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For many freelancers, managing cash flow means a lot more than simply finding savvy ways to save money personally and professionally. Cash flow as a freelancer means getting paid for the services that you provide – however, that means sending out an invoice and sitting waiting for it to be paid, or in some cases hoping that it’s actually going to be paid altogether. As a freelancer, you will have your own bills to pay and if you don’t have the funds, you may be put at risk of defaulting on the things which keep your freelance business afloat. If you’re a freelancer who is wishing that their clients paid them a little faster, here’s what you can do to up your chances of seeing the money on time.
Invoice Financing
Invoice financing is an innovative method of making sure that you are always paid on time. For freelancers who are constantly waiting for their clients to pay them or feel like they are constantly chasing up payments, this solution is definitely the least stressful option. Also known as invoice factoring, this solution allows freelancers to sell their overdue invoices to a factoring company in return for a large advance on the invoice amount, usually around 70-90% of the total value. For freelancers, this can be an excellent option as it allows them to have the cash on hand immediately to use for their professional and personal expenses. Once the outstanding invoice has been paid by the client, the freelancer will receive a rebate for the remainder of the invoice amount minus a fee to the factoring company.
Offer Incentives
Many freelancers find themselves in a position where they work for some clients pretty regularly. However, when these regular customers fail to pay on time, this can cause problems for both a freelancer’s personal and professional income. Because of this, offering small incentives can be a great way to encourage their clients to make regular, on-time payments. For example, offering a small percentage of the total invoice amount if paid before a certain date, or offering a discount of their next order if the invoice is paid before a certain date can definitely encourage your regular, long-term clients to pay on time, every time.
Be Polite
Sometimes, something as simple as just saying please and thank you can have a dramatic effect on the rate at which clients make their invoice payments. When designing your invoices, don’t forget to be friendly and polite when it comes to anything that you write on them. Sometimes, a simple ‘thank you for your prompt payment’ can be enough to turn a client who always pays late into one who usually pays on time. Along with this, it’s also important to think about what you write on your invoice in terms of understandability – using simple and easy-to-understand, layman’s terms is always the best way forward.
Make It Easy
One of the easiest ways to make sure that you get paid on time, every time is to make it easy for your clients to send money to you. If you only accept checks, for example, you’re going to be waiting a while to see the money as firstly you will need to wait for it to be mailed to you, and secondly you’re going to need to wait whilst it’s deposited into your account. By accepting a wide range of different payment options, such as a direct transfer to your bank account, PayPal, e-checks and credit card payments, you will make it much easier for your clients to pay you and will most likely start to enjoy being paid more punctually.
Have a Contract
Last but not least, drawing up a contract detailing payment times and amounts before any invoices are sent is the best way to avoid any potential future disputes. Making sure that both yourself and your client have a signed copy of a contract agreeing on work amounts and payment rates is vital to protecting yourself further down the line in the event of a potential non-payment. A contract of work is not only beneficial to you, it will also benefit your client by protecting both parties and preventing them both from making off with something that the other needs.
As a freelancer, trying to make sure that you get paid on time can be stressful. But, there is no need to settle for payments which are made late – there are many things that you can do to encourage your clients to pay.
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Those are some great tips. I’ve been lucky enough to only have had one late payment. I’m not trying to jinx myself though.
I have one client who always runs late, everyone else pays exactly on time: either on a set schedule or they will process a check the day they receive my invoice.