Cafe Witness

Thursday, May 15, 2008

The Importance of Getting Paid

When you're a freelancer, NOTHING is more important than getting paid. Not finding new leads, not meeting your deadlines, not exceeding client expectations -- NONE of that compares to making sure there's money in your pocket and your bills are paid on time.

Over the past 3 years, I've learned that the act of physically getting paid by clients is much harder than it should be. Some of this is due to clients moving slowly -- after all, no one wants you to get paid more than YOU do -- but most of the trouble I've had getting paid stems from complications that I can improve on my own... and now, so can you.

5 Ways to Make Sure You, the Freelancer, Get Paid

1) Request half your fee up front.

Depending on the specifics of your freelance gig, a job you begin in February may not pay you until June. After all, it can take weeks to assemble all of the related materials, weeks more to complete the work itself, and then weeks (or months) of reviews until the client decides the work is complete.

And all that time, you're working but not getting paid.

Brand new clients should expect to pay you half up front for new contracts. Longtime clients may be more flexible, and agree to pay in increments as milestones of a project (initial plan, mock-ups, each review round, etc.) are reached. But if a client is reluctant to pay even a portion of your fee up front, you need to decide if you can complete the job while not seeing a penny for 3 or 4 months. (Odds are, unless you have a massive nest egg built up, you can't; rent doesn't give you a 4 month reprieve.)

2) Never presume an invoice has been processed.

Most clients are quick to respond when they receive an invoice. Their confirmation that the invoice will be entering the accounting system helps us sleep at night, knowing we can expect to be paid within the agreed-upon turnaround time.

Recently, one of my clients claimed to have not received an invoice. When I called their accounting department to clarify, the resulting wild goose chase included, among other proposed solutions, faxing a copy of the overdue invoice to a specific accounting employee -- who, it turned out, didn't actually exist(!)...

If a client doesn't confirm receipt of an invoice, call to verify it's been received. Be pleasant but, if you're not getting an affirmative answer, be persistent -- at that stage, nothing is more important than ensuring that your invoice is processed as swiftly as possible. Remember, it's not the client's job to make sure you get paid; it's yours.

3) Make friends within the company, to help when Accounting falls behind.

If you're good at what you do, it's hard not to make friends within your client company. Keep in touch with these people, even when they're not directly involved in your current projects, because you never know when you may need to ask them for help after the impersonal folks in accounting can't find last month's invoice...

4) Be consistent in your invoicing procedures.

Most clients have one specific procedure that they request you follow when submitting invoices. This helps them avoid overlooking an invoice, which could trigger late fees if they don't pay on time. It also protects you in case you need to prove that an invoice was submitted properly, so any dispute can't be blamed on your inability to follow directions.

I recently attached a client's invoice in an email in which I also answered a client's question. Upon receipt, the client replied to follow up on my answer, resulting in a longer email conversation. Unfortunately, the client didn't notice the invoice was also attached, which resulted in that invoice not getting paid until I noticed it was overdue. In this case, simply sending two different emails (one delivering the invoice, one answering the client's question) could have saved me an additional 30 days of waiting to get paid -- since, in this case, the client wasn't wrong for not noticing the invoice because I'd diverged from standard procedure.

5) Deposit your cash immediately.

This might seem obvious, but it's amazing how often checks can languish, awaiting deposit in your account. Maybe you think it's more important to meet today's deadline, or maybe it's more convenient to deposit that check tomorrow when you're running other errands.

Wrong.

NOTHING is more important than getting paid -- and that includes the physcial act of depositing that money in your bank account.

This step is doubly important if your bank (like mine) places additional holds on out-of-state checks. In my case, when a non-Pennsylvania client pays me, it takes an extra week to actually receive that money because my bank holds that check for 5 business days. Add in the time it takes for the check to physically travel from my client's desk to mine -- up to 5 days, depending on when and where it's mailed -- and that's over 10 days between the time a client thinks they're paying me and the time I can actually apply that money to bills. (So when that check comes in, the last thing I can afford to do is "get to it tomorrow"...)

REMEMBER: When it comes to freelance work, NOTHING is more important than getting paid. If you keep your bank account full (or at least "not empty"), you'll survive long enough to acquire more clients, get higher-paying work, and (if you're really good at what you do) build a nest egg that will make each of these "get paid now" steps a little less harrowing.

Do you have any tips for getting paid? Add them to the comments below!

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17 Comments:

  • So what you're saying is, nothing is more important than getting paid.

    By Anonymous Rick Wolff, at 7:17 AM  

  • I couldn't agree more. Follow up on all invoices is key.

    Even though we have clients we have worked with for years, we still have to verify invoice receipt. Inevitably the one time we don't follow up is the time that one invoice winds up getting lost.

    Great post!

    By Anonymous Jennifer Navarrete, at 7:47 AM  

  • You posted this on the day I'm sending out invoices. Thanks for the advice!

    By Blogger Locobone, at 1:34 PM  

  • Since I do tech work I always have a signed contract with a customer: a.) to limit liability, b.) to assign the rights of my work, and c.) to stipulate payment terms like NET 30 and a late fee. Even billing hourly, when you complete your statement of work you can get a certain amount up front.

    Great to see a post like this. ~Jason

    By Blogger JasonCable, at 5:49 PM  

  • I'd like to add one:

    Fall IN LOVE with your invoicing system. It doesn't really matter whether you're using something like QuickBooks, or a web-based tool like Freshbooks or Blinksale... Or even if you're using a combination of sticky notes, spreadsheets and a word processor. Whatevery method you settle on, LOVE IT.

    Why? The more you love the way your invoicing system, the quicker you become at it - and the more likely you are to find ways to improve it. Plus, the less time you spend on invoices, the more time it is you can spend working.

    By Blogger Tommy Vallier, at 7:50 AM  

  • You've hit the nail on the head. Next to getting paid is hitting a home run for the client so that they're happy about paying you.

    By Blogger S. Neil Vineberg, at 8:02 AM  

  • I have the advantage of often being on site for my long term gigs. I make it a point to get to know the accounting folks, when possible. When they know they are writing Sean a check and not a large corporation, they often act quicker and are more responsive. I also learn their billing practices so I'm submitting invoices consistent with their procedures.

    By Blogger Sean, at 1:17 PM  

  • Truer words were never written.

    I'll toss out one more -- put a time limit on your review period. I've got a client right now that I didn't do this with, and although the work was completed in a week, it's taken months to get them to look at it long enough to give me a set of minor changes and call it complete.

    From here out, contracts go out with "final payment after client review (not to exceed 30 days)"

    By Anonymous Chuck Lawson, at 1:46 PM  

  • Great Post,

    This is the sort of stuff I preach...ok I am not really preachy so instead of the word preach I will say "talk" about all the time.

    My job is to get people paid quicker and if I can add one more thing to your list I would say "Look more professional"

    Anyway if you are interested in getting paid and looking more professional you should take a look at my web site (as well as Cafe Witness) as there are tools and info to help!

    Saul Colt
    Head of Magic
    www.FreshBooks.com

    By Blogger saulcolt, at 1:54 PM  

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  • When I called their accounting department to clarify,the resulting wild goose chase included, among other proposed solutions, faxing a copy of the overdue invoice to a specific accounting employee.m10m

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