The Nitty Gritty Details Freelancers Need to Know About Getting Paid

You’ve just taken the leap into full-time freelancing. It’s a great move, but there are a few things you need to know about getting paid.

When you were an employee, you probably got paid every pay period (usually every two weeks or sometimes weekly) pretty much automatically.

Well, guess what? Getting paid isn’t automatic for freelancers. Instead, you have to arrange for payment and you should do it before you ever start working on a project. You have to make arrangements to be paid each and every time you get a new project.

In this post, I’ll discuss some of the nitty gritty details about getting paid that you need to know as a freelancer.

Agree on Payment Terms

Before you do a single task for your clients, you both need to come to an agreement on payment terms. Make sure that you and your client both understand when the payment is due and how the payment will be made.

Get your payment terms in writing so that there’s no confusion later on.

Get a Deposit Up Front

The next thing to remember is that you should always get a deposit before you start work. Typically, your deposit should be between 30 to 50% of your total estimate for the project.

Not only does getting a deposit up front protect you from clients who don’t intend to pay you at all, it also means that the client has a stake in your success since they’ve already invested some money into it.

Make getting an initial deposit part of your standard practices.


By far the most common tool that freelancers use to get paid is PayPal. PayPal allows you to create and send invoices. Plus, your clients can pay you from their own PayPal account or using a credit card. They can even transfer money in from their bank account to pay you.

When it comes time to get your money, you can transfer it to your bank account (usually takes several days) or use a PayPal debit or credit card. You can even have PayPal send you a check

The drawback to PayPal, of course, is the fees. The service charges a small fee for every transaction.

Google Checkout offers an alternative to PayPal.

More Acceptable Ways to Get Paid

Another acceptable way to get paid is by a paper check mailed to your address. I still have some clients who prefer to use this method of payment. The biggest drawback to receiving a paper check is the time delay while the check goes through the mail system. Although it’s never happened to me, the check could also get lost in the mail.

Barter can be an acceptable way to get paid, but only if you are bartering for something that you would ordinarily use anyway. Remember that bartering won’t pay the bills, so only accept a barter exchange if you are already earning enough to get by. Also, be sure to keep track of the value of the items involved in the barter since you will need to report this transaction on your income tax form.

Direct deposit is not generally available for a freelancer, although some bidding sites do offer this option. Most clients will not do this unless you are on a long-term project. If you decide to use direct deposit to receive payment from a client make absolutely certain that you are dealing with an ethical individual before you turn over your bank account information.

Some Unacceptable Ways to Get Paid

Believe it or not, cash is generally not a good way to get paid. For one thing, cash can easily get lost or stolen in the mail. Also, cash doesn’t leave a very good trail for your accounting records. At the end of the year, the amount of the cash you actually received could become a matter of debate between you and the client.

Contingency payments, such as an agreement that your payment will be a portion of the client’s profits (if there are any), are often bad deals for the freelancer–especially if there is no other form of payment. This is usually a bad deal for the freelancer because he or she has no real control over whether the client’s venture becomes profitable or not. If it is unprofitable, the freelancer may never get paid.

Send the Invoice as Soon as You Are Done

As soon as you finish the project send in your invoice while your work is still fresh in your mind and in your client’s mind. Don’t dawdle or put off sending it out. The sooner you send out the invoice, the more quickly you will be paid. Don’t give your client a chance to move on to other things.

Reminders About Tracking Income

Regardless of the method of payment, it is important to keep an accurate record of all income received. In the U.S. you will be responsible for reporting all income received on your tax return whether the client sends you a 1099 Form at the end of the year or not.

Accurately tracking your income also gives you a picture of just how well your business is doing. You can also determine whether you are meeting your expenses.

Your Turn

I hope this post helped to answer any questions that you might have about how freelancers get paid.

Did I miss any tips for getting paid? How do you receive your freelancing payments?

Share your answers in the comments.