Get Paid on Time when Freelancing

While freelancing provides you with a lot of freedoms not experienced by salaried workers, there is one less certainty involved and that is the regular paycheck. As such, timely payment is very important and chasing up non-payments can be worrying and time-consuming. Using ways to ensure that you do get paid on time is worth putting effort into.

Steps

  1. Issue invoices for all work completed. Invoices serve as a record of services performed. There is less recourse to following up complaints if you haven't kept a clear paper trail. Treat invoices in the same manner as a contract; their existence is a formal indicator of work performed and payment promised.
  2. Put all the necessary information on the invoice from the outset. Sometimes payment will be held up due to missing information. To avoid this problem, ensure that the following basic elements are clearly outlined as part of the invoice:
    • Description of the services provided
    • Cost and method of calculating (hourly, for total or stage of project, additional expenses, etc.)
    • Detail any permissible additional expenses clearly, such as long distance phone calls, plane travel, etc.
    • Date and your address and contact details
    • Tax if relevant
    • An identifier for your record-keeping system
    • Your payment terms
  3. Keep a calendar reminder of the due date. If the invoice has not been paid on time, send a reminder notice or telephone and politely request information about the progress of payment. Calling is useful because it lets people know you are onto the matter and it also helps you to work out whether it's an oversight, or what the delays might be. Try to reach a solution together as to payment if needed. If the client is having temporary cash flow problems, or is out of town, or has misplaced the invoice, these issues can usually be worked through.
  4. Be persistent. The day after payment is overdue, send a reminder letter to the accounts division or payment officer, advising the client that they have missed the payment date. This lets them know that you have noticed. Over the upcoming week or two, continue to contact the client's office by phone, requesting payment of the invoice and highlighting your terms of payment. Remain calm and polite but be firm. Firm politeness keeps relationships alive and most clients will soon realize that you are on the ball and they won't pay late again. If you're still not getting anywhere and you're not prepared to compromise despite having discussed things with the client, proceed to the next step.
  5. Seek legal advice and recourse. If you cannot obtain the money owed to you despite trying, it is probably time to seek redress. You can start with a debt collection agency and if your have no luck there, commence proceedings through the courts. Use a lawyer to assist you (it is really useful to have established a good working relationship with a lawyer as part of your freelance business for just such events). You will need to identify the costs involved and whether going to court will be beneficial. Many jurisdictions provide very affordable small claims court services to assist businesses, so it pays to look into it.

Tips

  • Use regular confirmations to avoid the potential for dispute over paying invoices. Confirm by writing what is expected of you at the start of the freelance work, and confirm any variations to the work that you are performing in the same manner. An e-mail should suffice and keep it short but relevant. If the client is uncertain or disagrees, it is better to find out at this point than when you fulfill the contract and deliver something not wanted.
  • Avoid continuing to provide services to repeat offenders. Sometimes the business isn't worth it and that's the case with clients who never pay on time or who still have a number of outstanding accounts.
  • Don't wonder what a client is doing – ring them up and find out. Your invoice may have gone missing and/or they might not even be aware it is due.
  • Always read over your invoice before sending it, to double check that everything is included and that the figures are accurate.
  • Some firms offer an incentive for timely or early payment; if you can afford to do this, perhaps consider offering a percentage off the bill, such as 5%, or the equivalent of the relevant tax on services, etc. This might not be something you can afford until you're well established.

Warnings

  • Avoid being too sympathetic to late-payers. You've delivered and now they need to meet their side of the agreement. If they're running an efficient business, then timely payment of invoices should form a part of that.
  • Don't put off sending out invoices. Be prompt in preparing them once work has been done and send them off for immediate payment.

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