Getting paid (on time) is one of the biggest frustrations our members have to deal with. Along with the freedom of being your own boss comes the hassle of staying on top of your invoices and finances in general. Many freelancers still use the basic methods of emailing an invoice made via Word or Google Docs making without any tracking process. Other freelancers use an online tool to monitor payments. However you oversee your invoices, you've undoubtedly got a story of a late payment, a non payment or a dispute with a company about money. We feel your pain. We've been there (trust us). We've also done the research to help.
Preemptive Research
It's always tempting to say yes to everything as a freelancer. Unless you're inundated with work, freelancers generally need the money and turning down work is not an option. However, a little research and protection can save you a lot of time, money and headache.
Should the job be for a company check them out. Look at their reviews on Google (their on-site testimonials will always be positive), check that they are a registered business via Companies House web check and look up the Directors of the company if you're still not sure. Should any of the above set your alarm bells ringing, you may need to adjust the agreement to include an up front payment, larger deposit or in extreme cases pull out of the deal completely.
Tips on researching a company
- Research customer reviews online for general sense of the company
- Look up the company and directors
- Check how long they've been in business (using one of the links above)
- Meet the client in person when possible or at least have a chat on the phone
- Get the phone number and email of the point of contact and ask for the accounts department details when applicable.
Set your terms
We know how awkward it can be to ask a client to sign something especially when it's only a small job but it's important that they do. The reality is many freelancers (particularly new freelancers) don't want to jeopordise a deal by sending an agreement for a small job. When working for a private client this practice can be even tougher so it's important to put measures in place to protect yourself. Contracts are in place to protect you and the client. If a client blankly refuses to sign, you may want to ask why.
Ideal process: Use a formal legal document (typically a service agreement) drafted for the job with your terms and conditions clearly laid out. The document, if written correctly, can be tailored for future clients. Include clauses that address the nature of the job, the rate, when the work will be carried out, the delivery of the work, details in the event of cancelation, termination and refunds. Pro Members, check out our Download Centre to download suitable template documents to use.
Secondary process: Should you feel a full-on legal document is too much for some clients, draft a simplified, less intimidating version of the document that is neatly laid out. Using an e-signature site such as Adobe Echosign or E-Sign will make the process very easy for the client and protect you both.
Basic requirement: At the very least, have your agreement laid out in email form so that you have something to refer back to that has been acknowledged by the client. Using clear language lay out the price including a deposit amount, when the work will take place and when the final payment will be paid.
There are a few tips you can try at this early stage to further ensure safe payment.
- Offer a discount for early payment (no more than 10%). This is common practice and motivates the client to pay quickly.
- Request a deposit (standard is between 25% - 30% but for smaller jobs 50% up front is acceptable). A deposit is a great way to lock in the job as it is to secure full payment.
- Hold back on certain services until final payment has been made. This is not always possible but photographers, for example, have leverage using this approach. You could provide the client with the images but hold the copyright release until full payment has been made. Generally, for longer projects, a payment schedule should be agreed based on milestones reached.
- With all of the above, it's about the wording. This is business but it doesn't have to be nasty. By presenting the above in clear, fair and colloquial language you can improve your chances of prompt payment.
- For quick small jobs, asking for 100% of the pay before the job is possible. Not every client will agree to it but if it's less than £60, for instance, you can state that this is your policy.
- Include late fees in the contract. It's not typical practice but if you feel that the client may be unreliable, late fees can be used as a bargaining chip in the chase.
Asking for money
A phrase that fills many new freelancers with dread. How do you ask for money that you're owed without risk of losing the client? Firstly, you shouldn't feel like the bad guy in this situation. They owe you money and it's them who should be apologetic so don't be overly nice or they may walk all over you. Firm but fair is the approach to take as well as trying a few subtle techniques.
Stage 1 - The Approach
If you originally sent an invoice, resend it or send an overdue reminder (most accounting software or invoice apps will have this feature) after around 4 - 7 days. Don't leave this too long and don't jump down their throat too soon. Around a week is about right.
Eliminate the point of contact. Even if you know the client doesn't have an accounts department try to remove the point of contact from the line of questioning. Ask for the email address of the department looking after invoice payments. You can be really casual, keep your point of contact sweet while heavily hinting that you need to get paid with something as simple as "Hi. Hope you're well. Could you send me over the email address of the accounts department so I can chase up the last invoice. Paperwork! Thanks". Save this email so you can use it as proof and also to keep a template for future conflicts.
Should you not have sent an invoice in the first place and you're dealing with a private client, the above casual approach can often work just as well. Make it sound as casual as when they booked you for the job. Keeping up relationships is so important but it's also their responsibility to pay you on time so strike a balance on the first approach.
Stage 2 - The Follow Up
Still no payment from your casual approach after 3 or 4 days? It's time to ramp it up a bit. Start with a call to see if the client received your emails. Getting on the phone early is key. Often there is an explanation and resolution from speaking with a client. It's not a nice call but if you start by saying you're just calling to check if they got your email about the invoice, it keeps it's relaxed. Make sure to get a date as to when the payment will be made. Should calling not work, send an email stating that you still haven't received payment and ask when you can expect the payment to go through. State that the invoice (or payment) is overdue by however many days and ask them to promptly make payment to your account. Give them a few days to make the payment (3 to 4 working days max) or to give you an exact date as to when the payment will be made after you've reminded them.
There may be a case that the client wasn't happy with the work and instead of saying this is holding off on payment. Alternatively, they may have heard about a different price that you offered another client. Whatever the gripe, honest communication is vital to reach resolution.
Stage 3 - Final Demand
It's the situation you were hoping to avoid. The deadline has passed, reminder sent and follow up email long gone, it's now time to go full pelt. It's important to be clever about this stage as you'll generally only get one shot at it before you have to move to legal action so be 100% sure that you're ready to take the plunge. Ask yourself:
- Has the client made any effort to pay you?
- Have they given you a date when payment will be made?
- Are you definitely past the point of no return?
If the answer is no, no and yes then it's time to exercise the contract. Email the client with a final request and state unless payment is made by a specific date then the next stage will be take action. It's highly unlikely you're going to work with this client again if you've hit this point so it's important not to buckle. There is no need to apologise for your harsh tone, the idea is to express your frustration at the lack of action. Remember, it's not lawyer time yet so you want to use that as an absolute last resort. Be firm. Be direct but don't be unnecessarily rude or personal.
