How to get paid on time is a question we get asked on a daily basis. It seems that every freelancer has a story or two about a late payment, battling with a client for payment or not getting paid at all. Getting paid on time for the work you do as a freelancer is essential to keep money flowing into your business but more importantly, to turn your passion into a long term successful freelance career. So, why is it so hard to get paid on time?
We’ve compiled a few tips to help prevent late payments and get paid fairly for the work you do, on time, whilst keeping the client happy.
Preempt a late payment
At the risk of sounding slightly paranoid, presuming the client is going to pay you late is a pretty good mindset to have before starting a job. There are a few things you can do to help reduce the chances of late payment or non payment that are quick and easy to implement.
Get a deposit
Assuming you have spoken with the client on a few occasions and they have agreed to use your services, you should have a pretty good relationship already. We know a lot of freelancers worry about losing the client if they ask for a deposit. However, it would be highly unusual for a client to dump you before the job for the sake of a deposit and if they do, it would raise questions about their intentions to pay you at all. Include the details of the deposit in your contract as well any contingencies (more on this later) and the client should be fine with it.
We recommend anything from a 20% to 50% deposit with the remainder to be paid on completion of the job or within your agreed terms.
Getting the rest of the money
If you ask for the remainder of the payment to be made on completion of the job, you can hold back the assets (when possible) before realising them to the client on payment. This is not possible for everyone.
A makeup artist, for example, who asks for the remaining 50% of the payment before applying the last few brush strokes to the smokey eye wouldn’t go down too well. However, graphic designers can hold back assets, photographers can provide low-res examples and retain the raw images etc…
If you feel this approach shows a lack of trust with the client, try to negotiate the final payment once they sign off on the work. Some companies will have set payment terms whilst others will be more flexible. Before signing the contract, ask about it and see what you can get.
The contract
A lot of freelancers don’t use contracts. Why? Because they think they are unnecessary for a small job or might scare the client off. This is a big mistake and when things go wrong, you’re in a much weaker position if you don’t have one in place. Most freelancers who ask for our advice about late payments don’t have a contract and only have a verbal agreement to go by.
A contact is there to protect you and the client from a number of potential issues, late payment and non payment being amongst the most common. ALWAYS use a contract, no matter how small the job.
In the contract you can lay out any of your terms regarding the job and when you would like to get paid. If you felt that asking for payment on the day of completion was unrealistic, payment terms within 30 days is standard.
New to contracts? Don’t worry, we’ve got loads of legal templates that have been designed for freelancers. Download the Service Agreement template when working with a client and edit it to your liking. Legal contracts may seem intimidating but you’ll quickly get the hang of them.
Invoice the client on time
An invoice is more than just a means of getting paid, it’s also a reminder to the client. If you have agreed to terms of payment in the contract to be 30 days or more, send the invoice on the day you complete the job. This will increase the chances of getting paid early. Make sure that your bank details are clearly listed on the invoice as well as the services you provided and the cost with any additional amounts to be paid eg: VAT. A poorly written invoice slows down the payment process and increases the amount of time you spend on admin. Download our Invoice Template to use for all jobs.
Getting paid on time
Most of the time, you will be at the mercy of the client’s internal payment system. A small startup company can pay you whenever they like, however, they probably have a date every month when they pay all freelancers and you’ll be included in this batch. If you finish the job a day before this set date, you’ll be paid ‘early’ or you might have just missed the deadline in which case it will take a month. Ask the client when you can expect to be paid.
Larger companies are generally a bigger problem when it comes to late payments. Their systems are much more convoluted and often their payment terms are 60 days or more. This is where the conflict lies before a job.
The independent freelancer asks to be paid within 30 days and the imposing corporate juggernaut says no - our policy is 60 days and unless you play by our rules, you’ll never work in this town again. So what’s a freelancer to do? Play by their rules or walk away? Most accept the terms and look at ways to cover their cash flow in the meantime.
Pricing
If we had a pound every time we are asked about pricing... We’ve written a lot on pricing that you can check out, but for the sake of this article, we’ll focus on pricing in relation to the terms the if your agreement.
If you agree on a flat rate for a project, you must precisely lay out what the client is going to get in the contract and what happens if they ask for more work outside of these terms. In the case of a flat rate, it’s a good idea to have an hourly or daily rate that you will charge if the project goes over the agreed terms.
The alternative is an hourly or daily rate to begin with and you will charge the client based on your time. If they have hundreds of changes to the work, no problem, you can put them on the clock and get paid.
DO NOT agree to a flat fee for a project and do extra work on top for nothing. This is exploitative and often comes down to the freelancer not feeling confident enough to say no. If you started work without a well-written contract, this is where you can get into trouble.
We work with a lot of students who are freelancing whilst at university and they frequently find themselves working at a loss because they have accepted a job for a flat fee without a contract and the client is demanding more and more work or else they won’t get paid.
How to deal with late payments
We know that getting paid on time is a big problem in the freelance industry and many freelancers find it difficult to strike a balance between asking for payment and keeping a good relationship with the client.
If a client is delaying payment or refusing to pay, we’ve written a lot on the topic that should help you get what you’re owed. Check out:
We also have a complete guide on getting paid including email templates you can use to ramp up the requests. If it comes to it, we have a guide on preparing for the Small Claims court too.
Relationship Building
We recommend implementing as many of these tips as possible to lower the risk of a late or non payment but at the end of the day, it often comes down to clear communication and building a good relationship with the client. Follow these steps and you’ll not only have a better looking cash flow situation but you’ll save hundreds of hours of chasing clients for payment. Know your value and stick to it!
