Running your own freelance business allows you to make all the rules and work with the people you want. However, it also means you wear all hats, including the billing and collections departments (unless you hire someone to do it for you). There are many possible frustrations to running a freelance business, but probably none is bigger than dealing with dead-beat clients who can’t or won’t pay. Here are a few strategies you can use to better insure prompt payment for services rendered:
1) Establish a payment policy and include it in your contract. Because many people sign things without reading them, verbally point out important parts of the contract including your payment policy to make sure the client knows how and when payment is expected.
2) Deliver quality work on time. While non-payment can be a sign of a broke client, it could also be because the client isn’t happy with the work. One way to avoid a mad non-paying client is to ask questions and get clarifications during the course of the project, and deliver your best work on the date you said you’d have it done.
3) Make it easy for clients to pay you. Offer multiple methods of payment, including an online option, so clients can pay in the way that is fastest and easiest for them.
4) Get all the fees upfront before starting or delivering the work. While some clients may not want to pay you prior to work being completed, others will, especially those who know and trust your work.
5) Get a deposit. The most common method for securing some payment prior to work is by asking for a deposit, usually around 50% of the projected total fee. Having a deposit means you won’t have a total loss of time and money if the client doesn’t pay the remaining fee.
6) Offer a discount for early or immediate payment. If you want to have all the fee upfront (#4), consider offering a 10% discount for paying in advance as an incentive.
7) Send the invoice along with the completed project. Including the invoice with a reminder about when payment is due along with the project increases the odds of the client seeing it.
8) Charge late fees. Many companies tack on extra fees for late payment. If you’re going to add on late payment fees, be sure to include information about how much and what constitutes being late in your payment policy (#1).
9) Use bookkeeping software to create and track your invoices. Sometimes clients get away with non-payment because you’re not tracking when invoices went out, who paid and who still owes you money. A business finance software can create and track invoices, as well as help you manage income and expenses.