No matter how much you love what you do for a career, if you can’t pay the bills with it, it’s not a career, it’s a hobby.
And as a freelancer, proper invoicing techniques and policies are so crucial to the survival of your business. If payments are not coming on time, your entire business– and your entire livelihood– can be threatened.
Receiving payment regularly and quickly are essential to any thriving business, and it is important that you know what steps are necessary to ensure that this happens.
We have all been in the uncomfortable position of not receiving a payment at the time we expected. Especially early on in your career, this can sometimes be well beyond uncomfortable; it can create pure chaos.
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Freelancers live in a world of fixed expenses but variable income, and you want to make sure that you can get the money you have earned when you expect it.
This article will go over some of the basic (yet often overlooked) steps that are necessary to getting paid on time as well as a few helpful hacks for getting paid faster as a freelancer.
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The goal here is to help you avoid some of the missteps that put many entrepreneurs’ businesses in jeopardy, and to educate you on how some simple billing tips will help your business grow more quickly.
This should help you keep your accounts healthy, build better relationships with your clients and take your business to the next level with even more money!
1. Always Get a Deposit
So many freelancers overlook this simple step that can help them avoid so many difficulties.
Many are so excited about getting a new client that they do not worry about requesting a deposit or down payment on their services. Others simply do not know that this is to be expected.
Whatever the reason, many freelancers who do not get a deposit once quickly run into problems and do not make the same mistake again.
Requiring a down payment on your services is a standard industry practice, and there is no reason not to. Doing so not only gives you a level of security by ensuring payment, it also shows the client that you are committed to them and their project.
Obviously the amount will vary according to the job, but you should on plan on invoicing for at least one to two weeks’ worth of work from the start of your business relationship.
2. Look Out for Problem Clients
The best way to get paid quickly as a freelancer is to ensure that you are working with the right kind of clients.
If you are new to your profession, you may be taking as much work as you can get, but getting involved with a potentially problematic client could actually be much more trouble than it is worth.
There are a few key red flags that signify a problem client.
- The client seems like a cheapskate. You can usually spot this upfront, as they want to haggle about every penny, or they are hesitant to pay your requested deposit amount.
- The client is flaky. If your client never remembers your meeting or is impossible to get on the phone, this is a sign for trouble in the future.
- The client doesn’t know what they want. If your client is unable to set clear expectations about the work or the pay, this probably won’t get better in the future.
3. Invoice Upfront
Getting a down payment will start your business relationship off on the right foot, and invoicing upfront will ensure things continue to run smoothly.
As a general rule, you never want to work if you have not gotten paid.
Many freelancing payments work on NET 30 terms (where a client has 30 days to pay an invoice) or similar circumstances.
If you work under a NET 30 structure and only bill once a month, you could be waiting up to 60 days before you actually receive a payment!
The amount you bill upfront depends on several factors including your industry, the job and the rates that you set from the outset. Invoicing one to two weeks in advance is usually standard practice on jobs that are billed for time.
Billing for work upfront ensures that your clients have a clear payment schedule and that you will get paid within a reasonable amount of time.
This is one of the first steps in ensuring a steady stream of incoming and allowing your work to flow as it should.
4. Invoice Frequently
On a similar note, invoicing frequently means you will get paid frequently.
You want to shorten the loop between the time a client receives an invoice and the time you get paid as much as possible.
As is the case with everything, this will depend on several factors, but you want to send your invoices as often as possible.
Billing once a week will reduce the amount of time between payments and keep a steady flow of cash in your accounts.
5. Set Clear Expectations
One of the best aspects of working as a freelancer is the fact that you get to set the expectations about how and when you get paid. You get to dictate the terms, and you should make sure they are clear and straightforward.
This has lots of obvious benefits, most notably taking any confusion out of the process from the very beginning.
Set terms that you and the client both find advantageous, but never forget that you are the one in control of and responsible for your own terms.
6. Have a Policy in Place
Part of having clear expectations includes having standard billing and payment practices already in place before going into new jobs. Certain variable will obviously be different depending upon the job, but there are some things that should always be the case such as:
- How often you invoice
- A late fee policy for any past due accounts
- Standard industry-specific practices
Having clear policies in place not only helps to set clear expectations, it also shows prospective clients that you are responsible, professional and that you know what you are doing.
These policies will also provide you a level of security if things do not go as expected.
7. Have a Contract
Always, always, always get it in writing!
So many freelancers get themselves into lots of trouble– sometimes to the point of ruining their businesses– because they did not work of of contracts with clearly set expectations, policies and contingency procedures.
Contracts not only provide security in case something goes wrong, they also help you to establish how your business relationship will work from the very outset.
Many freelancers do not use contracts because they have misconceptions about them. Contracts do not have to be overly complex, and you do not have to have a law degree to draft up a simple, binding agreement.
If you are unclear where to start, there are tons of resources available that provide basic work agreement templates.
In addition to basic indemnity, non-disclosure and other service contract clauses, your contract should:
- Include your billing/payment policies
- Let the client know they do not own anything they have not paid for
- Include your late fee and interest charges for past-due accounts
- State that you have every right afforded by the courts if the client does not pay
8. Know How You Will Get Paid
You may have to take multiple forms of payment, depending upon your industry.
Online payments are usually the best, and there are multiple options available for this.
Avoid taking credit cards unless you have to, as this can lead to lots of problems if the client cannot pay.
Many clients still choose to use paper checks, and these can cause a delay in getting paid. One way the best ways to speed up paper payments is to simply include a prepaid overnight envelope with your invoice.
Paypal and IPN usually provide the quickest and most reliable forms of payment, although they do charge a fee.
9. Stay On Top of Invoicing
The best way to make sure you get paid quickly is to stay on top of invoicing.
This can sometimes be difficult and time-consuming, especially if you are new to it.
In any case, companies like AND CO (who has sponsored this article) provide some great help for all invoicing services. AND Co will assign a real, live human to your account who basically works as your personal invoicing assistant.
They can remind you when it is time to send invoices and even follow up with clients when necessary. This takes almost all of the work and time out of invoicing, freeing you up to do the work you love.
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