One of the most stressful parts of self-employment is managing cash flow. Even if you have consistent work (if so, kudos! you’re a step ahead of most), you may find yourself fretting about how to ensure you get paid, and get paid on time. Sadly, you’re not alone. More than 70% of freelancers have trouble getting paid at some point in their careers, according to research by the Freelancers Union.
The problem? While it’s easy to blame a bad client, there are certain habits that successful freelancers have developed to secure timely payment. What separates these freelancers from those who are double-checking the mail every day? They have developed these 8 habits:
1. They’re organized.
Before you even think about getting paid, you need to get organized. How you establish a relationship with a client from the very beginning will set expectations for the entirety of the project.
Keeping accurate and up-to-date project information and staying on top of communications are essential and demonstrate professionalism while building a stronger relationship with your client. Don’t forget to ask for notification when a client changes their email address or billing information.
2. They have a great accounting tool.
Manually managing all of your accounts is an antiquated process that is time-consuming, ineffective, and expensive.
Those who get paid on time have gone paperless by moving to more sophisticated tools like QuickBooks Self-Employed or utilizing Moonlighting’s freelancer tools. Tools like these allow them to create and send invoices electronically in a matter of minutes (or less). Faster invoices mean faster paychecks.
3. They always have a contract.
Your contract doesn’t have to be long or complicated. But it should clarify payment terms, down payments, payment method, due date, late penalties or incentives, project scope (including what changes would constitute an increase in cost estimate), and provide answers to questions that might arise during the course of the project.
By putting this in writing, you can ensure that both you and your client agree on the terms of payment and the scope of the work. Learn more about how to create an agreement in 3 simple steps.
Pro Tip: On average, debtors pay two weeks late. If you want to get paid on time, set your payment terms two weeks earlier than you expect to receive payment. For example, a payment term of 13 days should be used if you want to get paid within 30 days.
4. They don’t wait to invoice.
Since you’ve already defined payment terms (due upon receipt, net 30, net 60, etc.) in the signed contract, the next step is to invoice promptly. This timeliness will signal that the same expectations apply to your clients’ payment turnaround.
Pro Tip: Set a recurring calendar reminder to invoice clients based on your agreed upon payment terms. ‘Due upon receipt’ provides the greatest opportunity for you to get paid on time. But when working with larger organizations, you’ll likely have to come to terms with net 30 — or an even longer time frame.
Or better yet, set recurring invoices with services like Moonlighting. The more you can automate, the more your business starts to run itself, and the more likely you are to get paid on time!
5. They provide their clients with multiple payment options.
The harder you make it for a client to pay you, the less likely they are to do it. The various payment options have their pros and cons so you’ll have to weigh the trade-offs of each especially when it comes to timing vs. fees.
Willing to sacrifice a cut for speed? Digital payments through tools like PayPal or Stripe are securely processed, typically incredibly convenient for (and trusted by) your client, and will get your paycheck in the bank faster, but you’ll lose a cut to payment processing fees (usually around 3%).
Pro Tip: Receive digital payments through Moonlighting with a Pro membership and have your payment processing fees waived. Start your free Moonlighting Pro trial today!
Are you patient? Waiting on snail mail to deliver a paper check is painful, but allows you to avoid payment processing fees and is the preferred payment method of many larger clients you might work with.
Future of payments? While this option won’t appeal to all your clients, you could also consider getting paid (even partially) in a digital currency like bitcoin, litecoin, or ether, where the entire transaction occurs almost immediately.
6. They have a follow-up system in place.
If your client doesn’t send payment within the predefined terms, you must act swiftly to get back on track and work to ensure this doesn’t happen again.
Sending a courteous note as soon as the invoice is overdue is always appropriate, but an email reminder right before it goes overdue can be even more effective (and is likely a reminder you can easily automate).
If payment goes late by another day, get the client on the phone and ask them to pay the invoice right then and there. It’s harder for clients to ignore this direct confrontation and it’ll likely embarrass them to the point that they’ll never let it happen again!
7. They’re kind but firm.
Just saying “please” and “thank you” helps no matter what business you’re in. Showing appreciation in the form of a handwritten letter or a free piece of content can speed up the payment process. At the same time, they also have no problem being firm when it comes to sticking to their payment policies. You have to strike a delicate balance.
8. They get paid upfront.
Sure, it might seem obvious that you can remove the issue of a late payment by getting the full payment upfront. But you’ll likely have a hard time convincing a new client to trust you enough to pay the full amount without immediate access to any deliverables.
Instead, request a deposit in your contract. The great thing about getting a deposit is that it trains your client to pay you. It helps your client become familiar with your payment terms and invoicing system, so that you can get any questions out of the way ahead of time.
Final thoughts to get paid on time
Oftentimes, a shift in your daily freelance routine can be enough to fix the primary obstacles to timely payment. Establish these habits to turn the tide in your favor if you’ve been struggling to get paid on time and find the right tools for your success.
Are you ready to start your own freelance business or try out a few side gigs to get the feel of freelancing? No matter what path you choose, kick start your freelance business by joining the amazing community of freelancers, entrepreneurs, and gig workers on Moonlighting. Sign up or download the app today – Free!
This article was originally featured by USA Today.