Planning your finances as a freelance business owner can be challenging. Your income and expenses may fluctuate from month to month. It depends simply on the nature of the job and the type of service you sell. There’s another factor in how much you’ll receive in payments each month, and it’s late payers. These clients either choose to pay you late, forget, or just can’t seem to make ends meet in a struggling business. Whatever their reason, however, you’ll be affected.
Shockingly, 29% of invoices are reported as being paid late, and late or missing payments are one of the most common complaints within freelance discussion groups and support forums. Are you looking for ways to stop the late payments for your freelance jobs? While tips relating to your mindset, attitude, and communication skills are relevant, the secret to getting paid is much simpler than that. Read on for tips that have worked for the most successful independent contractors!
Create clear, concise invoices
When a client’s accounting department see your invoice each month, they should be able to easily assess how much they owe, what the payment is for, and how to get the money to you in a hassle-free manner. If your invoices don’t do all three of these things, it’s quite possible your invoice will be set aside to deal with at a later time. Just as you don’t want to have to hop on the phone to have to pay your internet or cell phone provider, your clients don’t want to have to track you down to figure out how to get you paid. Make the process simple, and don’t hesitate to use a freelance invoice template to make things easier.
Offer flexible, yet sensible payment options
Did you know that freelancers who accept Bitcoin and other cryptocurrencies are paid late three times more often than those who get paid by Direct Deposit? According to a recent survey of freelancers, your payment method of choice can significantly impact payment times. In fact, checks and cash are only slightly better performing than crypto methods, followed by PayPal. If you must offer a variety of payment methods, choose those that are easiest for your clients to initiate. It should preferably be with the click of a button directly from your invoice or invoicing software. Credit card payments followed Direct Deposit as the second speediest way to pay.
If you have a large project due to a client and are uncomfortable about the prospect of waiting until it’s finished to get paid, milestones are for you. Many freelancers set up this method of payment for anything larger than a few thousand dollars. But you can use it for any project that may be done in “sections,” as well. You’ll want it covered in your contract. Stating that you need partial payment up front, several more small payments at each stage of your work, and the balance due upon final delivery can get you paid more reasonably. If the worst happens, and they don’t want to continue working with you, your time and energy won’t be a total loss.
Bill on Mondays
If you leave your invoicing tasks until the end of the week, you could be seeing slower pay times. This is because business days matter. Waiting until the weekend starts the clock on two days when most companies aren’t doing business. By billing on a Monday, you are most likely putting your invoice in their weekly queue. While not all clients let you choose the day you bill, if you don’t have to follow a strict pay cycle, opt for earlier in the week to send your payment requests.
Unless you use an intuitive invoicing tool that alerts you to unpaid, late invoices (and this is always recommended), you’ll need to take some initiative to remind yourself to follow-up on these. Whether you choose to send a reminder the day after the due date, or a few days later, is up to you. Never go beyond a week with unpaid invoices, however. Send a quick email asking if there is anything additional they need to pay. Remind them of any late fees that may have accrued as a result. (Late fees should be established in your contract, not at the time of invoicing).
Send a Thank you
Whether you’re a freelance writer, web designer, photographer, or virtual assistant, it’s always wise to follow-up a paid invoice with a brief “thanks” via email – especially if it was paid on time. It can be hard to stand out in a crowded field of independent contractors, but this simple act of kindness adds positive reinforcement for payment, as well as helps clients know that you are organized and attentive.
Refer to the Contract
If you still haven’t been paid and are unsure of your options, go back to your original contract. There should be terms stated for when payment is due, to help you support your case. Late fees should be listed here, as well, along with if contract termination is possible. While you ideally want to hold onto a client (even if they pay late from time to time), a chronically late-paying client may be viewed as a sign of disrespect and may warrant ending the professional relationship. Setting good boundaries from the onset – via the contract – is your best way to make sure you get paid on time.
It can be difficult for a new freelancer to ask for money. Especially if you don’t have a background in sales, retail, or marketing. As the bedrock for your business, however, payments must be taken seriously and handled promptly. If you see signs of a client pushing payment dates out, making excuses for why they don’t owe or dragging out conversations to stall payments, you should make plans to replace the client as soon as possible. Your time should be spent doing what you get paid to do – not chasing payments.