How to Ensure Timely Payments for Freelancers

The greatest benefit of the omnipresence of the Internet is that today you can easily find myriad of jobs online. And this is where you can get caught in a trap. Due to the lack of experience, you can end up working without being paid.

To help you avoid such a scenario, we’ve prepared an extensive guide that will show you how to get paid on time and in accordance with the terms you agree with your clients.

Therefore, we’re going to follow the next ten points:

  • handpick the right clients
  • communicate with the right people
  • negotiate the terms in advance
  • avoid verbal agreements
  • build your reputation
  • ask for down payments
  • opt for milestone payments
  • offer various payment gateways
  • ensure smooth invoicing
  • take legal action

Handpick the right clients

Some people might claim that a new freelancer can’t be too picky when it comes to their clients.

On the one hand, it’s true that you might not be getting too many offers at the beginning. On the other, under no condition should you allow your clients to exploit you. What every new entrepreneur can do is carefully choose the clients they’re going to work with.

To reduce the risk of choosing problematic clients, use the following checklist:

  • Check your client’s status on freelancing websites. If they’re not registered on any of them, it’s already a good reason to raise a few eyebrows.
  • Ask them for their physical address, as well as for their website.
  • Inspect the legal background of the client’s company. In the USA, you can search the EDGAR database on the US Securities and Exchange Commission website. Find a similar website in your country.
  • Visit your client’s LinkedIn profile, as well as other social media pages.
  • Google the client and their company in combination with words “fraud”, “scam”, “late payments” and similar terms, to see if there are any forum threads or comments about that business.

Communicate with the right people

Even if you manage to score an honest client, you can still make a mistake, especially if you don’t communicate with the right people. Because of that, make sure that you discuss the payment matters with their financial manager. That way, you’ll get accurate information from the horse’s mouth.

For instance, if your price is too high for your client’s budget, you can negotiate it when you’re talking to a financial official.

As opposed to that, talking to other employees will take a lot of time. The worst of it all, if you don’t reach an agreement, you could miss some other projects in the meantime.

Negotiate the terms in advance

One of the most important aspects of every business collaboration is to negotiate the terms in advance. First, you need to set a specific price for every project you bid on. Moreover, you should also prepare several what-if scenarios for the negotiations. If you have a pre-set tactic once you sit down with your potential client, you’ll have more room for maneuver.

Also, you shouldn’t be too generous when it comes to pricing. You could consider adjusting your rates only to repeat clients or if you can score some long-term, lucrative projects.

It’s important to know that experienced entrepreneurs will ask you to deliver a specified list of your works and expenses. Because of that, every freelancer needs to learn how to give a proper estimate. When you’ve learnt how to write this document, your clients will know what they’re paying for.

In return, they will be happy to pay you for your work.

Avoid verbal agreements

According to Law Dictionary, verbal agreements and oral contracts are generally valid and legally binding as long as they are reasonable, equitable, conscionable, and made in good faith. So, in theory, any verbal agreement you make with a client is equal to its written counterpart.

However, in practice, proving its validity could be a long-lasting and expensive procedure. Imagine that you have a client from another country of even continent. If you don’t make a full-scale written contract that will protect both parties, how can any of you prove that you have a verbal agreement?

Moreover, what court would be in charge of dealing with your case? For all these reasons, put every single contract you make with a new client in writing.

As for your loyal clients, it’s fine if you leave some details to a verbal agreement. Still, use this tactic only with your long-term, loyal clients.

Build your reputation

Like any other business person, you look at your potential clients from your own point of view. You don’t want to be tricked or exploited, so you’re applying different strategies that will ensure you get paid for your work.

While doing so, you need to be aware that your potential clients are playing the same game. Most of them are honest professionals who want to work with people of an equal kind. Hence, you’ll get on their radar more easily if you take some time to build your online reputation. Creating a full LinkedIn profile will be a good start. Moreover, build a digital portfolio that will contain all your finished projects.

Also, some freelancing platforms, like Upwork, allow you to reveal how much you’ve earned or paid others. Use these options to support your credibility.

All these features will help your potential client get to know you in a better way. When two true professionals find each other, there’s little or no risk of any payment irregularities.

Ask for down payments

Reaching an agreement on a down payment is the best way to protect both interested parties in a business relationship.

The main problem with this payment-ensuring technique is that some freelancers sometimes don’t know how much to ask for in advance. Since every collaboration is different, it’s hard to give a universal answer to this question. The most logical advice is that you should ask for an upfront payment that you find suitable for a particular project.

For instance, asking a client to pay you 20% of the total sum after they receive your estimate could be a fair solution.

You’ll get a motive to start working on the project and the client will invest a sum that will ensure they don’t abandon your agreement.

Opt for milestone payments

In addition to deposit payments, both clients and freelancers will benefit from milestone payments, as well.

These mini-deadlines will force you to continuously work on your project.

Moreover, your clients will have a chance to make corrections on time. Nevertheless, the number and extent of their interventions need to be specified in advance, so that you don’t end up working on the same project all over again.

Apart from that, your client will pay you more easily if they can break down the total sum into several installments. The milestones will enable them to do so.

Finally, instead of waiting for months to get paid, money will keep coming as you work on the project. That way, you can cover various overhead costs and keep the business roll.

Offer various payment options

It might happen that some clients don’t use some payment options you use or the other way around. Therefore, always tell your clients during the negotiations what methods you prefer. Is it a credit card, PayPal, check, bank transfer or maybe bitcoins?

It would be a shame to finish a project and not be able to accept the payment.

Of course, you should also anticipate the issue of different currencies.

For instance, if your client from Norway pays you in crowns and you receive that payment in dollars, you might lose a lot due to different currency exchange rates.

To avoid such losses, you should always specify the currency in which you receive payments.

Ensure smooth invoicing

Freelancers whose individual career takes off successfully will soon find themselves lost in dozens of documents, invoices and financial reports, that is, unless they start using online invoicing services such as Invoicebus. These services can speed up the entire work and payment process. They help you receive payments through your invoices with only a few clicks.

That way, you can accept more projects, make payments much faster and get paid in no time.

These solutions also enable you to send invoices to your repeat customers automatically, on pre-set dates. Furthermore, invoicing software features allow you to set automatic reminders and chase your payments more easily. They will keep your clients aware that their payments to you are due soon.

All these measures will bring a twofold benefit to your freelancing business. Not only you’ll get your payments on time, but you won’t have to deal with all these issues in a slow, traditional way.

Take legal actions

If you face a payment inconvenience in spite of all these tactics, you should apply a string of actions, in order to force your debtor to pay you:

  • Resend the invoice – Give your debtor a week or so after the deadline. If they still don’t pay their debt, resend the invoice for that project and attach a reminder note.
  • Phone the financial manager – In case there’s still no answer, call the person you negotiated the financial terms with. Inform them on the late payment.
  • Send the last reminder – It should serve as the ultimate warning to your client before you send them to court. Include key people of the organization in your email.
  • Going to court – Collect all the documents, reports and reminders and file an official lawsuit against the client.

The last point is recommended only in some extreme cases. For most freelancers, the sum they earned on the project will only cover the legal costs. So, it’s wiser to study and apply the nine previous points.

Conclusion

Freelancers are still in a grey area when it comes to their legal status and rights. The good news is that the legal authorities understand freelancers’ problems. The New York City Council has brought the Freelancer Isn’t Free Act that protects the rights of allegedly 4 million NYC freelancers.

Hopefully, other city councils and national governments will follow suit and realize how important this issue is for the economy. Until then, you need to be careful when you’re making deals with your clients. The strategies discussed in this article will enable you to lead your negotiations and close your deals in a less stressful way.

Finally, they’ll help you meet the demands of your future clients while ensuring you always get properly paid for your hard work.

Mark Thomasson
Mark is a biz-dev hero at Invoicebus - a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.
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