How to Make Sure You Get Paid as a Freelancer

Cash flow is king when you’re a freelancer. This means having a client roster filled with people you can count on to pay on time is key to both your financial security and mental well being. Nobody enjoys chasing clients for money.

In fact, it’s probably the least fun thing you’ll ever do when you’re self-employed. It can be an enervating, depressing, and maddening exercise. And it can be downright scary if the amount of money someone owes you is significant enough to imperil your business.

Making sure you get paid requires first focusing on picking the right clients and then having policies in place that help you if someone does turn out to be a slow payer. Let’s look closely at both of these strategies.

Carefully Choose Your Clients

It’s all too easy, especially when you’re in the early days of your freelance career or in times of economic stress, to say yes to any prospective client who wants to hire you.

But this means you’re completely overlooking the possibility that this exciting new client might turn out to be a slow payer or, even worse, a non-payer. You can pre-empt tons of financial stress and problems by doing your very best to make sure deadbeats don’t end up on your client list, to begin with.

Over 30 years of freelancing, I only had three clients from whom I was never able to collect. Yes, some clients had to be reminded once or twice that their payment was overdue, but even those represented only a handful of the dozens and dozens of companies I served.

The chief reason behind this good collections track record was that roughly 80 percent of my business came through referrals from either existing clients or close colleagues. In general, you can be fairly certain that these people aren’t going to refer anyone about whom they have doubts regarding their ability to pay.

Do Your Research

For potential clients who come your way from sources other than client/colleague referrals (i.e., your website, through meeting them at a networking meeting, and the like), you should definitely do as much research as you can before signing on with them.

For example, check the Better Business Bureau website to see if your prospect has complaints about them. If a business is shoddy in one aspect of their work, such as customer service, you can bet that they might be sloppy in another aspect, such as paying their vendors on time.

Also, check with people in your business network to see if anyone knows anything about how the business treats its vendors. If anything sounds questionable, back away. It’s easier and better to find another prospect than it is to tie yourself to a company that is going to make you beg for the money you are owed.

Ask for Deposits

I have long had a policy that each new client has to pay a deposit until I have enough experience with them to know that they are going to pay their bills promptly.  I do this no matter how good the source of referral is.

Even if my very best client referred someone to me, I still always ask for a deposit, usually 20–30 percent. This way, if the new client turns out to have a challenge in paying on time, at least you’ve got some money up front.

Related: Pricing Your Services as a Freelancer: How to Get It Right

Have a Strong Collections Process in Place

Sooner or later, every freelancer meets up with a slow-paying client. This is when it’s essential to have practices in place to help you deal effectively and promptly with the situation. Out of every part of your business, following up on accounts payable is the spot where you can least afford to be lax.

I credit my collections success to the fact that I apply the squeaky wheel adage early and often when a client’s bill goes overdue. My bills are supposed to be paid within thirty days; if I don’t have a check in hand by day thirty, I email the client on day thirty-one. If that doesn’t produce an instant explanation, I follow up with a phone call.

I do not give up, and I don’t hesitate to be that irritatingly squeaky wheel. A slow-paying client is guaranteed to hear from me every week. I’ve found that such persistence is what is required to get invoices paid.

I have colleagues who will let weeks (or even months!) go by before they inquire about an overdue invoice! This is foolish. As the time expands between when you delivered your services and when you speak up and demand what you are owed, the greater the odds that you might not get paid.

Einstein didn’t come up with that formula, but I am positive it is true based on having observed the losses suffered by colleagues who were loath to do their collections work in a timely fashion.

So, bottom line, if you’re the type of person who has a hard time asking for what you deserve (i.e., prompt payment for your products or services), then you may have a rocky road if you go the freelance route.

If this is you, a course in assertiveness training may be in order because I guarantee you that sooner or later you will have to chase a client for money. It happens to everyone.

Here are specific strategies that I’ve found effective to make sure I get paid what I’m owed:

1. Become Friends with the Person Who Actually Cuts the Checks

I’ve wrestled many a payment out of a late payer by building a good relationship with their accounts payable person. I try to identify this person even before things go haywire so that I don’t have to build this relationship after a bill is late.

Consider calling this person after you submit your first invoice; you can inquire as to whether there was any additional information they needed on your invoices. This positions you as someone who wants to be helpful to them, which they will appreciate.

Getting on a first-name basis with the accounts payable person pays dividends down the line; this individual can either make your life miserable or make it a breeze. Never forget this. Also, never get pushy with this person or, worse yet, yell at them. It’s not their fault that your client is running short on funds, and a spoonful of sugar will get you much farther than a loud voice will.

If the company is in financial troubles or having a cash shortage, the accounts payable person will probably have lots of people being nasty to them. Don’t be that person; instead, be the person who is nice and understanding but also persistent.

2. Do Not Be Afraid to Play the “I’m Not the Phone Company” Card

I have never hesitated to remind an accounts payable person that I am a solopreneur trying to survive out here on my own instead of a huge faceless corporation with lots of financial resources.

Related: How to Monetize Your Knowledge and Expertise

Usually, you don’t have to say too much in this vein to get the message across and have your invoice moved to the top of the pile. Seriously, it works, particularly if you’ve laid the groundwork by building a relationship with the accounts payable person.

3. Keep Close Track of Your Invoice Due Dates

The money end of the business is often the least attractive part for many people, especially those of us in creative fields. We hate doing billing, we hate record keeping, and we hate chasing money. Feel free to hate it all you want, but just know you have to do this if you want to stay in business. You should always know who owes you money, how much they owe, and when it is due.

Find resources that will help you be well organized and systematic; there are plenty of tools available to assist you in this. For example, a few years ago I started using PayPal to send invoices to my smaller clients, a handful of people for whom I do small editing jobs.

Yes, PayPal does take a small cut of the money, but what I’ve found is that I get my money really fast by using their service because these clients find it quick and easy to pay their small bills (usually no more than a few hundred dollars) through PayPal. My record time between sending out such an invoice and receiving payment was about fifteen minutes!

Before I started using PayPal for these clients, I often had to waste time chasing down the money. These people are mostly also self-employed people whose systems weren’t the best, and so my invoice would shuffle around on their desks, not being paid. That is not the case now that I use PayPal, and if someone is a little late, PayPal has a very convenient system that takes just a click of the mouse to send off a friendly reminder.

4. Send Invoices Electronically

I hesitated to do this at first, fearing it might not seem as professional as an invoice printed on my nice letterhead. But once I did begin to send invoices via email, I found I was being paid faster. You may find that a small minority of clients will still want you to send them a paper copy of your invoice. For such people, I send both electronically and via snail mail, noting on the electronic invoice that a hard copy is being mailed.

5. See If Offering a Discount for Early Payment Makes a Difference with Slow Payers

I’ve never done this myself, but I do know that small businesses have found it worth their while to offer a small discount of up to 3 percent for early payment. Consider trying this particularly with large invoices that will decimate your available cash if they aren’t paid promptly.

6. Don’t Be Afraid to Fire a Habitually Late-Paying Client

I know this is easier said than done, especially if you’re just getting started and are trying to build your business. But trust me; firing a lousy client almost always pays off and a client who you have to chase for money time after time is definitely a lousy client.

More often than not, the time you save and the negative energy you avoid by not having to dun someone constantly will mean you have more time to find a good client to replace the bad one. Don’t work for people who disrespect you by not paying their bills on time.

This is not to say that a good client might not need some leeway once or twice. If the person has a reasonable explanation for being late and it has not happened before, of course, you cut them some slack. But if this goes on month after month, that’s a serious red flag that perhaps this person’s business is in trouble and you might be the one holding the (empty) bag in the end.