3 Essential Freelancer Tactics for Getting Paid in 2018

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It's all about getting paid. It's the reason you're freelancing! I suppose you could be doing this for free because you love the work, but then how would you pay for the things you need, right?

Imagine you're working for a company. (No, bear with me; I understand you don't want to go back. This is just an exercise ;)) That company just doesn't pay you for about six weeks. What would happen to you? Your family. What would happen to the company?

Freelancers assume, on average, about $6000 USD in nonpayment debt annually. That's about 13% of their income. This is the most stressful thing that can happen to a freelancer. It sucks the creativity out of their practice. It forces them into survival mode. It artificially creates a scarcity mindset that can lead to all other sorts of damaging behaviours in your practice.

We need better legislation and regulation in many jurisdictions to combat this problem. Legislation like New York City's Freelance Isn't Free Act, which protects indy workers in a number of ways relating to payments.

But in addition to that, we need to manage the collections part of our practice better. I've got some tactics that I use in my practice that I hope will help you. If you're not doing any of these three, then adding them into your practice will help you get paid.

Have a contract

Have a contract. Have a contract. Have a contract. It's critical for clients to understand what you're offering, what the terms are, how you expect to get paid, and how they can expect to receive your finished work. Make sure all those details are spelled out in the contract. There's a few things that should absolutely be in the contract but get your own legal advice for particular implementation! I'm not a lawyer.

  • Payment amount.
  • Payment terms. How much at what points?
  • Ownership of the work. You need to maintain ownership of the work until payment is received in full. That way you can continue to exert control over the work legally.
  • A link to your collections process and any late payment fees or penalties.

Get a deposit

When I work on fixed bid projects, I get a 50% deposit up front. That money is basically what I'm paying myself for the duration of the project. The balance is potentially my profit. So the more efficient I can be delivering the project, the more profit my practice makes. The deposit also indicates to everyone that the project has started. Everyone's all in, and the money is on the table. Never, ever start work unless the money's on the table!

Smaller invoice increments for newer clients

You're getting to know a client for the first time. There's lots of new things to figure out. They're also trying to figure you out. When it comes to money, this can make a lot of things uncomfortable. But it doesn't have to be. For clients who don't do fixed bids, I offer a daily rate. And then I'll invoice weekly. If the invoice doesn't get paid the following week, then I stop work until it's paid. I'm not rude, or angry about it, but I just say I can't continue until the outstanding balance is paid. It's way more difficult to get money for work after the fact.

Waiting until the end of the month to invoice would mean my invoice total is four times the size of weekly billing. That's four times the risk.

After a while, if the client is paying weekly invoices regularly, you might decide to offer them monthly billing if it works better. You're both more comfortable with each other and that's a good time to start considering ways to make each other's lives easier. Alternatively, I also give certain clients discounted rates for prompt payments. You could also work on a monthly retainer that approximates the volume of work, is prepaid before the work happens, and then bill for any amounts over that value.

All these things are negotiable so use your negotiating phase to get the deal you're looking for.

BONUS ITEM: No Net 30 Terms

I realized I left a critcal item off this list when I wrote the outline. Which is, I suppose, one of the benefits of working from an outline!

A merchant bank will offer short-term credit to businesses to help them purchase inventory, supplies, or other needs in order for the business to keep its cashflow working.

The reason I bring that up is that because by offering Net 30 terms (an accounting expression that means that the balance of an invoice must be paid within 30 days) you are essentially offering the same service to your clients.

As a freelancer, it is not your job to be a merchant bank for your clients. You do not need to offer them credit.

It's common practice for agencies, startups, and other small businesses who use freelancers to use this approach to fund the work they do. Then if there's any problems, that usually trickles down to the freelancers. And it shouldn't. You've provided the service. That's not your risk to manage. It's also common practice for a small number of those companies to use your services without ever intending to pay for them. So protect yourself from those people!

You should make all your invoices Due on receipt. They should be paid immediately. These businesses don't pay their plumbers in 30 days. They don't pay for their lunch in 30 days, they don't pay their employees in 30 days. And they don't pay you in 30 days.

I hope you find these valueable. Have you been burned by nonpayment? How much was the invoice? Tell me about it on Twitter, Facebook, or Instagram


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