9 Ways to Encourage Your Clients to Pay Faster

If you’ve ever waited and waited for a client to pay an invoice, you’re not alone. Almost one-third of freelancers (31 percent) consider late-paying clients to be one of the challenges of freelancing, according to a survey of over 5,000 American freelancers commissioned by Freelancers Union and Upwork.

This is one of the least fun parts of owning a business, and it’s easy to put getting paid on the back burner, but steady cash flow is important to the health of your business. So, if you are looking for how to get clients to pay faster, there are some tried-and-true methods to make this happen.

1. Invoice Promptly

Send an invoice at the same time as your completed assignment to communicate a high level of efficiency and professionalism. This will increase the likelihood of your client reciprocating.

Even if the client doesn’t pay by the due date, you should still receive your payment quicker than if you had waited several days or weeks before submitting your invoice.

2. Reduce Your Payment Terms

Reducing your payment term can encourage faster payments, as shorter timelines give your invoice a sense of urgency.

Many freelancers offer standard payment terms of 30 days. However, payment terms can be 60 or 90 days or even longer in some industries. If you reduce your payment terms from 30 to 14 days, there are no guarantees that your client will pay you within 14 days, but you may receive your payment within 30 days. On the other hand, if you offer payment terms of 30 days, you may end up waiting for 45 days or longer.

Avoid saying that payment is due “upon receipt” or using such terms as “net 30.” According to research carried out by the cloud accounting company, Harvest, invoices that included these terms took longer to be paid than invoices that clearly stated “30 days” or something similar.

3. Include Specific Payment Terms in Contracts

Define specific payment terms in each of your contracts with your clients so that the client knows exactly what is expected with regard to payment(s). Include the following information:

• The total amount payable in dollars or the currency of the client’s home country.
• Your payment terms are expressed as a number of days.
• The amount of each installment and the dates on which payments are due if the client has agreed to pay in installments.
• The exact amount of a deposit or up-front payment must be made before you start work if this has been agreed with the client.
• Other terms and conditions relating to payment(s). For example, if overseas bank transfers are being made, the contract should state whether the client will cover all the international transfer fees or if you will pay for half of them.

If specific payment terms are detailed in the contract, your client will be more likely to remember exactly when payments are due and pay you accordingly. In the event of a late payment or a payment dispute, you can refer back to the original contract.

If you don’t already have a contract, download a template for a standard work-for-hire agreement from the Internet, adapt it to suit your business, and ask a lawyer to look it over before using it for the first time. Then, adapt this contract to suit each individual project.

4. Request Deposits or Installments

For longer-term and higher-value projects, requesting either an up-front payment or a series of payments upon delivery of certain key pieces of work is a good idea. Paying a number of smaller amounts rather than one large amount will help the client’s cash flow and make them more likely to pay installments on time. Also, they’ll want to maintain a good relationship with you while you’re carrying out a long-term project for them, so they’ll be more willing to pay you promptly at each milestone.

If you’re working for a new client, they may not agree to make an up-front payment unless you’re highly recommended by people they know well. However, if you’re carrying out a second or subsequent project for a client, they may be more amenable to paying a proportion of the cost of the project up-front because you have a proven track record.

5. Offer a Prompt Payment Discount or Freebie

If you offer a small discount for paying an invoice before its due date, some clients will be encouraged to make an early payment to obtain this discount. When calculating your rate for a particular project, include this discount in your calculations so that you won’t be out of pocket if your client takes advantage of the offer.

Alternatively, offer a freebie if your client pays an invoice early. Make sure the freebie will be valuable for the client but won’t take up too much of your time. For example, if you’re a freelance writer, you could offer a 500-word blog post on a subject you’re familiar with for the client’s website.

6. Don’t Give Up Your Rights Until You Receive Payment

If possible, hold onto the rights to use and amend your work until payment has been received from the client. For example, if you’re designing a logo for a client, you would only show them printed and watermarked versions of the logo before payment is made. You would then send the files that allow the client to use and change the logo. This should encourage the client to pay as quickly as possible.

In order to avoid misunderstandings, include a clause in your contract which states that the files giving the client the ability to use the finished product will not be sent until the final payment has been received.

7. Get to Know People in the Client’s Accounts Department

Unless your client is part of a very small business, your invoice will be handled by someone in the accounts department. Therefore, it’s important to find out who is responsible for their payment process and paying your invoice and build up a good relationship with them.

Ask your client for the contact details of the relevant accounts clerk or manager. Call that person and ask them if they’ve received your invoice and whether it includes all the relevant details. If the invoice becomes overdue, contact them again and ask politely and kindly if there are any problems with your invoice.

8. Include Late Payment Fees in Your Contract

Adding a late payment fee clause to your contract can motivate your customers to pay on time while protecting you from the financial impact of delayed payments. Clearly specify in your contract that you will charge a percentage of the invoice amount (typically 1-5%) for each month or portion of a month that payment is overdue. Make sure to explain this fee structure during contract negotiations so clients understand the consequences of late payments.

To implement late fees effectively, include the following details in your contract:

• The exact percentage or flat rate that will be charged for late payments.
• When will the late fee begin to accrue (for example, one day after the payment due date)?
• Will the fee be compounded monthly or charged as a one-time fee?
• A maximum cap on late fees if applicable.

Before implementing late fees, check your local laws regarding maximum allowable late payment charges. Some clients may try to negotiate these terms, but standing firm on reasonable late fees shows that you take your payment terms seriously and value your time as a professional.

Remember to send a polite reminder a few days before payment is due to give clients an opportunity to avoid late fees. This approach maintains good client relationships while protecting your business interests. Many accounting software programs will send out automated payment reminders.

9. Set Up Recurring Payment Systems

Establishing automatic recurring payments can be an excellent solution for clients with ongoing projects or retainer agreements, especially those with a history of late payments. This system ensures timely payments while reducing the administrative burden for both you and your client. Many modern payment processors and accounting platforms offer recurring billing features that can automatically charge a client’s credit card or initiate ACH payment on specific dates.

When implementing automatic payments, consider these key points:

• The payment schedule should align with your regular billing cycle, whether weekly, monthly, or quarterly.
• Choose a payment processor that offers competitive rates and integrates well with your accounting software.
• Document the recurring payment arrangement in your contract, including the specific amount, payment dates, and process for handling any variations in monthly charges.
• Keep your clients’ payment information secure and compliant with relevant data protection regulations.

This approach can be particularly valuable for salvaging relationships with consistently late-paying clients who are otherwise good to work with. Instead of terminating the relationship due to payment issues, you can suggest recurring payments as a win-win solution that ensures you receive timely compensation while simplifying the payment process for your client.

If all else fails

Most freelancers have some clients who pay early, some who pay on time, and others who are late payers. Do all that you can to increase the probability of your clients paying you quickly. If one or two clients remain persistent late-payers despite all your best efforts, consider replacing them over time with clients who show that they value your work by paying you promptly.