Yet, sooner or later, many of us are faced with a client who doesn’t pay us on time. It’s normal, I think, to procrastinate in such circumstances. You tell yourself that the check will be in tomorrow’s mail, but in your heart, you know it’s not really coming.
Getting paid is vital to a freelancer. In fact, the money we receive for our services is what enables us to keep doing what we love. It’s how we support our families and ourselves.
Fortunately, there are some steps a freelancer can take to prevent payment problems from occurring in the first place as well as some steps to follow when a payment is late. In this post, we’ll discuss ten of those steps.
How to Get Your Money
When a client is seriously late with a payment it’s not only a blow to the pocketbook, it’s a threat to our livelihood.
What can a freelancer do to avoid having problems getting paid?
We’ve talked about collecting late payments before at Freelance Folder. In the excellent post What To Do To Avoid Getting Ripped Off? Lois Knight suggests the following steps:
- Always send a formal invoice with a description of the work.
- Send a gentle reminder after 7-10 days.
- Send a second reminder in 15-30 days.
- Take the client to court.
- File a grievance with the Better Business Bureau.
- Require a retainer up front.
These suggestions are great, but there is even more that you can do to keep from losing money.
In addition to the steps listed above, try these steps:
- Investigate a client first–Learn everything you can about potential clients. Look at their website. Google their company name. Check the Better Business Bureau for complaints (if he or she treats his or her customers poorly, they will probably also treat their vendors poorly). While you can’t always tell whether a client will be a deadbeat from what you learn online, it’s amazing what you actually can learn. The more information you have up front, the better.
- Use a formal contract–A contract should spell out the agreement between you and your client. Having a contract may give you a little legal edge later on if there is trouble later on. Not only does having a contract serve as a record of your agreement, it also tells the client that your business with them is a serious matter.
- Offer a discount for early payment–In many industries it is customary for a vendor to offer a discount to customers who pay early. You can do the same thing to encourage your clients to pay you promptly. For example, if your invoices are normally due in a month, but you’d like to be paid sooner you can offer clients who pay within the week a small discount. On your invoice a 2% discount for payment within seven days would be written 2/7 net 30. (On a thousand dollar invoice, this is only $20.00.)
- Invoice promptly–It’s very important send an invoice as soon as a project is done. First of all, very few clients will pay you before they receive an invoice. Also, the longer the time period between when you turn in your work and when you invoice the client, the more likely it is that you will have trouble getting paid. Leaving a gap between project completion and invoicing opens the door to a lot of potential problems. Your contact for the project could leave the company. Or, the company may believe that they have already paid you due to the length of time that has passed. If you invoice a client monthly, try to do it on about the same date each month.
- Make that telephone call–Sometimes there’s no way around it. You have to call the client on the phone and ask for the money that you are owed. When you are faced with this challenge, it’s a good idea to plan in advance what you are going to say. Jot down some main points that you want to make with the client. If possible, rehearse the phone call. While you are on the phone keep your voice and language professional, but firm. Avoid yelling or cussing at the client, even if you feel angry or upset.
With careful planning, you should be able to reduce your number of unpaying clients and late paying clients.
What Do You Think?
Do you have steps that you take to ensure that you get paid on time? Share your tips.
Have you ever had a client that didn’t pay? Share your story (no names please).
Image by ywds