One of the most stressful things about being self-employed is managing your cash flow. This is especially difficult if clients don’t pay you on time. To make sure your invoices are handled promptly, start by doing your homework.
What the Experts Say
When freelancing is your primary source of income, you have to be meticulous and organized about keeping your books, according to Jon Younger, the founder of the Agile Talent Collaborative. “If you’re not disciplined and rigorous about getting paid, you will not succeed,” he says. And yet, even if you do everything right, clients can still be frustratingly late with their payments.
Over 70% of freelancers have trouble getting paid at some point in their careers, according to research by the Freelancers Union, the nonprofit group that promotes the interests of independent workers. “When you’re on your own freelancing for a big company, there is a fundamental power imbalance,” says Caitlin Pearce. So if your paycheck doesn’t arrive on time, “You think, ‘What did I do wrong?’” Here are some strategies to help you run the, ahem, “billing department” of your freelance business.
Do your homework
The best way to ensure you get paid in a timely manner is to work only for reputable, well-funded companies that treat freelancers with dignity and respect. This requires you to make your own company checks. Before responding to a client request, you need to establish that the company can pay you and will pay you. Or just use Wishu, clients that accept you for a job role on Wishu automatically get the funds locked in our escrow system. This way you can be sure that you will get paid. But, if you’re talking to clients outside of Wishu either re-direct them to your profile or start talking to other freelancers that might know more information about the clients.
An organisational structure is your friend. Considering how you will bill your clients or if you’re going to be using a marketplace like Wishu, it therefore means less paperwork as we collect the money for you and store it securely. Also, make sure to use bookkeeping/accounting software that helps you prepare taces, controls your costs, ensuring your business is properly structured.
Get it in writing
Before you start any project you should always have a written agreement/contract in place. As your career grows, you’ll start getting challenging projects and clients. Stuff will happen. What you’ll learn is that you have much more leverage in troubleshooting if you have a contract, letter of agreement, deal memo, or even a confirmation email/message with what was agreed upon. For the same reason, put decisions, approvals, changes of direction, and other important benchmarks in writing as you proceed on a project. Keep notes on your conversations. It will help you not only remember but also mention that you noted it down when you talked to the client.
Invoice early and often (if you’re not using Wishu)
If you’re using a mixture of online marketplaces like Wishu (that makes sure you get paid on time) and your own circle of clients you should establish a billing cycle that frequent and predictable for outside of Wishu clients. Bill on a weekly basis or every time you finish a bit of work. Billing often is a signal that you consider your time valuable.
If your client is ever late with a payment, you should always directly follow up and set your own expectations on payment deadlines. If the client doesn’t respond phone them or go see them in person at their office. It’s much easier to ignore an email than a human.
Principles to Remember
Your research. Check if there are any red flags.
Bill on a regular basis!
Consider pursuing a settlement in court if your client fails to pay you!
Work informally. You need a good contract!!!!
Be late or inconsistent with your invoices. Use a tool!