One of the biggest concerns as a freelancer is getting paid. What happens if a client doesn’t pay? What if they don’t pay on time? How can I make sure that I get paid every time I do a job?
While the possibility for nonpayment may always exist, there are several ways you can head off troubles at the pass. In today’s post, I will be sharing a few pointers and a few excerpts from a recent discussion with Julie Elster from Just Tell Julie.
If you haven’t heard of Julie, she helps freelancers collect on unpaid invoices. She makes the call you don’t want to make, aka where’s my money? You’ll see her comments in the quotes below.
Why Does a Good Client Go Bad?
There may be any numbers of reasons behind a missed payment. Maybe the client wasn’t happy with your work. Maybe they ran into money problems mid-project. Maybe he/she is just out-and-out a deadbeat.
What Can You Do to Get Paid Without Issue?
As freelancers, many of us work strictly with clients we have never met in person. I highly recommend collecting as much information about your prospective client as possible before conducting work. Get their name, address, telephone number. An email address and first name aren’t enough information to go on to collect a missed payment.
Once you have your client’s information, do a little legwork. Check them out with the BBB. Do a Google search.
Get it in writing. Formal contracts can be confusing and a financial burden to new freelancers. You don’t need to things to be super complicated. Above all else, make sure the project details, timeframe and payment amount are in writing. That may simply mean sending an email after formalizing things over the phone. Anytime there is a change to the terms, send it in an email. Freelancers Union has a general template you can use as well.
Collect payment upfront or at least prior to handing over a finished product. If it’s a large project, ask for 50% upfront and 50% due at the project’s end. This is standard procedure these days. Don’t let a potential client try to tell you differently.
The best and easiest way to prevent payments from coming in late is so easy and simple. And most of us simply don’t do it. To avoid late payments 100% of the time, every time: Accept full payment upfront. Done. If they don’t pay you, you aren’t starting their project. You aren’t putting in hours of your time and sending invoices that are ignored. There’s no risk of overdue invoices or clients holding payments hostage.
Communicate with your client. Julie shared an awesome tip, but I also think having an open line of discussion makes it more difficult for a client with morals and a heart to stand you up. You are a person at that point, not just a keyboard behind an email. You may also spot a red flag before it becomes an issue.
I think to avoid setting yourself up for non-payment (or simply a terrible working relationship with your client) communication is key. Talking to your client about project expectations is a simple way to make sure everyone is on the same page. It also helps you to qualify your client. You want to make sure that you are working with the kind of client who understands your business and your needs. Payment expectations are a huge part of that.
Make paying you as painless as possible. We all hate fees, but it’s the cost of doing business. Asking your client to sign up for a third-party service they have never heard of to save you a few bucks may be asking too much. PayPal is a common online payment processing option and also allows for invoicing. I suggest going with a software that allows for a complete accounting system like Harvest. It allows for time tracking, invoicing, income/expenses and has a credit card processing option if you prefer not to use PayPal.
Note: If you opt for PayPal Business Payments on Harvest invoices, you will only pay a $.50 flat fee as opposed to the usual percentage. Keep in mind your client will only be able to pay with a PayPal with that option and not a credit card. If they want to pay with a credit card via PayPal or other payment processing service, suck it up and write off the fees as a business expense.
What to do When an Invoice Goes Unpaid?
Your invoices should clearly state when payment is due – Upon Receipt, Net 15, Net 30, etc. Julie advises having payment terms no longer than 21 days. Using an accounting software like Freshbooks or QuickBooks will help you keep on top of outstanding invoices and make collecting money much easier. As soon as that due date nears, send a reminder. As soon as it passes, it’s time to get serious.
Pick up the phone. No one ever wants to pick up the phone to call their clients. We all rely on email and messaging, but getting a client on the phone will increase your chance of getting paid significantly. It is much harder to ignore your requests for payment over the phone than it is through an email.
When all else fails, get a third-party involved.
The power of having a third-party call on your behalf is huge. Whether that is my service, or having an office manager call, it can make a huge difference. I can’t stress enough the importance of being able to pick up the phone to call your client. It is more powerful than many even know. I personally don’t like using late fees as a way to bully clients in to paying invoices. In my experience it rarely ever works. Your best bet is to set up expectations upfront. Collect payment before you even start working. Pick up the phone and build a relationship with your client. ~ Julie, Just Tell Julie
Those are a few of our tips for getting paid as a freelancer. I’d love to hear your tips for collecting on unpaid invoices or avoiding issues entirely.
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