I’m a big believer in defensive freelancing — handling problems before they become a problem.
Tactics like using contracts, expectation management (which we’re covering in the Academy this month), and even using your website to communicate your price ranges and processes can go a long way in preventing freelance issues…and if there’s one area where a strong defense pays off, it’s payment problems.
We’ve got clients out here paying 60 and 90 days after they were invoiced, and some sliding past the 1-year mark!
In high-friction niches like digital media, that can be next to impossible to avoid (it’s the nature of the beast, and in most cases you have few options to turn things around — at least ones that don’t take a ton of effort), but in most freelance relationships, you do have quite a few chances to stop non-payment and underpayment before they start.
Try out these 4 tactics if you want to cut back on payment issues and boost your freelance stability.
Work with People Who Have Revenue
We’re going to start things off on a strategic level because this can change the tone of your entire freelance career.
Personally, I don’t target early-stage businesses as a freelancer. (Some people do well there, it’s just not my thing.) Part of that is because it’s just not where my heart and talent live, but that’s not all of it.
Businesses that have survived 10, 20, 50+ years have proven that at some level, they probably know how to get money in and have figured out a reliable revenue model. They might not be great at execution, but it’s less likely that they’re funding a ‘brilliant idea’ with personal cash or being towed along by VC money. (That said, there is a flip side to this with dying revenue models — think about what we’ve seen in print media.)
Of course, clients with tons of revenue can still go broke or refuse to pay you as a freelancer, and young business can pay on time, but keep an eye on your clients’ revenue model. If they aren’t making money, you aren’t either.
Want to start building and refining your freelance strategy? Start here.
Require a Deposit
I swear NOTHING turns people with shady payment ethics away like having to put money out up front.
You’ll see a lot of established freelancers require deposits and charge by milestones, and ultimately that comes down to sharing risk — you’re not left doing an entire project’s worth of work and hoping your client’s ethical. You client isn’t paying for a full project and hoping you don’t just decide to go on vacation with it.
Deposits (and their cousin, the milestone) split up the risk. They also help you filter for clients who are more interested in building equitable relationships than exploitation.
Wondering if your potential client’s an exploiter? Read this.
Discuss Logistics Up Front
This is one of those techniques I’ve incorporated into my client interview template. That’s not even a trust issue. Every client has different billing preferences and between e-invoices, credit cards, direct deposit, and good old-fashioned PDFs, you just never know how they work.
Payment flexibility falls on us as freelancers (IMO, so it’s never too early to make sure you know what you’re dealing with.
The nice thing about this is it’s really easy to leverage the discussion as a customer service angle and position it as you trying to make your contact’s life easier.
I tend to volunteer to ask if they want me to take on the responsibility of getting things to the right person. It never hurts to have additional contacts in an organization (especially if your contact quits or gets fired without warning and you want to know who’s in the new role).
Need a client interview template? This should help.
Charge a Late Fee
You know how credit cards send you updates every time they change a random term on your account? That’s mostly because of consumer protection laws, but it’s also an effective way to remind you that there are rules around your relationship.
I charge a late fee. That’s not so much for monetary reasons, but more to let clients know that I’m serious about being paid on time and that there are boundaries in our business relationship. Those terms are called out clearly in the payment section of my contract, and for the few people who I have had issues with, I also toss a mention of it in the invoice.
These four are just a start. Freelancers Union has covered topics like using a client scorecard, making a friend in accounting, and reactive approaches like small claims court. Regardless, don’t wait until non-payment (or underpayment) becomes an issue. Save yourself (and your bank account) the headache, and start trying out a few of these on your next new client.