Best Practices for Getting Paid as a Freelancer
Freelancing provides huge opportunities for both freelancers and the companies that seek to hire, and it's expected that the demand for freelance work will continue to grow in the years to come. The number of U.S. freelancers reached incredible 57.3 million in 2017 according to the “Freelancing in America: 2017” (FIA), the most comprehensive measure of the U.S. independent workforce. By 2027 freelancers are predicted to become the U.S. workforce majority. While there are many benefits from doing freelance work there are also many challenges that freelancers face. One of the big ones is getting paid according to the agreed upon terms and conditions.
“A staggering 71 percent of freelancers report having difficulty getting paid at some point in their career.”
There are many cases when in the middle of a project the client may ask for other additions and expect those to be included in the original price. Other times clients are really late with the payments. And the worst is when clients simply won’t pay for the service at all. Time to get paid, not played.
There are several things you can do to minimize the risk of a delayed payment (or non-payment at all). Don’t let the money situation run wild and try these tactics if you don’t want to deal with a client that is late or refuses to pay:
1. Know when to stop and pause work until you're paid!
NEVER work until you're paid! We mean it! Trust clients cautiously, even a long term client who always pays their bills on time. Sadly there are many cases when, due to a 'kind will and patience', freelancers have lost time and money waiting for their “good” client to pay them. They will surely go with some of the very familiar excuses like: “We are in a bad situation”, “There were some issues with the pay system”, “We were out of town”, “We were very busy on this new project”, “If you could wait for just a few more days”...and the list of excuses goes on and on and on. No matter if you are working with new or old client never work if the client disrespects the terms you both have agreed upon. Do not wait and prolong the situation. If you were able to complete the work in time, the client should feel the same responsibility and pay you on time.
Of course, we are humans and things can happen to anyone. But, no matter the reason if the invoice hasn’t been paid on the agreed upon date, stop working for that client until the invoice is paid.
Save yourself from becoming a debt collector. Instead of spending time asking clients why their invoice is overdue, develop other business relationships while working on other projects for the clients who are actually paying on time.
2. Get paid up front and invoice often, preferably once a week
Before you start working on a project always require a down payment. Best practice if you are working on a fixed price project is to charge at least 30% upfront, and if you are working on an hourly basis calculate at least your weekly costs and bill that amount upfront.
Defining weekly milestones will help both you and the client feel secure. No matter what is it that you decide works best for your own situation, practice prompt invoicing and always invoice once a week. Let the clients know the invoice was sent by email and phone and remind them of the due date.
Don’t let the thought of being rude or unprofessional to draw you away from billing up front. Those are your terms of work which you should make sure are clear and on paper when discussing payment with new customers. An interview with 20 designers confirms that it is a best practice to charge upfront. Almost all of the 20 interviewed designers said that they charge 50% upfront fee.
Separate leads from actual clients. If the client refuses to pay the upfront fee that is definitely a red flag, indicating that it is wise to walk away.
3. Learn more about your prospective clients before starting the contract
This is a preventative measure that will save you from spending time and effort on an unreliable and irresponsible client. Protect yourself from day 1 and before starting to work take your time to check whether client’s business is legit. Do a research for any information you might find regarding client’s business such as their physical address, phone number, positive or negative reviews etc.
Taking a great deal of uncertainty out of starting any professional relationship is now easier than ever. Look for clients on social media. You will gain great insights by looking at their LinkedIn, Facebook, Twitter or Instagram profiles.
4. Make it as simple as possible for clients to pay you
Make it easy. Provide your clients with multiple options so they can choose which ever they’re most comfortable with. This will speed up the payment process and you will avoid the complications deriving from clients complaining about the payment systems.
There are several forms of payment which you may take into account when setting up your preferred payment methods:
PayPal is one of today’s most widely used form of payment by freelancers everywhere in the world. In the fourth quarter of 2017, more than 227 million accounts were active worldwide. The benefits of using PayPal are: security, flexibility, and the ability to send money to anyone with an e-mail address. High transaction fees are the main reason why some people prefer to use other methods.
- Electronic Funds Transfer
Electronic payment systems present a range of advantages in comparison to traditional banking services. EFT means that the payment is sent directly from one bank account to another making it the easiest, quickest, and least expensive way to get paid.
However there are also some drawbacks like limitations on amount, risk of being hacked and privacy concerns.
Even though checks are often considered a traditional payment method, it is great choice if you would like to skip provisions since there is no fee to deposit the check into your bank account. The downside is the need to wait for the check to arrive by mail as well as wait for the check to clear in your bank account.
Speed up the process of invoicing and payment with these free or very low cost invoicing software solutions
- Professional invoice templates plus the ability to add a personalized message
- Track payments and overdue invoices, plus send automated late payment reminders
- Integrate it with Basecamp, PayPal and others
- Credit and Debit Card processing, eCheck and ACH Payments
- Domestic and international payment processing, plus the ability to choose from multiple languages and currencies
- Online and phone support
- Free sign up with transaction fees
- Design and send professional invoices in minutes
- Receive payments automatically
- Select preferred payment gateway and accept card payments
- Track time spent on each project task
- Free for 1 user and up to 5 Customers
- Accept Credit Cards and get paid up to 11 days faster
- Charge your client’s credit card, set up automatic reminders and charge late fees
- Automatically calculate taxes
- Select currency and language
- 50$ /month for up to 5 clients
- Integrate it with your online bank account and automatically import transactions
- Project tracking: time, income, and profitability
- Easily set up professional-looking invoices
- Automatic reminders
- Sales Tax Reporting & Multi-Currency Invoicing
- $20 /month
* Bonus payment tips and tricks for designers only
- Password protect your design work until you have been paid the full amount
- Provide low resolution proofs
- Sign an agreement that states that the client is not allowed to use the intellectual property before they pay the full project cost
- Don’t provide “ideas” or “samples” before starting the contract
Do you have any additional tips for getting paid on time? Share them in the comments below!