Getting paid late sucks
Late payments are disruptive and can stop a project in its tracks. That’s a problem (both for you and your client), and getting the project back on track as quickly as possible should be the goal.
If you are a solo freelancer, this is the time when you have to take off your designer/coder/writer hat and put on your admin hat and kick up some dirt.
So what to do to avoid late payments? The best way is to keep late payments from happening in the first place. To do that, a bit of upfront planning and negotiating is necessary. The key is making sure that the client knows and agrees to the payment terms. That way there is no disagreement on expectations. The right time to set those expectations? In the very beginning, before the project has started. Not during the project. Doing it upfront is really half the battle to making sure you get paid on time.
Use these suggestions to avoid late payments
1. Get the money upfront
The absolute best way to avoid late payments is to get paid before starting work. If you can’t get 100% of the payment upfront—BTW if you don’t ask for it, the answer is definitely no—look to get 50% upfront to start the project. If a client pushes back on 50%, tell them it’s the industry standard. If they won’t budge, you might have to just walk away.
If you really want/need the project, you could go down to something like 1/3 to start, but try to negotiate something else in your favor as a trade-off. And unless you’ve worked with a client before, never (ever!) start a project without getting some form of payment upfront.
2. Set more favorable terms
Avoid payment terms that allow the client to pay you over an extended period of time. A lot of freelancers still use net 30 (payment within 30 days of an invoice sent out), but no one says you have to do that. Again, if you don’t ask for something different, you won’t get it.
Instead, try to get paid immediately after invoicing. I use “payment due on receipt” on all my invoices to remind the client that they need to pay immediately. Most clients never even mention it and pay on time right after the invoice goes out.
3. Make it easy for them to pay you
Let them Stripe or Paypal you a payment linked from your invoice. By letting them pay with a credit card immediately instead of having to write and mail you a check, you increase the chances of them paying you on the spot. You also don’t have to do the “check is in the mail” dance with them, wondering if the check got lost—it didn’t, they just haven’t actually sent it yet. (Damn you client!) As a bonus, you’ll also avoid those weird emails telling them that you haven’t received the check yet.
And sure, it’s an expense to pay the CC fees, but I think it’s worth it for the peace of mind of getting paid quickly.
4. Exchange deliverables for payment
Don’t give the client the deliverables until they pay you in full (or for a milestone). One thing that gives you real leverage is that you have the thing that the client wants, so exchange it for the thing you want: the money they owe you.
5. Decouple deliverables and payments
You can also avoid late payments by getting paid on a specific date. Since approval of the deliverable is up to the client, and approval means getting paid, when you get paid is still sort of up to the client. So even better than getting payed when you deliver, is getting paid on a defined date.
50% upfront, 25% on X date and remaining 25% on X date.
Most clients won’t intentionally hold off approval, but if you decouple the deliverables from payment, you’ll know exactly when you’ll get paid—no matter how long it takes to get approval.
Knowing when you’ll be paid will also allow you to do better work, and sleep better at night.
6. Tell them how and when to pay you
Remember, your client doesn’t instinctively know how you would like to get paid, so tell them how.
Use some or all of the above suggestions in the payment section of an on boarding document you send to clients looking for your services, and then include the final terms in the contract. Title it “How payment works” or something simple and easy to understand. That way everyone is on the same page about how and when you’ll be getting paid. (And makes sure nobody gets hurt).
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