It’s rare to meet a freelancer who hasn’t had to chase a late payment or had issues with a client who refused to pay. It impacts cash flow, is detrimental to the freelancer’s well-being, and is highly time-consuming. Freelancers don’t want to jeopardise the client relationship with threatening emails or, worse, spend time in the Small Claims Court. So what's the answer? When Solna, a smart invoicing App, got in touch, we jumped at the chance to ask their advice.

Freelancers don’t have it easy. It’s something you probably know all too well. Between scrapping for new customers and delivering great work, you’ve got to find time for yourself and ensure the business side of your operation runs smoothly. Throw some cash flow issues into the mix, and you have a recipe for disaster.

And you didn’t get into freelancing to struggle, did you? Didn’t think as much. The short version of the story is freelancers are increasingly struggling with cash flow, and the number one reason for that is late invoice payments.

One in ten freelancers has faced difficulty paying their mortgage or rent because of late invoice payment. 37 percent have turned to family and friends because they’re cash poor. And the most startling statistic - on average, freelancer invoices are paid 18 days late. 18. Days. Late. Ludicrous, isn’t it?

The fact is, however, that for these freelancers, many issues could be resolved if they were just able to get their customers to pay them on time. That’s the key here. If you’re looking for a few pragmatic ways to achieve just that, read on.

Credit check your customers

First things first - a step to help avoid poor paying customers in the first place (although it only applies to businesses, not individuals).

If you have business customers, there are online tools you can use to access and monitor business credit scores. We made sure to include this feature in Solna.

Every business with a registered company number has a credit profile. You can access this information, before you work with them, to form a risk profile. You might surmise that those with a poor credit score are less likely to pay you on time because they have a poor financial history. And that’s perfectly fine.

It certainly isn’t a guarantee that a customer will or won't pay you on time, but never-the-less, credit scores are a good indication of the financial health of a potential customer. You’ll have the knowledge to decide if you want to work with a specific customer, and what payments terms you might set (more on that below). Use these in your project decision process to help weed out poor payers and make informed decisions.

Set very clear payment terms

If you can, always demand payment in advance of work. Or at the very least, ask for a percentage of the order value up front. These are both common in creative industries and are a surefire way to keep the money rolling in.

If the above isn’t an option for you, the terms you set in your contract/agreement are very important. They’ve got to be clear. Requesting payment on Net 7 or Net 10 terms (payment within 7 or 10 days of invoice receipt) is the preferred option. Net 30 is the most common, but it means you might not get paid until 30 days after invoice issue. Doing a small job with a quick turnaround? We’d recommend you opt for shorter payments terms and use Net 7 or Net 10. Most freelancers can’t afford to wait a month for payment, and waiting 30+ days for a £300 invoice to clear is not healthy for your budgets or your pockets. The shorter the gap between invoice and payment, the better.  

Make sure your invoices have highlighted terms on them. Your payment terms should also be mentioned in every invoice email you send. This will reinforce your terms and ensure your customer sees them - even if they don’t open the invoice.

Make it easy for customers to pay you

How easy do you make it for your customers to pay you?

Most freelancers accept payment by BACS (otherwise known as bank transfer), only. This is a fine payment method, but it isn’t convenient sometimes. The most convenient way for a customer to pay you is electronically via card, and it’s surprisingly easy to accept card payments.

All you need to do is set up a free account with Stripe or PayPal. You can then embed custom payment links into your invoices. Your customer will click the link and be taken to a secure payment page where you’ve already inputted the amount for them. As long as they have an internet connection and a debit card, they can pay you. Easy!  

Send your invoice to the right person

We’ll keep this short - your contact at the business you’re working for might not be the person who pays the bills. You also can’t rely on your contact to pass your invoice on. It’s up to you to email your invoice to the right person.

This is usually the finance department or an accountant. Sometimes it’s the business owner. Whatever the case, get their email address, and any other relevant details BEFORE you start the work, that way you can send your invoice to them in good time. By ‘good time’, we mean as soon as possible, ideally when the project has been signed off. Delay sending your invoice and chances are, your customer will assume it’s not urgent and delay payment.  An invoice with the correct details, sent in a timely fashion, will ensure payment doesn’t get delayed because it’s sitting in limbo. 

Stay in the loop and chase up late invoices

If an invoice does become overdue it’s essential you jump on it right away. This creates a sense of urgency and speeds up the process of payment.

It’s important to remember that some customers will forget to pay you. This is normal, so don’t take it personally. The most important thing at this stage is to remind your customer about the invoice so they can action it.

You can only do this if you stay in the loop. If you like to work from your desktop, something as simple as keeping a spreadsheet of your invoices and dates they’re due can help. Check it every day and be sure to take action on any invoices that haven’t been paid on time. You can also remind customers a day before the invoice is due. This’ll keep your invoice fresh in their mind.

Now, if checking into a spreadsheet daily and firing off chaser emails means more work for you, you can easily automate this process.  You can easily set up reminders with our invoice platform Solna. Solna tracks your invoices for you and sends out customisable, automated reminders before and after an invoice is due. You just decide when.

Even better, you can consolidate invoice reminders, so your customer receives no more than one reminder at a time for multiple unpaid invoices. We know you hate talking about, or even asking for money. These ensure you don’t burn your bridges with them or create any nasty awkwardness.

The bottom line is, nobody likes chasing up money. With Solna, you don’t have to! Automate the process and you’ll have more time to concentrate on the things you love to do.

 

Reference: Experian