Becoming self-employed puts you in control of your income and self-determined financial goals. Don’t let late payments from clients undermine that. Here are seven tips for streamlining your invoice system and re-thinking your approach to make sure payments happen when they should.
As a freelancer, entrepreneur, or small business owner, you’ve demonstrated your value through deliverable results and you earn yourself repeat clients and ongoing work. You are your own boss, and you—yes, you—are the one responsible for making sure you get paid. In work settings where an employee/employer relationship exists, recurring late payment would be grounds for terminating your relationship with a company. So why should freelancing be any different? If clients are regularly late with payment, get firm or walk away.
Agree upon payment amount as well as deadlines and any associated penalties for missing them in your initial work agreement with the client. Work agreements can take many forms, from an informal Letter of Agreement (LOA) to a legally binding contract to a project proposal. No matter the format of your agreement, terms should be concrete and specific. Set a date for when payment will be made and don’t be afraid to impose a financial penalty (such as a slight interest rate) if that deadline passes. Conversely, discounts can incentivize early payments without putting too much of a dent into your compensation.
Tracking your own time and labor is key when it comes to invoicing clients and getting paid on time. Plenty of apps such as Toggl provide systems for hour tracking, and online app suites such as Invoice Ninja offer free integration with invoices and payment so you can track everything in one streamlined, online system (and much of it for free). The ease of an integrated online system can make payments effortless, and luckily there are plenty of free apps that won’t add to your business expenses.
Time is precious. Being self-employed means that you are in charge of your own time, so don’t waste yours or your clients by wading through outdated systems. Free platforms such as Invoice Ninja can streamline your proposals, invoicing, and time tracking into one suite of business apps and free templates that give your client easy access to information and payment processing. Think about the difference between manually splitting a restaurant check into eight different amounts and payment methods, versus Venmoing your roommate for the exact price of your avocado toast. Payments can be specific, personalized and accurate when you have a system for tracking your labor and streamlining compensation.
It is fairly common for freelancers to extend credit to their clients by arranging for payments due thirty days from receipt of work (Net 30). While this paradigm creates flexibility for clients, freelancers should be mindful of how this can affect payment. If you are billing clients for payment 30 days (or more) from receipt of work, you are bargaining your time for their promise to pay. Instead of defaulting to Net 30, consider requesting a partial payment up front in your initial quote.
Once the client has received your work and contributions to the project, their compensation is complete but yours is not. Don’t be afraid to ask for partial payment up front, or submit a preview rather than full project prior to and pending full payment. Clients who delay payment are not only devaluing your time, they are taking advantage of your intellectual property without proper purchase.
When expectations are set from the beginning, gentle reminders can actually serve to strengthen the client relationship. Follow up with your client prior to the payment date with a cordial and courteous message. If you don’t hear anything, follow up again on the payment date, and so on. Be nice but don’t fall into the trap of hedging when it comes to asking for payment. You have delivered on your end of the agreement, and the client needs to deliver on theirs.
If you are anything like author Alana Massey and find yourself constantly wondering about what’s owed you, it may be time to reconsider your approach. Don’t be afraid to follow up and be firm if the deadline has come and gone. If you’ve set out clear terms with your client from the get-go there is no reason to beat around the bush when it comes to tracking payment. Freelancing, entrepreneurship, and small business ownership are now easier than ever thanks to a slew of free, online apps that expedite tracking and payment. Don’t make things hard on yourself by failing to capitalize on these resources, and use your common sense and communication skills by following up with clients. You have the talent to contribute to a multitude of projects, now apply those skills on your own behalf when it comes to speeding up payment.