Despite what your client might be telling you, the check isn’t always in the mail.
Chasing late payments on invoices is one of the toughest, and most awkward, jobs for any freelancer.
But this is business. You are entitled to be paid for the work you’ve done.
So what can you do?
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Try the following 4 tips to get what’s owed to you.
Set terms and expectations
Invoicing terms are one of the first things every freelancer should establish with each client.
Talking about the terms early on in the relationship will help avoid any awkwardness further on down the line.
The sooner you set the terms and expectations, the better.
What terms should you apply?
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That’s really up to you. You can set your own rules.
Some people charge an additional 3% after 30 days and 4% after 60 days.
Some find it best to set a term that if the final invoice isn’t paid within 30 days, a 5% “non-payment” fee is charged.
You choose the terms that work best for you and your situation.
Get it in writing
One of the best ways you can help yourself get paid is to set the terms and expectations in a written contract.
If you start working with a client without a contract, you could run into problems later on, especially when it comes to payment.
Sending a contract for a client to sign serves a few purposes.
First, it establishes a professional relationship and sets the tone for the rest of your working relationship.
A contract also helps by outlining the specific terms and expectations of the work so neither party can say later on they were misunderstood.
This contract should also specifically address the terms of payment and serve as proof of your work agreement.
Remember, contracts are there to protect both parties.
Too many freelancers let late-paying clients slide.
Sometimes you just don’t want to confront or offend your client.
Sometimes you’re simply too busy to track receivables.
First step: use an accounting software to review your receivables at least once a week.
Then, develop a system for following up with your payments that are 15 days, 30 days, 45 days late – and stick to it.
You may want to use a service like AND CO (this article’s partner) to help reduce late payments.
Use a demand letter
When you have a stubborn or non-responsive client, the most effective measure is to send a physical demand letter.
Some clients know they owe you money, but they don’t expect you’ll ever pursue them.
Things often change if you write a firm letter, called a demand letter, laying out the reasons money is owed to you.
Writing a demand letter for payment is often recommended before you pursue small claims court. Your letter should include:
• A review of the history of your dispute. This is a good place to remind your client about the contract and payment terms that have been established.
• Be polite. Avoid personally attacking your client. The more angry and annoying you are, the more you invite the other person to respond in a similar, angry manner.
• Say what you want. Ask for the specific amount of money to be paid by a set date.
• Conclude by stating you will file in small claims court. Of course, this is not the action you want to take, but the demand letter should state what will happen if your demand is not met.
Williams & Harricks, one of AND CO’s newest services, allows you to send a real, physical demand letter to your client when non-payment or late payment is an issue. This letter is a reminder that payment is due.
This letter won’t necessarily ensure payment, but it saves you from an awkward conversation or wasting time chasing the payment.
When you’re running your own freelancing business, it’s important to get paid promptly by your clients so you can keep your cash flow healthy.
Stay in touch with your clients, use tools like AND CO to help you get paid, and create a schedule that works for both you and your clients.
How have you dealt with late-paying clients? Tell us your tips in the comments!
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