How Freelancers Can Make Sure They Get Paid on Time

From the Harvard Business Review, Rebecca Knight offers excellent advice to freelancers on how to get paid on time. These are a few of her recommendations. Rebecca writes:

Get it in writing
Before you start working on an assignment, you need a contract that lays out the scope of the project, the payment terms, and the expectations for both sides. “Don’t believe in a handshake,” Younger says. Informal agreements are the source of almost every payment problem, so be sure “to get everything in writing.” For small projects an email chain will often suffice, but for longer engagements “it is worth working with a lawyer,” Pearce says. Most freelancers have a standard template contract that they alter for different clients. “When you can, work with your own contract,” she says. “You know what’s in it, and it has terms you can live with and negotiate from.” The Freelancers Union has several templates on its website, as well as an app that connects freelancers with attorneys who represent independent workers.
Understand your client’s payment cycle
It’s also important to talk with your client about its “payment schedules and policies in advance” of starting any work, Younger says. Find out how its fiscal year runs, how long it typically takes to process invoices, which days of the week it cuts checks, and how it pays its contract workers. This information helps you better manage your monthly cash flow. Pearce recommends you “try to get as much money up front” as possible. “A deposit of 30%–50% of your estimated fee is acceptable in many industries,” she says. Another tip: “Make sure you have the name and contact details of the person in finance with whom you’ll be dealing with,” Pearce says. This way, if there are delays, you have someone to call.
Invoice early and often
Regardless of your client’s payment terms, Younger recommends establishing your own billing cycle that’s frequent and predictable. “Bill on a weekly basis or every time you finish a bit of work,” he says. Billing often is “a signal that you consider your time valuable.” For longer-term projects, Pearce suggests invoicing at predetermined “milestones along the way” so that you are guaranteed “payment at certain points over time.” Milestone payments not only help you manage your cash flow, they are “also a tool for communication,” she says. “They make sure you and your client are both aligned and satisfied.” Whatever you do, don’t agree to terms that involve your getting paid only upon the full delivery of the work. “You don’t want to work for three months on a project only to have the client say, ‘I hate it. And I will only pay you for 50%.’”
Establish your professionalism
Earning your living as a freelancer requires that you “treat yourself like a business,” Pearce says. Don’t do slapdash work, don’t “forget” to invoice, and don’t be careless in your communications. “Getting paid is contingent on the quality of your work and the quality of your relationship with your client,” Younger says. “If you’re mailing it in, difficult to reach, or hard to deal with, that will affect your ability to make money.” On a related note, don’t work for free. “A lot of companies are fishing around these days for free work on the assumption that your working for them will help you more than it realistically will,” he says. Remember this any time you’re “invited” to give a free webinar or moderate a panel gratis. “Talk plainly and in businesslike terms” about your fee. “Establish the value of your work.”
Follow up
If your client is ever late with a payment, “you have to be vigilant about following up,” Pearce says. “If you’re vigilant on your end, it sets expectations on theirs.” If you’re following up and no one is responsive, “escalate to a phone call or go to the office in person,” she says. It’s much easier to ignore an email than it is to ignore a human. Be persistent about seeking payment, Younger advises. “Don’t walk away, and don’t give up,” he says. “Work your way up the food chain and take it to the top” of the executive leadership if you need to. Your emails and calls about late or missing payments serve as documentation of your efforts to be paid. Use that paper trail to ask, “What’s the deal?”
Hire a lawyer
If you’ve tried everything and the client is still not paying, it might make sense to engage an attorney. It’s not a straightforward decision, however. “Mostly it’s a cost-benefit analysis” that involves calculating the amount that’s owed you, your odds of success, and the hassle of hiring — and paying for — a lawyer, Pearce says.