More than half of all freelancers get paid late each year, and that can cause serious problems when you have bills and rent to pay.
Unfortunately, there’s no silver bullet to unequivocally solving the problem of clients withholding payment. However, here are my 10 top tips to follow before, during, and after each freelance project, in order to ensure you get paid on time – every time.
This post is divided into three parts: what to do before a project, what to do if a client pays late, and what to do if they don’t pay at all. Let’s get started.
This is the number one rule of freelancing, and one that many people need to learn the hard way. ALWAYS use a contract. If there’s one thing you can do consistently to improve your business, it’s using a contract. In addition to looking more professional to the client, you will be protecting yourself and setting the project up for success.
But I’ll let you in on a secret: the primary value of contracts is not in protecting you in court. These disputes rarely go to court, and the primary value of a contract is in stopping a dispute from even getting to that point.
Contracts are most valuable in setting clear expectations with your clients.
These expectations include exactly what you’re going to do, when you’re going to deliver it, and all the payment terms (when, how, and how much the client pays, what happens if they pay late, etc). Late payment often happen because there’s a miscommunication at the beginning that could’ve been easily solved if everything was spelled out in a contract.
The easiest way to create a contract is through Bonsai, which provides a free and easy contract builder with e-signing built-in. It was built specifically for creative freelancers, and it’s contracts were written by experienced lawyers.
One way to avoid payment issues is to take some of the payment upfront as a deposit. Depending upon the size and length of the project, it’s common to take 25-50% of the total project amount upfront.
Many new freelancers are shy about taking a deposit, but don’t be! Whether you take a deposit and how much you take may differ based on each client and the scope of work, but strongly consider it.
Freelancers will often not charge a deposit because they think it will scare away a client. While that may be the case, a client not wanting to pay a deposit can be a warning sign of a troublesome client.
Your invoice frequency will be determined by the length and size of the project.
However, try to invoice as often as possible without annoying the client or adding too much administrative burden to yourself.
It’s common to invoice based on major milestones and/or roughly in increments of 25% or 33%.
Again, each project and client are different, but a client who refuses to pay in milestones can also be a red flag.
Once you’ve started work, or are about to kick off a new project, clients are late to pay because they’re just like you. They’re often small business owners who are overwhelmed with things to do.
So, make it easy for them to know how and when to pay you without being annoying.
Send them a reminder before an invoice is due, and learn upfront which methods they prefer to pay you with.
Some clients will pay via mailed check, some will pay by credit card, and others with bitcoin. Just make sure you make the payment terms (and schedule) clear upfront, make it easy for them to pay you, and let them know (nicely!) when they need to pay.
This is a very easy and very effective tactic if you do as we recommend and bill your clients in milestones.
If the client isn’t reviewing or paying for work you submitted, then stop working on the project until they do. It’s that simple.
Send them a nice email explaining that you cannot continue working on the next stage of the project until they pay for the last stage. Bonsai Contracts are written such that the client does not own the work you produce for them, until they’ve paid for it in full.
If the client isn’t responding to you, one tactic I recently learned about, and have used very effectively is “the magic email”.
It’s a very simple way to get clients to respond if they just go radio silent. Here it is:
“Since I have not heard from you on this, I have to assume your priorities have changed.”
That’s it. Nothing more, nothing less. Kurt Elster, the author of the magic email, has been using this tactic to start getting responses from his freelance clients that have gone completely off the radar. If you have someone who goes dark while they still owe you money for work you’ve done, you owe it to yourself to do everything in your power to be made whole on your contractual agreement.
Same advice as before. If you’ve already got a client who refuses to pay for work you’ve already done, you need to stop working immediately, and communicate to the client that work will not proceed and existing completed work will not be turned over to them until you’re paid.
You need to include in your contract that work is not turned over and not legally owned by the client until it’s paid for in full.
This is very important to remember throughout the process: remain polite!
Remember that clients are often small business owners, just like you. You’re much more likely to be repaid by being diplomatic and trying to work out a solution vs. getting angry and burning bridges.
Experienced freelancer and business consultant, Ilise Benun talks in length about how to amicably work with your freelance clients (and covers many more of the potential red flags) in her class, Command the Fees You Deserve right here on CreativeLive.
This is an obvious step that many freelancers skip for one reason or another.
Really try to put yourself in their shoes and understand why the client isn’t paying.
Is it because they think you didn’t deliver what you promised?
Because they don’t have the money?
Because they’re just disorganized?
Or is it something else entirely?
Determining the root cause of why your client won’t pay for work you’ve delivered, will help you decide on your course of action to getting paid.
This is a little trick that has worked well for me in the past.
Maybe you want to maintain a good relationship with the client, or maybe it’s not your personality to push a client to pay. So, get someone else to do it!
It may be tricky to find the right person, but generally it can be very helpful to have someone else call the client and ask them to pay up. They don’t have to be aggressive, but having someone else on the client’s case may get you paid quicker.
That’s it for the payment tips. Remember, to help avoid late payments the best first step is to always use a good contract and remain polite.
If you’re ready to start a freelance business, or get serious about growing your existing client base, download our free eBook, The Freelancer’s Roadmap.