feedback, changing the scope, or the freelancer dropping the ball with their organisational skills or underestimating the workload.

This is problematic because clients can claim loss of income or demand compensation to hire other freelancers to get the project up to speed.

The second pattern is that client expectations are different to the freelancer’s expectations. Why is this bad? Because if a client feels like they haven’t got the work they expected and budgeted for, it can open up a can of worms such as refusal to pay or threats of legal action.

With so many issues stemming from these areas, let’s look at best practices including how to keep projects running on time and manage client expectations.

• Deadlines work both ways. It’s important to get feedback from a client on time so you can stay on track for the project duration
• Provide the client with a timeline of what deliverables are due and when and schedule in feedback from your client. This holds them accountable to keeping the project on time, whether it’s having to give feedback, sign off on revisions or provide deliverables
• Make sure a schedule of presentation and delivery dates are included in the initial contract. Anything that falls out of the scope is discussed as to how it would affect or lengthen timescales
• Be transparent with the client. Yes, the scope may change, but this means making them aware of how those changes impact timescale and budget
• Be confident of your creative process and explain it well and simply to clients
• Have a clause in your contract to say that if a client doesn’t meet the deadline you can withdraw from the project and be paid for the work you’ve done
• Consider adding a pause clause to your contract. If a client is late in providing deliverables, you’ll put the project on hold after some time has lapsed as stated in your contract. When the deliverable is received from the client the project will be rescheduled based on your current workload and availability
• Make sure your client knows how many rounds of revisions are included within the project and suggest that any revisions requested outside of the contracted scope will be billed at an hourly rate
• Don’t overpromise and under-deliver. We've seen claims arise because work that's been promised within a certain timescale or to a certain standard isn’t delivered

You can read more about the pause clause here. The aim of the pause clause is to incentivise clients to provide deliverables on time whether that’s input, content, payment or approvals.

– Ashley, With Jack Founder

Most claims are to do with client relationships breaking down and the situation reaches a point where it may escalate. A lot of freelancers don’t have the confidence to handle these situations in the correct way.

Most of our claims are rarely to do with the freelancer making a mistake in their work. Whilst there is cover under the professional indemnity policy if you do make a mistake and the client tries to recover compensation, that makes up a tiny percentage of situations.

Most of the time the freelancer has done good work and completed (or was making progress with) their work to the best of their ability. Where things go wrong tends to be on the client relationship side.

A difficult client relationship can be down to the client feeling like they aren’t getting what they wanted, when they wanted.

Again, this isn’t necessarily the freelancer’s fault. Yes, we do see situations where the freelancer hasn’t done themselves any favours in terms of overestimating the workload or working without a contract to give the project structure.

But we see poor project management on the client side just as much, if not more. We’ve seen clients hire freelancers for projects with no deadline yet become threatening because they deem the project to be overdue.

We’ve seen clients dramatically change the scope of work midway through a project and react badly when the freelancer needs more time and money to complete the work.

Or a difficult client relationship can just be down to a problem client who, irrespective of the work you do and how good you are at your job, is always going to be difficult to please.

These situations are the ones that tend to cause problems for freelancers, so let’s look at how to handle them properly.

One of most important aspects of healthy client relationships and a fulfilling freelance career is to learn how to set and stick to boundaries.

You deserve to be treated with respect. You are allowed to have boundaries. You bring value to the project. You shouldn’t have to discount your services, work overtime, or put yourself under significant stress to keep a client happy.

– Ashley, With Jack Founder

There are some practical things you can do to set boundaries within your business.

1. Always work with a contract. This removes any ambiguity around what is expected of both parties and if problems do arise refer to the contract to diffuse the situation
2. Always have a statement of work or a project scope showing exactly what the client gets and what it costs. If the client asks for features outside of the ones detailed in the scope, they’ll have to revise budgets and timescales
3. Have set hours you’re available. Clients know that if they call you at 10PM on a Friday night you’re not answering. You do not want to set a precedence of being available 24/7. You do not exist solely to serve this client. You have a life, you also have other clients which is why you have to manage your time effectively

That’s the easy part. The testing part is how you react when clients try to take advantage of you. A client’s behaviour might not feel hugely destructive to begin with and can be disguised in a variety of ways.

Common situations are clients asking you to work more hours but without more pay, imposing difficult deadlines on you, expecting you to be at their beck and call and changing their mind regularly.

Here’s where being a confident freelancer comes in.

The way you respond to these situations can be the difference between a smooth project that ends harmoniously and one you regret taking on.

If you don’t set boundaries and instead agree to build extra features for free or eagerly overwork to meet impossible deadlines, you’re teaching the client that it’s OK to undervalue you.

If you do that certain clients will continue undervaluing you, pushing you closer to burnout and putting you under pressure. That’s where we see a lot of client relationships start to break down, causing friction that leads to the messy situations that insurance can help with.

Some freelancers struggle with setting and sticking to boundaries because they don’t want to deal with conflict and feel uncomfortable telling a client “No”. Or there’s a fear of losing a client so freelancers are willing to overstretch themselves to accommodate their client, but this is a recipe for disaster.

It’s important to remember your client isn’t a friend. This is a professional arrangement that has to make sense for both of you.

– Ashley, With Jack Founder

It’s upsetting when freelancers are willing to undervalue their work and time yet it is a common pattern with the situations we see at With Jack.

Now let’s take a recent situation that we’ve seen crop up quite a lot of. A client isn’t happy with either the work you’ve done or the timescale you’ve completed it to, and instead of working towards a solution they put an abrupt end to the project and refuse to pay your fees.

Being insured should give you the confidence to stand your ground with clients who try to mistreat you or extract more from you than has been agreed.

You should be able to firmly say, “I’ve adhered to the terms of the contract and provided good work to a high standard. I believe my fee should be paid”.

Provide a breakdown of what they asked you to do, what you have done and refer to your contract and statement of work to show you’ve been doing what’s asked of you. You’ve done the work, you deserve to be compensated.

If you stand firm and the client doesn’t back down and threatens to take things further, that’s when your professional indemnity policy is triggered. This means you’ll have help to navigate the situation and might even benefit from the policy’s mitigation costs clause if the client still refuses to pay. However, most of the time when you stand firm the client backs down.

The practical element of insurance is getting affordable legal help should you need it, but it’s really the aspirational element of being insured that most freelancers benefit from and certainly comes into play here.

Insurance should give you the confidence to stand firm with clients who are trying to take advantage of you, knowing that if they do push things a bit further you have the help to get you through it.