9 Ways Freelancers Can Get Paid on Time and Avoid Deadbeat Clients
Grow Your Business, Not Your Inbox
Cash flow management for freelancers is more than just finding clever ways to save money personally and professionally. It means getting paid for the services you provide but that, unfortunately, requires more that sending out an invoice and then sitting back waiting for your payment. You also have bills to pay and if you don’t have the funds, then you risk defaulting on the gadgets and services that keep your business afloat.
Here is what I’ve learned about getting paid from 15 years as a freelance accountant and small business owner;
1. Be known as a professional.
Your reputation isn’t just important to attract and retain your current clients, it can actually play a part in getting paid on time. If you’re rude to clients, late on projects, deliver sub-par work and have a website that screams amateur, then why would a client make paying your invoice a priority?
Prove to clients that you are a true professional worth hiring by always being polite, exceeding goals on time, sharing reviews and showcasing your portfolio on your website.
2. Do some homework on prospective clients.
When you are approached by a prospective client you should do a little digging. Search online for any red flags from your fellow freelancers about the client. You may be able to view consumer reviews on the Better Business Bureau from other consultants who have dealt with the client in the past and were left with a bad taste in their mouth. You should also review their website to make sure that everything appears to be on the up and up.
In short, if you know that the client could become a potential headache, then why would you want to take a chance with them?
3. Be flexible with your rates.
What happens when you’re approached by a client, but they can’t afford your rates? Do you decline their business? Or, are you willing to be flexible?
This isn’t saying you should always give clients a break. You deserve to get paid for what you’re worth. It just means if you want to attract clients you want to be flexible with your rates. This is especially true when you’re just starting out, since this will add to your experience and maybe earn you some referrals.
When deciding on rates you usually have three options:
Hourly fees: You can use sites like Careers in Business to learn how much consultants in your area are charging per hour. Then, use a different invoicing tools with a solid time tracker to help you with managing your hours.
Project rates: You can also charge a fixed amount for a project. One way to figure this rate out is by estimating how many hours you believe it will take to complete the project, multiply that amount by your hourly rate and add 10 percent.
Retainer basis: This is an arrangement where you agree to a monthly fee for an agreed upon number of hours.
4. Bill up front.
Don’t think it’s rude or unprofessional to bill up front. I typically bill up to $5,000 upfront. It’s not only a common practice, it also ensures that you get paid for your services and keep the cash flowing in.
How much you should ask for before starting on a job depends on your industry and how you’ve setup your rates. When you're charging for bigger projects 30 percent up front is pretty common. If you’re billing for time, then you may want to invoice for one or two weeks upfront. I prefer to invoice the whole month upfront and then move to net 30. Many freelancers use invoicing and payment services such as Due.com
5. Make it easy for clients to pay you.
Instead of only accepting checks, which have to be sent snail and then deposited into your bank account, you should accept multiple forms of payment. Whether it’s accepting eChecks, credit/debit cards or setting up a PayPal account, you need to make it easy for your clients to pay you.
Most invoicing software allows you to select your preferred method(s) of payment, so a client should be able to pay your invoice with just one-click of a button. Here are a few good tips to get paid online from fellow Entrepreneur contributor John Rampton.
6. Invoice promptly.
Instead of waiting every month to get paid, you should either bill weekly or immediately following the completion of a job. This not only keeps a positive cash flow, it also prevents you forgetting to send out the bill.
If you use invoicing software, you can either setup recurring client profiles or automated billing, which not only makes your life easier, it also makes sure that your invoice gets to the client in a timely manner. Consider offering clients a discount if they pay ahead of time, such as 10 percent if paid-in-full within 21 days.
7. Never work until you're paid.
You’re not a debt collector. Instead of spending time tracking down clients and asking why their invoice is overdue, you could be working on other projects for the clients who are paying you. If you send out an invoice and it hasn’t been paid on the agreed upon date, then stop working for that client until the invoice is paid.
Follow up with clients after sending an invoice. If you have a client who has always paid on time and suddenly you don’t receive a payment, you should reach out to them politely and make sure everything is all right. Maybe they missed the email or were in a severe car accident and have been in the hospital.
I've had long-term clients who missed a month but I continued working for them. Most of the time it's just that they missed the invoice but this isn't always the case!
8. Have it in writing.
A contract protects both parties, since it should prevent either party from pulling a fast one (plus it adds to that whole professional perception I mentioned earlier). Contracts also specify the terms and conditions of the project which include everything from expectations to terms of payment. That keeps everyone on the same page. A contract might specify that you require a 30 percent deposit, 50 percent half way through, and 20 percent when completed.
If you don’t have the budget for an attorney, there are plenty of websites that provide Contracts Service Agreements. Entrepreneur, RocketLawyer, QuoteRoller and PandaDoc are just a handful of locations where you can find amazing contract templates.
9. Call in the calvary.
What happens when a client still hasn’t paid an invoice? If you have an assistant or colleague who is more assertive than you, have them handle outstanding invoices. Follow up with these difficult clients by emailing or calling them and asking for a payment. If all else fails, you may have to ask your attorney to send the client a letter informing them that if the debt is unsettled there will be legal action, such as being taken to small claims court. Another route that I have had to use in the past is to hire a debt collection agency.
Remember, if you want to get paid on-time make sure you communicate frequently with you client, have set clear expectations and you've properly invoiced them. Here's to getting paid 100 percent of the time!