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A Freelancer’s Guide to Getting Paid on Time

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This post is part of a series called Freelance Financial Bootcamp.
A Freelancer’s Guide to Basic Bookkeeping
A Freelancer's Guide to Planning for Retirement

As freelancers, of course, we love our work, but we also love to get paid for it.

Getting paid on time can be a problem, however. In a survey conducted in the U.S. by Freelancers Union, 77% of members said they’d had problems being paid for their work.

So in this tutorial I’ll give you some strategies you can use to get paid more quickly. I’ll look at selecting the right clients to begin with, establishing clear payment rules, invoicing effectively, and resolving problems.

No tutorial, of course, can protect you 100% from bad clients. You may follow all of these steps and still be unlucky enough to encounter a scamster, a dishonest client, or a client who simply can’t pay. But putting these strategies in place will give you a much better chance of avoiding the fate of the 77%, and instead joining the 23% of freelancers who happily get paid on time and hassle-free.

1. Select Your Clients

This may seem like a strange place to start, but in my experience it’s the most important step of all. As freelancers, we tend to be on the prowl for work all the time, and we don’t want to turn down a potential new client. But sometimes, you just have to say “No”.

There are no hard and fast rules for determining which clients will pay on time and which won’t. But a little research can go a long way.

Check out the company’s background and reputation. Has it been around for a long time? Is it big or small? Does it have a real, bricks-and-mortar office, or does it only exist in the wires of the World Wide Web?

If you’re working for an individual, try to research their background in a similar way. What companies have they worked for, and have they hired freelancers before? Also, do they have a strong online presence? You can glean a lot from someone’s LinkedIn profile or website—and people who are active online also tend to be more sensitive to their online reputations, making them less likely to refuse to pay you and risk being attacked on social media.

You can also search on forums, ask other freelancers you know, or do something as simple as typing the client’s name into Google accompanied by words like “scam”, “unreliable”, “bad client” or anything else you can think of. Sometimes another freelancer’s complaints or warnings on a forum or blog post will pop up.

Ultimately, you can never determine with complete accuracy whether a client will be reliable or not. But doing some careful research up front will definitely improve your chances. Never be afraid to say “No” to an offer that doesn’t feel right.  

2. Establish Clear Rules

Once you’ve selected your clients, you need to set some rules.

Choose Your Payment Terms

How and when do you expect to be paid? This is the first thing you need to establish.

You’ll probably have some general payment terms, and then some that are specific to particular clients or projects. For example, you might usually expect payment within 30 days of completion, but for a very large project you expect to get a third up front, another third on delivering a particular milestone, and the rest on project completion.

Choose what’s right for each project and each client. Understand that some clients will have their own standard processes and terms, but also be firm about what works for you.

The payment method you choose will depend on the banking system and norms in your country, but the general aim is to find a method that’s widely used, that’s easy to use (both for you and the client), and that minimizes fees.

PayPal and similar online payment services are widely used, especially for international payments. Bank transfers and checks may also work for you, especially for domestic transactions.

Check the situation in your country. Find out which solution offers the lowest fees, the greatest ease of use, and acceptance among clients. There’s no point in demanding payment through the lowest-fee service if none of your clients use it.

Communicate From the Start

There’s a time to have a conversation with the client about your payment terms, and it’s not when you’re sending out your invoice.

When I was first getting started as a freelancer, I completed some work for an overseas client, and happily sent off my invoice providing my PayPal account details. Big mistake.

“We don’t use PayPal,” I was told.

I offered to provide my bank details instead, but they didn’t do bank transfers either. All they could do was mail me a check. Depositing that U.S. check in my U.K. bank account cost me a lot of time, a lot of fees, and an aching wrist from all the forms I had to complete.

The moral of the story? Always talk about payment terms up front, before starting work on the project. It’s good to offer a range of options, but it’s important, particularly with international clients, to ensure that the client can pay you in a way you can accept.

You should also mention your other payment terms, such as the timeframe within which you expect to get paid, and any payments that will be due before or during the project. It’s best to solidify all this in a written contract (see my earlier tutorial for more help on contracts).

Most of the time, agreeing the details of payment terms poses no real problem, but if there is any conflict, it’s best to iron it out early on. That way the onus is on the client to figure out how to meet your terms if they want the work done; leave it to the end, and the dynamic is reversed—now it’ll be up to you to accept the client’s terms if you want to get paid.

3. Invoice Clearly

If you want to get paid promptly, you need to invoice promptly. As soon as you’ve completed the work, or reached whatever milestone was agreed, send out your invoice immediately.

More importantly, make sure that the invoice contains all the necessary ingredients:

  • your name, business name if it’s different, and full contact details
  • the client’s name and address
  • an invoice number for reference
  • the date of the invoice
  • the date by which you expect to be paid
  • a brief description of the work completed
  • the amount due
  • any tax details as appropriate
  • instructions on how to pay

As long as you include all of these details, and any others that may be specific to your particular business, it doesn’t really matter which format or template you use.

Personally, I use a simple template that comes bundled with Microsoft Excel for Mac. (Go to File > New from Template..., choose Business Finance, and click Invoice). It’s basic, and it probably won’t win any design awards, but it does the job for me. There are similar templates available in Word and other similar programs, both for Mac and Windows.

If your business is more complicated and you have a higher volume of work, you may want to use specialized software or apps, which often offer additional advantages like tracking your time or performing other financial functions. There are plenty of apps to do this: just a few examples include Zoho, Harvest, and Invoiceable. You can also send invoices using PayPal, which can be useful if that’s how you’re getting paid and you want to do everything in one place.

Whichever method you use, be sure to set up a reminder when the invoice is due for payment. That way you can check whether the payment came through, and follow up if it didn’t. We’ll look at how to do that in the next section.

4. What to Do If They Don’t Pay

If you’ve followed the steps so far, you’ve given yourself a good chance of being paid on time. But sometimes, despite all your best efforts in selecting your clients carefully, choosing and communicating your payment terms, and sending out a prompt, clear invoice, you still won’t get paid. In this section, we’ll look at how to handle that.

Step 1: Pick Up the Phone

Sometimes, especially when you’re working for large firms, a failure to pay you can be simply down to an oversight or administrative mix-up. So there’s no need to get aggressive straight away. Instead, pick up the phone and start a conversation to find out what’s happening. I find that most disputes can be resolved far more quickly in a five-minute phone call than a long chain of emails.

Although you’re keeping things informal at this stage, you do, however, want to be prompt. If you’ve followed the advice in the previous step and set up a reminder when the payment is due, make sure you follow up quickly—within a day or two at the most. That way you’re not only starting the process sooner, but also making it clear to the client that you take your payment terms seriously.

Step 2: Follow Up in Writing

After you’ve made the call, send a quick email confirming what you’ve agreed. You can still keep things friendly, but it’s important to have a record of the conversation, in case problems occur later. For example, you could say:

Great talking to you today, and thanks for explaining that the guy in accounts was on vacation. It’s good to hear that he’ll be back today and I should get paid by the end of the week. I’ll email you again next Monday to let you know whether I received it.

The wording’s up to you, of course, but the idea is simply to confirm how things stand based on your conversation, and to let the person know the date when you expect to be paid (and that you’ll be following up again as soon as that deadline passes).

Step 3: Deal With the Right Person

There’s nothing guaranteed to slow down a process like having too many people involved. Particularly when dealing with large companies, this can be a big problem.

You might, for example, email a billing query to your regular contact Bill, who emails his boss Janet, who forwards the query to Sanjay, the head of accounts, who passes it on to Jared, the clerk responsible for making the payment.

Then Jared replies to Sanjay, who passes the email to Janet, then Bill, and then finally it comes back to you, a week or so later, with your original query unanswered, and you have to start the process all over again.

This may sound absurd, but I have found myself in almost exactly this situation in the past (only the names have been changed to protect the not-so-innocent).

Clearly, it would be better just to talk directly to Jared and figure out what’s going on. You’ll solve the problem more quickly, and also avoid damaging your relationship with the regular contact that you work with.

So as soon as you feel there’s a problem brewing, perhaps even in the initial phone call in Step 1, ask who’s responsible for processing the payment, and get that person’s contact details. Then contact him or her directly, only involving your regular work contact again if you fail to make progress.

Step 4: Be Firm and Persistent

Keep following up regularly, by phone and email, documenting everything, and trying different people within the organization if appropriate. Set a reminder after each conversation or promise, and follow up promptly as soon as each new deadline expires.

By doing this, you’re making it clear to the client that you’re not going to just “go away”, and that the simplest way to end the situation is by paying you. There’s no need to harass anyone; just follow up regularly and persistently.

Step 5: Down Tools

During labour disputes in the U.K., union leaders would often tell their members, “Down tools!” The workers would put their tools down and refuse to do any more work until their grievances were resolved.

As a freelancer, this option is open to you if you’re not getting paid on time. Whether it works as a strategy for getting paid depends on how valuable you are to your client, and how easily they can hire someone else to do the work. But at the very least, it will protect you from further losses. If the client hasn’t paid for work you’ve already completed, it would be crazy to do any more work for the same client and risk losing even more.

You don’t want to invoke this option immediately, of course. Allow some reasonable time for the client to work through whatever problems have caused the delay. But if things are dragging on and you feel that the client is being unfair, then “Down tools” is a perfectly reasonable response.

Step 6: Start (or Threaten to Start) Legal Action

To be honest, legal action is an absolute last resort for freelancers. You can sue in small claims court, but in many countries, legal processes are slow, confusing, sometimes expensive, and generally a huge distraction from the work you want to be doing.

The good news is that your client wants to avoid legal action too. All of those same concerns apply—and for them there’s the added worry about reputation. Being sued by a freelancer for refusal to pay doesn’t look good.

So simply sending an official letter to start legal action may be enough to make that elusive paycheck magically appear. If not, keep the process going, because the client may decide to settle the dispute at some point along the way. The legal process itself is beyond the scope of this article, because it varies so much in different countries, but look for help from local trade associations or freelancer organizations, and try to find professional legal advice that you can afford.

At this stage, you may also want to embark on other strategies, such as making the dispute public or otherwise damaging the client’s reputation. That’s also a last resort, and not an action to take lightly or without legal council, but if you’ve reached this stage it’s because the more reasonable approaches haven’t worked. Use any tools at your disposal, while making sure not to let your frustration tempt you into doing things that will damage your own reputation.

Next Steps

Although the tutorial has ended on the sour note of threats and legal action, it’s important to keep in mind that the majority of disputes never get this far.

If you select your clients carefully, establish clear rules around when and how you expect to get paid, invoice clearly, and follow up persistently, you should end up receiving most or all of your payments on time.

Doing all this will not only help you avoid wasting time on unnecessary and unpleasant disputes, but will also boost the finances of your freelance business. As I wrote in a previous tutorial aimed at small businesses, a strong cash flow is a crucial component of business success. Getting paid earlier means more money available to pay your bills without having to resort to debt, so it’s worth taking the time to get your payment terms straight and to manage your invoices carefully.

Do you have other tips or strategies for getting paid on time? Share them with your fellow freelancers in the comments below, or on the Tuts+ student forum.

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