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Let’s talk real challenges: getting paid can be a wild ride. The unpredictability and the hustle for payments made on time can often give us a serious headache, don’t they? So, here’s a bit of eye-opening info from the Independent Economy Council: as many as 74% of freelancers have dealt with clients who don’t stick to their payment timelines. Even more alerting, 16% of freelancers find themselves waiting for their hard-earned money for two months or even longer. Crazy, right?
That’s why I want to dig into these common struggles, share with you insights I’ve gathered along the way and most importantly give you some practical, no-nonsense rules that can that can help overcome these challenges. I’ll dive into some essential tips for you to get paid on time, every time.
Communicate your expectations
We’ve all experienced that post-meeting high with a client, the kind where the excitement about the project is mutual, and there’s a genuine desire to work together. It’s like finding the perfect match and seeing everything through rose-tinted glasses. However, it’s crucial to hit the pause button for a moment of thoughtful reflection. Take a minute to consider your expectations for the project. Once these expectations are crystal clear, initiate another conversation with your client. Share comprehensive details about the project scope, requirements, and payment terms before fully diving into the work. This not only establishes a solid foundation for your client relationship but also reduces the likelihood of misunderstandings down the road. It’s a small gesture with significant impact, that ensures a seamless and successful working relationship.
A well drafted contract
Ah, the naivety of my younger years! Back then, I believed a simple handshake and a gentleman’s agreement were all it took to get paid after a job. My optimistic view led me to think everyone was honest and eager to settle their dues for the services and goods they needed. I know I always pay my accountant with a huge smile on my face as I prefer not to do this task myself, and I genuinely thought this was the case for everyone.
After years of experience (including bad ones with unpaid invoices) my approach evolved. Today, I whip up contracts with my terms and conditions, and I make sure they come back signed. Having a written agreement not only makes me look more professional, but it also saved me a lot of anxiety. More importantly, the contract serves as a handy reference point in case disputes rear their ugly heads. As a freelancer, a well-drafted and signed contract is truly your best buddy throughout a project.
Elements to Include in Your Contract:
Outline of scope of work
Clearly define the services you will provide. Outline the project’s scope to make sure you don’t work more than your get paid for and what the deliverables are. Be as detailed as possible to avoid misunderstandings.
Timeline
Specify project deadlines, milestones, and the overall timeline for completion.
Payment Terms
Clearly outline the payment structure, including: Total project cost, payment schedule (e.g., upfront deposit, milestone payments, final payment), accepted payment methods, late payment fees, if applicable.
Penalties for Late Payments
To nudge clients towards timely payments, think about adding some penalties to your contract. Now, I know the term “penalties” might sound a bit stern and negative, but it’s not as harsh as it seems. It’s more like outlining the outcomes of late payments, such as interest charges or a slight increase in the total amount due. It’s not about being confrontational; it’s just a sensible aspect of running a business. Your client is likely familiar with these terms, as they might use them in their dealings too. So, embrace late fees as a way to make sure your hard-earned hours are rightfully compensated—you’ve earned them!
Terms and Conditions*
For legal protection, make sure that your Terms & Conditions are accepted when the contract is signed. In your T&C, provide all the information that apply in your business. This can be cancellation policy, intellectual property rights, indemnification, termination clause, etc…
Get an upfront payment from your client
You might think that now that you have the contract signed, you’re finally going to be able to start working on your project and do what you love to do! I am sorry to disappoint. After the contract, we need to talk finances. You need to make sure you’re not working like a fool and you need to get your upfront payment. This will benefit you in different ways:
Commitment & Trust
By asking them to pay a percentage or the full amount of the invoice upfront, they’re essentially involved to work with you. Which reassures you that you’re not working for nothing and creates a trust-relationship between your client and yourself. This is a good start for your client-relationship.
Bringing cashflow for your business
Delivering top-notch results often involves not just time but sometimes a bit of upfront investment in the project. Without asking for upfront payment, you’re basically dipping into your own pocket for those investments. Not the best scenario for your business, right? Your business is the most important thing as a freelancer, and you need to keep your finances running smoothly.
The different types of upfront payments
100% upfront
Some clients appreciate clearing the tab in advance to avoid lingering costs. The key here is to make sure that the project scope is laid out in black and white and is a point of agreement in your contract. You need to do this because there are instances where clients may request additional services beyond the initially agreed-upon scope. It’s crucial to remember that paying upfront doesn’t imply providing extra work without fair compensation. If the client seeks additional services, it’s reasonable to discuss and agree on an appropriate compensation for the extra labor involved. Open communication ensures that both parties are on the same page and helps maintain a fair and balanced working relationship.
TIP If you prefer having the full amount of your invoice paid upfront, sweeten the deal for your client. Consider offering a discount for upfront payments; it’s a win-win situation for both parties. Your client get a reduced cost, and you get the benefit of having your cash flow boosted right from the start. Fair and square, right?
Deposit payments
When you’re engaging with new clients, it’s quite normal to ask for an upfront deposit. The percentage for this initial payment isn’t set in stone—it’s all about finding a number that sits well with both you and your client, based on the unique aspects of the project. And if the project demands some hefty investments, leaning toward a higher upfront percentage can be a smart move to directly cover those costs. It’s essentially about finding a balance that meets both parties’ needs.
Milestone payments
And last but not least we have the milestone payments. Think of them as your project’s financial journey – instead of the client paying you the full amount at the project’s finish line, payments are made at different milestones. It’s like breaking down the project into manageable chunks, and you get paid as you hit specific goals. This can be a good type of payment if you have a long project. With this setup, you don’t have to worry if your client has a sudden financial hiccup, or if they decide the work isn’t what they wanted, you’re still securing your well-deserved payment for the completed phases.
Be wary of hesitant clients
If you come across a client hesitating to pay upfront or pushing for payment only at the project’s end, it’s a red flag. Take a moment to reconsider whether this is the kind of client relationship you want to dive into. A client reluctant about deposits may signal potential issues with payment down the road, putting both your time and money at risk. It’s worth giving it a second thought before proceeding.
F*ck you, Pay me
If you don’t know this epic talk already, please check it out. Mike Monteiro explains to all creative freelancers how to deal with your clients in the best way possible.
Conclusion
Nailing down (timely) payments and getting paid can be a bit of a wild ride, filled with twists and turns. But worry not, you’ve got the power to take the reins. Take charge by strategically outlining your payment terms, deadlines, and expectations. Create a model for a thoughtful payment strategy that benefits you and your client. Let those payments roll in like clockwork and ensure that you are duly compensated for your efforts.
