The Alchemist's Lair
Thoughts on writing, language, life as a freelancer,
and what comes to mind.
and what comes to mind.
In a freelance setting, getting paid on time is often an issue.
As freelancer, keeping a healthy cash flow is key - but dealing with multiple customers, and invoices due at different times of the month, can make it harder than it looks.
Indeed, paying on time is the customer's duty (AKA their part of the deal). However, this doesn't mean we should sit and wait for them to "wake up" at their convenience.
1. Protect your work from day 1
When a new prospect comes in, take your time to check whether their business is legit, and about their financial reliability.
Make sure you have the company's full details (physical address, VAT or tax ID, phone number, ...), and search the internet for their online presence and other information you might gather (such as positive or negative reviews).
You can also check dedicated websites and platforms (such as Better Business Bureau for businesses and charities operating in the US or in Canada), or ask for feedback in freelance groups & networks.
Also, don't forget to have the company sign your terms and conditions, to back up informal agreements with a legally binding document.
2. Establish a consistent invoicing routine
"I'm sorry, we didn't receive your invoice"
... now, how many times have you heard that?
At times, this is a plain excuse - but sometimes it is our fault too. And the first rule to get paid on time is to make sure you did your bit properly.
The best way to avoid these situations is to send the invoice alongside the completed project - and ask for a confirmation of receipt.
It's a simple step to implement, but really does the trick - in fact, you can't possibly receive only "half email", so you will know exactly when the customer received your invoice.
3. Set a late payment policy
As services providers, freelancers are entitled to establish late payment policies according to national and international regulations. As an example, freelancers residing in the EU shall check Directive 2000/35/EC and its local applications.
If you're not sure whether this or similar regulations apply to your business, contact local authorities and clarify what are your obligations and options. Also, always check with a competent accountant or business consultant before including such clauses in your terms and conditions.
Plain and simple: customers are more keen on paying on time if they know delays would have financial consequences.
4. Follow up
Keep track of all of your invoices, due dates and payment methods - you can use a simple Excel spreadsheet, or use a professional invoicing software with due date reminders and other similar features as you see fit.
Check your records regularly, and don't be afraid to send a reminder to the customer and ask for information about your your invoice status. There is nothing to be ashamed about, really - you did your share, now it's time for the customer to comply with their side of the deal.
If a friendly email reminder is not enough, make a phone call and talk to the person/the office in charge of handling payments and invoicing. Direct contact is more difficult to avoid - plus, you'll be in touch with someone who knows what's going on rather than a random employee.
The bottom line
Getting paid on time starts with implementing reasonable measures to protect your work, and with establishing healthy cash flow management routines.
This doesn't only cater for minimising business risks, but also helps your customers understand that you're serious about your business - in return, they will be more likely to treat you seriously and "not mess around" because you are "just another freelancer".
Author's note: this article is based on an older post published on this blog in February 2013.
This new version has been improved, expanded, and complemented with resources.