The big benefits of being a freelancer:
- You are your own boss.
- You work when you like and how you like.
- You work from wherever you want.
The big downer on being a freelancer:
- You need to try and piece together a steady stream of work (read: income).
- You have to keep on top of your finances all the time.
They are the two skills that every freelancer needs to have – or learn fast – if they want to keep working on their own and not have to go back and work for an unbearable boss, doing something they loathe in order to keep tiles above their head and cuppa soups on the table.
Anyway, of the two downers we mentioned, the latter is the worst and that’s because getting paid on time seems to be an impossible task. It doesn’t matter that you did the work, surpassed their expectations with the quality and met the absurd delivery time; you are still thousands of dollars short and that can cripple you.
If this is you, then it’s worth saying you’re not alone. If, however, you haven’t gone solo yet but are thinking about, we need to tell you that half of all freelancers have reported problems with getting paid. And that’s just the tip of the iceberg because the average freelancer is owed more than $9000 and has spent 40 hours tracking down these missed payments.
What this means is simple: there is a big problem that needs addressing. That said, there are still plenty of practical things you can be doing protect yourself from a late-paying client or, worse yet, a client that just doesn’t pay.
Spot The Red Flags
One of the best things you can do to avoid any payment issues is look out for any red flags when you’re chatting with a potential client. We’re talking about chaotic clients that always seem in a flap, clueless clients that don’t really know what they want you to do or what their budget is, clients that show no respect to you, cheapskate clients and, yes, boring clients; the kind that offer you lots of work that doesn’t get your heart-pumping. These are all traits of bad clients. So, if you spot a red flag, save yourself a headache by saying no.
Have A Basic Contract
So many freelancers are scared of contracts because they think it will scare off potential clients or incur legal costs to make watertight, but that’s not the case. It’s simply a way of protecting yourself by laying out the fundamentals of the job you are offering. who you are, what the job is, how much you’re getting paid and when, and who owns the work, how many rounds of comments and rewrites are part of the project, and a clause that indicates a specific pay period – be it 10 days, 15, 30 or whatever. These will help you look more professional and stop you from getting involved in a bad deal.
Establish A Line Of Credit
Sometimes – just sometimes – you can’t chase your late payments any more than you have without losing your cool and leaving a horse’s head in their bed. That’s where things like invoice finance can swoop in wearing a bright red cape. The way it works is pretty simple: you simply draw funds against any money you’re owed from your outstanding invoices, without having to wait out whatever lengthy payment terms are in place or whatever excuses they are coming up with.
Carrot & Stick Clause
A great little clause to add to your invoice terms embraces the carrot and stick philosophy. Starting with the carrot, offer your clients a 1-2% discount if they pay their invoice earlier than payment term dates you agreed. Admittedly, most clients won’t care too much about 1-2%. But that’s where the carrot comes in, and it comes in the form of a 10% of your invoice getting added to the overall cost for every 5 days payment is late. That will kick people into action, trust us.
Call In The Big Guns
If the pestering isn’t working, the carrot and stick approach has failed to get their attention, and the money you are owed is such a significant amount it’s worth more to you than a working relationship with your client, you might want to go nuclear and sue them in a small claims court. This approach may seem over the top, but it’s a fantastic way of getting the money you owe without too much hassle. Of course, it could be better to start with a letter written on paper with your lawyer’s logo at the top. That might work just as effectively.