5 effective ways for freelancers to get paid on time
Working as a freelance professional in a creative industry can be a very rewarding experience. It provides the freedom to pursue fun projects with a variety of customers, while doing valuable work in the world. The payment for that work can provide a more-secure and less-stressful lifestyle when you're off the clock... that is, if you manage to get paid.
What if you have a customer who doesn't pay you, no matter what you do? In extreme cases, you could take them to small claims court (if applicable in your state).
A graphic designer friend of mine did just that. Whatever money the customer owed her had to go to court fees and make up for a lost day of work.
I almost wound up there. I had done a webinar with someone and we verbally agreed to split the revenue in half. He ended up keeping $8,000 and ignoring my invoices. When I asked him why he wasn't paying, he told me there was no contract.
I had to pay a lawyer to explain to him that if he used me to get profits for himself and not pay me, that's a form of slavery and therefore illegal. Finally, I got paid $4,000 six months later, after 5 scary legal emails and a burnt business relationship.
That's why it's better to take steps that will help avoid non-payment in the first place. After all, you are worth it. Getting paid for the work you do should feel natural. But that means getting in the habit of relentlessly insisting you get paid.
A good practice is to set aside a "Financial Management Hour" on Fridays, where you look at any late invoices, money that people owe you, and use accounting apps like Billy to automatically re-send the invoice to your contact as a reminder. A quick follow up call on top of the reminder email could really work.
You don't have to be rude. I prefer to give people the benefit of the doubt. They could have forgotten about it. Your email went to spam. Their mom died. You don't know why they are late, just that they are late, and that makes running your business hard.
You are worth getting paid for the value you provide to your clients. So, here are 5 ways to make it less awkward when asking for an invoice payment:
1. Get paid upfront before you do any work
For my consulting business, I offer 10% discounts on any work that gets paid upfront. I won't start any work unless at least 50% is deposited, this is an industry standard and hasn't been a problem for me. If you like that policy, stick to it relentlessly.
2. Charge late fees
With an accounting app like Billy, you can program your invoices to accrue late fees when they are late. So if you decide to add 10% each week your invoice is late, when you send an overdue email reminder to your customer, simply add the late fee. However, the fee is only valid if it's in your invoice terms.
3. Make your terms visible on your invoice
If you do decide to include late fees, make your terms very clear in your invoice notes. With an app like Billy, you can add your terms to your invoice message. I'd add something like, "Net 30 Days plus 5% late fees each month afterwards." Having clear terms and conditions upfront is key.
4. Make it easy for your customers to pay you
Apps like Billy integrate with payment apps like Stripe to let your customers pay your invoices online, using their credit cards. Yes, there's a fee to process card payments. However, consider the value of having that cash almost immediately over the hassle of making collection calls later. Enabling credit cards in Billy Premium is very easy.
5. Send weekly payment due reminders
These can just be friendly notes: "Hey, just want to remind you that this invoice is coming due soon." Let's call this The Money Habit which you do weekly.
If you combine this with a follow up call, here is a short script I like to use when making a collection call:
"Hi Sam. Hey, I wanted to follow up with you about Invoice #126 for the design work I did for you last month. Is that something you might be able to take care of this week?"
If they say, "Yes." Say, "Great! That would be a huge help to me. I really appreciate it, and I look forward to working together with you in the future."
If they say, "No." Ask, "When do you think you can take care of that invoice? Is there anything I can do to help make it easier to pay?"
That's all. No thumb breaking. Just problem-solving. Maybe they can pay 50% of it this week, and the rest next month. Maybe they actually can't pay it, so they are willing to barter.
Did you know that just believing you're worth it makes you a better negotiator? And if you're a better negotiator, you make more money. Check out this research here. Your work is a gift to the world. You deserve to get paid for it!
This tip is part of a 5-day email course which you can get for free here: The Tax Hacking Secrets.
From Career Enlightenment.
RELATED: #4 is a must-read