# Prevention checklist: contract terms before work starts

Use this before the first invoice goes out, not after the first one goes unpaid. Every item here is something you set once, in the contract or the first quote, and it changes how every future invoice behaves.

## The three terms every contract needs

- [ ] **Deposit or upfront percentage.** A standard range is 25 to 50 percent before work begins. State the exact number and when it's due (on signature, not "before we start").
- [ ] **Due date.** State a real date or a real term, "net 15," "net 30," "due on delivery." If the client's own paperwork sets terms, that's fine, but write it into your contract too so both sides are looking at the same number. If nothing is specified anywhere, default to net 30 and say so in writing.
- [ ] **Late-fee rate, disclosed in advance.** A rate you never wrote down cannot be charged later no matter how late the invoice runs. State the exact rate now: a common structure is 1 to 2 percent of the balance per month, or a flat fee in the $25 to $50 range. See `late-fee-rules.md` for why disclosure has to happen before work starts, not after.

If any of the three is missing from a contract in front of you, stop and add it before work begins. A contract with all three still gets ignored by some clients. A contract missing one of them gives you nothing to enforce when that happens.

## The written-contract threshold

Several US states and cities require a written contract once a freelance engagement crosses a dollar threshold, and treat nonpayment on a covered contract as a bigger deal than an ordinary breach.

| Location | Threshold | What happens on nonpayment |
|---|---|---|
| New York City (Freelance Isn't Free Act) | $800 within any 120-day period, one client | Client owes double the unpaid amount, plus attorney's fees, if the case goes to enforcement |
| California | Similar written-contract requirement, statewide | Statutory penalties on top of the unpaid balance |
| Illinois | Similar written-contract requirement, statewide | Statutory penalties on top of the unpaid balance |
| Minnesota | Similar written-contract requirement, statewide | Statutory penalties on top of the unpaid balance |

Rates, dollar thresholds, and covered cities change. Confirm the current number for your state or city before relying on it in an actual dispute, this table is a starting point, not a legal opinion.

If your engagement is likely to cross the threshold and there's no signed contract yet, get one signed before the next milestone. Without a written contract, you're relying on general contract law and whatever emails exist. With one, you have a specific statute backing you up if the client goes quiet.

## What "specifies a payment milestone" means

If work is ongoing (a retainer, a multi-phase project), write the pause point into the contract itself: "Phase 2 work stops if Phase 1 invoice is unpaid 14 days past due." That sentence is what lets you pause work later without it reading as you walking off the job. Without that sentence in the contract, pausing mid-engagement is a judgment call with less cover. See `stop-work-trigger.md` for how this gets used once an invoice is actually overdue.

## Recheck this on every new client, every time

Don't assume last year's template still has the right numbers in it. Rates change, and your own minimum deposit percentage may have changed since the last contract you sent. Pull the current template, confirm all three boxes above are filled in with today's numbers, and only then send the quote.

# Escalation ladder: the cadence, rung by rung

Run this against every open invoice, not just the ones you remember are late. Compute days overdue as (today minus due date). A negative number means the invoice isn't due yet, keep it out of the ladder until it crosses zero.

## The ladder

| Rung | Timing | Channel | Tone | What it does |
|---|---|---|---|---|
| 1. Pre-due reminder | 3 to 5 days before due date | Email | Friendly, informational | Confirms the invoice arrived and the date it's due. Nothing accusatory, most clients at this rung haven't done anything wrong yet |
| 2. Day-of reminder | Due date itself | Email | Friendly, still assuming good faith | A short nudge on the day payment is due |
| 3. Firm follow-up | Day 7 overdue | Email | Direct, no longer assuming it was an oversight | States the invoice is now a week late and asks for a payment date |
| 4. Channel-switch follow-up | Day 14 overdue | Email plus text or phone call | Firm, personal | The rule below explains why the channel changes here |
| 5. Formal notice | Day 30 overdue | Email, formal tone, invoice reattached | Formal | States the late fee is now applying (see `late-fee-rules.md`) and restates the total owed |
| 6. Final notice | Day 60 to 90 overdue | Email, certified mail if the amount justifies it | Final | States the next step is collections or small claims if payment doesn't arrive by a stated date |

## The channel-switching rule

Email alone stops working around day 14 for a client who has already ignored two emails. The rule: at day 14, add a second channel, a text message or a phone call, alongside the email rather than instead of it. A client who has muted your email thread may still see a text, which is the whole reason the channel changes here.

Never switch channels earlier than day 14. Two channels of pressure before day 7 reads as chasing a client for a genuinely fresh invoice, and burns goodwill you may need later in the relationship.

## Computing which rung is due

For each open invoice:

1. Pull the due date from the invoice record (see Phase 1, step 3, of the main skill: an invoice with no recorded due date can't be placed on the ladder).
2. Compute days overdue.
3. Match that number against the table above. If days overdue falls between two rungs (say, day 20), use the most recent rung that's already been crossed (rung 4, the day-14 channel switch) rather than jumping ahead.
4. Check that invoice's row in `invoice-tracking-log.md` for whether that rung's touch has already been sent. If it has, do nothing, wait for the next rung. If it hasn't, that's the touch to draft.

## Stopping conditions

Stop the ladder immediately, at any rung, the moment either of these happens:

- The client pays the invoice in full.
- The client responds with a specific payment date you can hold them to.

Do not let a queued or already-drafted touch go out after either of these. Check the invoice and thread status again right before sending, not just when you first computed the rung.

# Message templates: one per rung

Fill every bracket from the invoice record or the message thread. Never guess at a name, a date, or an amount, if a field is missing, go back to the owner and ask rather than filling it with a placeholder that looks real.

Every template here is a draft. None of them leave the draft state without the owner's explicit yes in that turn.

---

## Rung 1: pre-due reminder (3 to 5 days before due date)

Subject: Invoice [invoice number] due [due date]

Hi [client name],

Just a heads-up that invoice [invoice number] for [amount] is due on [due date]. Attached again in case the first copy got buried.

Let me know if anything's needed on your end to process it.

Thanks,
[your name]

---

## Rung 2: day-of reminder (due date)

Subject: Invoice [invoice number] due today

Hi [client name],

Invoice [invoice number] for [amount] is due today. If it's already scheduled on your end, no need to reply, just flagging it in case it slipped.

Thanks,
[your name]

---

## Rung 3: firm follow-up (day 7 overdue)

Subject: Invoice [invoice number], now a week overdue

Hi [client name],

Invoice [invoice number] for [amount] was due [due date] and is now a week past that. Can you confirm a date I can expect payment by?

If there's an issue with the invoice itself, let me know and I'll sort it out.

Thanks,
[your name]

---

## Rung 4: channel-switch follow-up (day 14 overdue)

Send this by email, and pair it with a text or a call the same day (see `escalation-ladder.md` for why the channel changes here).

**Email:**

Subject: Invoice [invoice number], 2 weeks overdue, please advise

Hi [client name],

I haven't heard back on invoice [invoice number] for [amount], now two weeks past its [due date] due date. I'd like to get this resolved this week. Can we get on a call, or can you confirm a payment date?

[your name]

**Text (short, same day):**

Hi [client name], following up on invoice [invoice number] ([amount]), now 2 weeks overdue. Can you give me a call or confirm when I can expect payment? Thanks, [your name]

---

## Rung 5: formal notice with late fee (day 30 overdue)

Only include the late-fee line if the contract disclosed the rate in advance in writing. See `late-fee-rules.md` before sending this.

Subject: Formal notice: invoice [invoice number], 30 days overdue

Hi [client name],

Invoice [invoice number] for [amount], due [due date], remains unpaid at 30 days overdue. Per the payment terms in our signed agreement dated [contract date], a late fee of [late fee rate, e.g. "1.5% per month"] now applies, bringing the total owed to [amount plus late fee].

Invoice reattached. Please remit payment by [date, typically 7 to 10 days out] to avoid further escalation.

[your name]

---

## Rung 6: final notice (day 60 to 90 overdue)

Subject: Final notice: invoice [invoice number] before further action

Hi [client name],

This is a final notice regarding invoice [invoice number] for [amount plus any applicable late fee], now [days overdue] days past due. Despite [number] prior attempts to reach you on [dates of prior touches], the balance remains unpaid.

If payment in full is not received by [date, typically 7 days out], I'll be referring this to [collections / small claims court] to recover the amount owed, along with any applicable fees.

I'd still rather resolve this directly. Please contact me by the date above.

[your name]

---

## Rules for every template above

- Pull client name, invoice number, amount, and due date from the invoice record, never from memory.
- Never fill a bracket with an invented number or date. An empty bracket is a signal to ask, not to guess.
- Show the filled draft to the owner before it leaves the draft state, every single time, at every rung.
- Do not send a rung-4, rung-5, or rung-6 template into a thread where the client has already replied with a payment date or already paid, check the thread's current state right before sending.

# Late-fee rules: when a fee is actually chargeable

The short version: a late fee has to be disclosed in writing before the work started. Adding one after the fact, no matter how late the invoice is, generally doesn't hold up in most US states.

## The disclosure test

Before adding a late fee to any invoice, confirm both of these are true:

- [ ] The original signed contract or agreement states a specific late-fee rate, not "a reasonable late fee" or "fees may apply," an actual number.
- [ ] That contract was signed, or otherwise agreed to in writing, before the work began, not sent alongside the overdue invoice itself.

If either box is unchecked, do not add a late fee to this invoice. Note the gap and fix it in the next contract using `prevention-checklist.md`, but don't retroactively apply a fee that was never agreed to.

## Typical rates, if the contract sets one

Contracts that do disclose a rate usually land in one of these ranges:

- **Percentage-based:** 1 to 2 percent of the outstanding balance per month (12 to 24 percent annualized). Some states cap the maximum allowable rate, check your state's usury or late-fee cap before setting a number in a new contract.
- **Flat fee:** 25 to 50 dollars per late invoice, sometimes compounding if the invoice is small enough that a percentage wouldn't be meaningful.

Use whichever rate is actually written into the contract in front of you. Never substitute a different number because it looks more standard, the contract's number is the only one that's enforceable.

## Applying the fee

1. Confirm the disclosure test above passes.
2. Pull the exact rate from the contract, don't round it or estimate it.
3. Calculate the fee on the outstanding balance as of the day it's applied (typically day 30 on the escalation ladder, see `escalation-ladder.md`).
4. Note the new total (original balance plus fee) on the day-30 formal notice from `message-templates.md`.
5. If the invoice remains unpaid into a second late period and the contract allows fees to compound monthly, recalculate for each new period, always against the contract's stated rate, never a higher one added out of frustration.

## What this file is not

This is a starting reference, not legal advice, and not a substitute for confirming current law. Late-fee caps, disclosure requirements, and what counts as "in writing" vary by state and change over time. Before relying on a specific number or rule in an actual dispute, confirm the current rule with a lawyer or your state's consumer-protection office. Never present a rate or a rule from this file as settled for every jurisdiction.

# Stop-work trigger: pausing work, firing a client, or going to collections

Three separate decisions live in this file. They apply at different points and none of them get made for the owner, this file is a decision guide, not an auto-pilot.

## Decision 1: pausing work mid-engagement (any time a milestone is unpaid)

This only applies if the contract specifies a payment-linked milestone (see `prevention-checklist.md`, "What specifies a payment milestone means"). If it doesn't, there's no contractual trigger to pause on, flag the gap back to Phase 1 for the next contract instead of improvising one now.

If the contract does specify a milestone:

- [ ] Confirm the milestone's invoice is the one that's overdue, not a different, unrelated invoice.
- [ ] Confirm the number of days overdue matches or exceeds what the contract states as the pause trigger.
- [ ] Pause new work at that point, the point the contract names, not earlier out of frustration and not later out of guilt.
- [ ] Tell the client plainly that work is paused and cite the contract clause, don't let the client find out by silence.

Pausing at the pre-agreed point is enforcing a contract. Pausing before that point, or without ever having named a trigger, reads as walking off the job.

## Decision 2: the day-60-to-90 choice, once the final notice's deadline passes

At this point three paths are available. None of them is automatically correct, the right one depends on the amount owed, the relationship, and how much time collections or small claims will cost relative to the invoice.

| Path | When it fits | What it costs the owner |
|---|---|---|
| Formal demand letter (often via a lawyer) | Larger invoices, an ongoing relationship worth salvaging if the client suddenly pays | A one-time legal fee, usually a few hundred dollars for a template letter |
| Collections agency | Smaller invoices where the owner's time is worth more than chasing further | The agency typically keeps 20 to 50 percent of what's recovered |
| Small claims court | Invoices within the state's small claims cap (commonly 5,000 to 10,000 dollars, varies by state), where the owner wants to see it through | Filing fee (usually under 100 dollars) and the owner's own time to appear |

Present all three, with the documentation trail below, and let the owner choose. Don't default to one path because it's the easiest to draft.

## The documentation trail (needed for any of the three paths)

Before presenting the decision, confirm this trail is complete:

- [ ] The signed contract (or the written agreement establishing the terms)
- [ ] The original invoice
- [ ] Every logged touch from `invoice-tracking-log.md`, with its date and channel (Phase 2, step 8 of the main skill)
- [ ] Any reply the client sent, including ones that promised a date and then went unmet

A collections agency or a small claims court will ask for this trail. Missing pieces weaken the case regardless of which path gets chosen.

## What never happens here

- Never choose the path (demand letter, collections, small claims) unilaterally. Present the three options with their tradeoffs and let the owner decide.
- Never fire a client or send an account to collections based on a single missed rung of the ladder, this decision only comes up after the full cadence in `escalation-ladder.md` has run its course to the final notice.
- Never pause work at a point the contract didn't specify, that's a relationship decision for the owner to make consciously, not a default this file should trigger on its own.

# Invoice tracking log: the per-invoice ledger this skill runs on

This file turns the escalation cadence in `escalation-ladder.md` into something repeatable: check it before every touch, update it after every touch. Without a written row per invoice, a run next week would have no way to know what already went out short of re-reading the whole thread.

## Columns

| Column | What goes here |
|---|---|
| Invoice # | The invoice number, pulled from the invoice record, never invented |
| Client | Client name |
| Due date | The date recorded in Phase 1, step 3 of the main skill |
| Current rung | The last rung whose touch has actually been sent, 1 through 6, or "none" if the invoice hasn't crossed its due date yet |
| Last touch date | The date the most recent touch was sent |
| Last touch channel | Email, text, phone call, or certified mail |
| Status | Open, Paid, Payment date confirmed, or Escalated |
| Notes | A broken promise date, a dispute over the invoice itself, a milestone pause in effect, anything that doesn't fit the columns above |

## Template row (copy this row for each new invoice)

| Invoice # | Client | Due date | Current rung | Last touch date | Last touch channel | Status | Notes |
|---|---|---|---|---|---|---|---|
| [invoice number] | [client name] | [due date] | none | | | Open | |

## How to use this file across separate runs

1. When Phase 1, step 3 records a new invoice's due date, add a new row here with Current rung set to "none."
2. Every time Phase 2 runs, whether daily or on request, read this file before drafting anything. For each open invoice, compute days overdue against the due date column, then compare that against Current rung to find the next rung due. If Current rung already matches or exceeds the rung the days-overdue count points to, that touch already went out. Skip it and move to the next open invoice.
3. After a touch is approved and sent (Phase 2, step 8 of the main skill), update that invoice's row: set Current rung to the rung just sent, and fill in Last touch date and Last touch channel.
4. The moment an invoice's status changes to Paid or Payment date confirmed, update the Status column immediately. A row marked Paid or Payment date confirmed is never read as a source for a new touch.
5. If an invoice reaches Decision 2 in `stop-work-trigger.md` (the day-60-to-90 choice), set Status to Escalated once the owner picks a path, and record which path in the Notes column.

## Keep it accurate

A stale row is worse than no row: it tells the next run a touch already went out when it didn't, or the reverse. Update the row in the same turn the touch is sent, not at the end of a batch of several invoices.

# Escalation thread example: one invoice from due date to payment

This is a filled walkthrough of the cadence in `escalation-ladder.md`, using one invoice as the example, run all the way through every rung to its resolution. The names, dates, and numbers below are illustrative. Pull the real invoice record before using any of this as a template for an actual client.

## The invoice

- Invoice #1042, Fenwick Studio, $4,200, due date March 3.
- Contract on file: 30 percent deposit paid on signature, net 30 terms, late fee of 1.5 percent per month disclosed in the signed agreement.

## Tracking log for this invoice, as it evolves

| Invoice # | Client | Due date | Current rung | Last touch date | Last touch channel | Status | Notes |
|---|---|---|---|---|---|---|---|
| 1042 | Fenwick Studio | Mar 3 | none | | | Open | |

## Rung 1: pre-due reminder (Feb 27)

Four days before the due date. The heads-up goes out by email, friendly and informational, no follow-up expected yet. Tracking log updated: Current rung set to 1, Last touch date Feb 27, Last touch channel Email.

## Rung 2: day-of reminder (Mar 3)

No reply to rung 1. The day-of nudge goes out on the due date itself, still assuming good faith, by email. Tracking log updated: Current rung set to 2, Last touch date Mar 3, Last touch channel Email.

## Rung 3: firm follow-up (Mar 10)

Seven days overdue, still no reply. The tone shifts here, this one states the invoice is a week late and asks directly for a payment date. Sent by email. Tracking log updated: Current rung set to 3, Last touch date Mar 10, Last touch channel Email.

## A skipped check (Mar 12)

Phase 2 runs again two days later as part of the daily check. Days overdue for invoice 1042 is 9, which still maps to rung 3 on the ladder (day 7 through day 13, ahead of the day-14 channel switch). The tracking log already shows Current rung 3, sent Mar 10. That rung's touch already went out, and the days-overdue count has not yet crossed into rung 4, so nothing gets drafted for this invoice today. The run moves on to the next open invoice on the log. No row changes.

## Rung 4: channel-switch follow-up (Mar 17)

Fourteen days overdue. Per the channel-switching rule in `escalation-ladder.md`, this rung pairs the email with a same-day text rather than replacing it. Both go out on Mar 17. Tracking log updated: Current rung set to 4, Last touch date Mar 17, Last touch channel Email plus text.

No reply comes back this time, by text or by email. The ladder continues.

## Rung 5: formal notice with late fee (Apr 2)

Thirty days overdue, still no response. Per `late-fee-rules.md`, the disclosure test is checked first: the signed contract states a rate of 1.5 percent per month, agreed to in writing before work began, so the fee is chargeable. The fee is calculated on the outstanding balance as of this date: $4,200 times 1.5 percent equals $63, bringing the total owed to $4,263. The formal notice states this new total, reattaches the invoice, and is sent by email. Tracking log updated: Current rung set to 5, Last touch date Apr 2, Last touch channel Email.

## Rung 6: final notice (May 2)

Sixty days overdue. The notice cites the four prior attempts on Feb 27, Mar 3, Mar 10, and Mar 17, plus the Apr 2 formal notice, and states that the full $4,263 is due within 7 days, by May 9, or the account moves to the day-60-to-90 decision in `stop-work-trigger.md`: a demand letter, a collections agency, or small claims. Sent by email, with a certified-mail copy given the amount involved. Tracking log updated: Current rung set to 6, Last touch date May 2, Last touch channel Email plus certified mail.

## Resolution (May 5)

Fenwick Studio's bookkeeper wires the full $4,263 on May 5, three days after the final notice and four days ahead of the May 9 deadline. Per the stopping conditions in `escalation-ladder.md`, the ladder stops here. The day-60-to-90 decision in `stop-work-trigger.md` never gets presented to the owner, since payment arrived before that deadline passed.

Tracking log updated once more: Status set to Paid, Notes set to "Paid in full including late fee, wire received May 5, four days ahead of final-notice deadline."

## What this example shows

- The tracking log gets read before every touch and written after every touch, treated as required state, not optional bookkeeping.
- A check that finds the current rung already sent, with the days-overdue count still short of the next rung, skips drafting and moves to the next invoice instead of repeating a touch.
- The channel switch at rung 4 adds a text alongside the email, per the rule in `escalation-ladder.md`, rather than dropping email in favor of the new channel.
- A late fee only gets applied once the disclosure test in `late-fee-rules.md` passes, using the exact rate written into the contract, never rounded or estimated.
- The ladder can run all the way to the final notice and still resolve without reaching the collections decision in `stop-work-trigger.md`, if payment lands before that deadline passes. Had it not, the next step would have been presenting the three paths in that file, along with the full documentation trail.
- A specific payment date and payment in full are each their own stopping condition. Whichever one happens first ends the run, whether that's at rung 4 or, as here, after rung 6.

Count the days since the due date, not the invoice date, then match that number to the ladder: day 7 gets a firm but polite follow-up, day 14 adds a second channel like text or a phone call alongside email. Three weeks overdue typically sits between those two stages.

In most US states, no. A late fee only holds up if the exact rate was disclosed in writing in the signed contract before work started. Add the clause to future contracts instead of trying to apply a fee retroactively on this one.

If the contract has a payment-linked milestone, work pauses there, not after things have already gone sideways. With no reply by day 60 to 90, it's time to weigh a final notice, a demand letter, or collections.

Once a client engagement crosses roughly $800 in places like New York City, yes, by law, and several other states run similar rules. Without one, there's no statutory backing if the client stops paying; with one, nonpayment can carry double damages.

Use the day 7 or day 14 template depending on how long they've been silent, and add a second contact channel at day 14 rather than repeating the same unanswered email.

That's the point to hand the full paper trail, the contract, the invoice, and every logged touch, to a collections agency or file in small claims, rather than sending yet another reminder.