One of the things that I really enjoy doing is mentoring freelancers. I work in the start-up world, and freelancers are a big part of that. I get to see the ups and downs of that world every day. It’s fascinating to see how people price their time, and creative abilities.
For those who freelance, dealing with late paying clients is part of the gig. The trust is that most clients have a tendency of not paying on time. It’s such an odd world out there, but it seems that paying that guy takes a back seat when it comes to paying their bills.
Being on the receiving end of that can be difficult as freelancers also have bills to pay, and rent to cover.
So if you are a freelancer and find yourself in that situation, here are some ways to deal with it:
1) Have a contingency fund in your bank account AT ALL TIMES. What I mean by that is having money that can cover your expenses until your invoices are paid will certainly help you so you don’t rely on your credit. I understand that this is not an option for everyone all the time, but creating a contingency fund should be priority as it will save your behind.
2) Ask for portion or all of the your fee upfront. This is not an option for everyone, but having milestones built in your contract is the best way to ensure that you’re not waiting for your entire fee, but just a portion of it at the end of your project.
3) Take out a loan. Not something that I recommend, unless your have unpaid invoices pending. If that’s the case then invoice finance could be just the solution to your problems. Invoice finance is an umbrella term which essentially allows you to get financing based on unpaid invoices. This is not only great for freelancers, but for small invoices who need capital to fund further production, and not have to wait on everything to be paid in advance. This pretty much only works when you sell to businesses, not consumers, and you must be invoicing those clients.
I have been working as a freelancer for more than two years already and it really is very comfortable aside from the fact that I get to spend quality time with my family. But a lot of self-discipline is really important to divide the time between work and family especially when doing the jobs at house.
One should always have money saved. You never know what can and what will happen.
Very true, Martin!
Do you have a specific invoicing policy that you communicate to your clients? Has it changed over time?
Yes I do! I add a late fee after 30 days, and make sure that they are fully aware when the invoice goes out. Some accounts need a retainer before we come on board.