Not getting paid, not collecting the dough, is every freelancer’s nightmare. To ensure this doesn’t happen, there are some specific tactics you need to do before agreeing to take on work for client. These include:
- Assess the credit worthiness of your clients: Determine up front how risky it is to work for a certain client. It’s amazing how many people agree to work on Upwork.com and other freelance sites without really researching the company (at least, check out their website).
- Sign a contract: You need to protect yourself so make sure you get an agreement in writing (yes, have someone provide a signature (electronic or otherwise) before taking on work. Freelance Union has a simple contract creator tool.
- Ask for 50% upfront: For project based work, don’t be afraid to ask for some money upfront before you start working for your employer.
- Make the net payment 30 Days. If they want to negotiate, maybe go to 60 days, but I would stick to 30 days and make sure to add a penalty (X%) for each day they don’t pay.
- Email your invoices: Make sure to email your invoices on time. With some accounting applications, you can automatically send a second invoice if a client does not pay.
If you don’t get paid,
- Ask your attorney (friend : ) to write a letter, but don’t threaten your client during the first communication. Try to stay away debt collectors or small claims court. Collection agencies generally take 50% of what they collect. Yikes!
- Hire a collection agency to make calls and send letters. Collection agencies will generally pay you 50% of what they collect. Click here to find more info on them or for a list of different companies that can help you.
- Determine if Small Claims Court makes sense. It might cost your more in time and effort than it is worth.
- Offer a discounted payment as a one-time-only offer. Write it, put a strict deadline on it, and be extra clear with them that this offer is only happening once. If they accept, be sure to formalize the deal with a legal agreement called a mutual release and settlement.
- Turn unpaid invoices or failed payments. into a customer service opportunity. Sometimes your employer or clients will not pay a bill because they are overworked or lazy. So your job is to make sure you make it as easy as possible for them to pay you.
To be honest, I can see this becoming a bigger issue for freelancer in the coming years. It’s too expensive to depend on a bookkeeper to handle a lot of the invoicing and follow up with companies. So in the meantime, make sure you set aside a few hours a week to follow up with your clients on payments, etc. It also can’t hurt to have accounting software or a good spreadsheet to track these sorts of transactions.
For larger clients, you will have to submit invoices and probably wait 30+ days. For smaller clients, you can ask to be paid via Paypal or use Square or Flint Mobile, which I particularly like because you can scan a credit card without using a Square-Swipish-ish toggle.