Unless you happen to be luck incarnate, as a freelance/contractor sooner or later you’ll be faced with that oldest of foes “The late/none paying client”. Perhaps the single biggest ender of freelance careers, as even the most frugal and money grabbing of freelancers still has to eat, drink vast amounts of coffee, lose hours a day on the internet and have somewhere to sleep.
So despite the ease at which money will flow out of your account, it might not always being flowing back in. To help fix this rampant cash leak, you need to make sure your clients are paying on time, every time.
Credit Control is your friend
IF you allow your clients to pay a number of days after you’ve slap them with an invoice, you’re basically offering them credit – and therefore require credit control.
Remember your invoice isn’t anywhere near as important to your clients, as it is to you. As such it’s best not to expect them to jump on your invoice the second they see it, giving it all the love and worship it obviously deservers! Responding quickly and with much reverence for the wonderful work you have performed for them!
Chances are, your invoice will simply be added to the pile (it’s heart breaking, I know) If you want to cut down on any potential cash flow problems, you’re going to have to take a few proactive steps to encourage prompt payment on account of the barista starting to make threats about your tab and Wi-Fi leeching.
Payment terms that favour you
Now a lot of big business can afford to waltz around offering 30+ day credit terms, but can you? (Hey look at me, look at me… can you? “No” that’s right) perhaps once your well established, or you’ve been productive enough to not be waiting on baited breath for your notification of payment.
But starting out or perhaps if/when your workload runs a little dry, any dip in your cash flow can equate to a major crises. As such you need to reign in the realities of your credit terms to better suit the realities of your finances.
Personally I try to balance my need to eat, with the need to offer my client at least some flexibility. I personally find 7 – 14 days is a nice rounded set of numbers people can get behind. Keep in mind however that a lot of larger companies (and even some SME’s) will only pay their own standard terms which is often 30+ days after invoicing. That said, many smaller companies will be happy to pay on your terms, assuming you discuss them before you start the project.
Be the donkey, who actually gets that dam carrot
There is nothing wrong (nothing at all) with asking for money you’re rightly owed for services rendered. Remember when your chasing payments for issued invoices, it’s not for you personally, but for your business – you are collecting payment owed to your business.
As a personal rule, I’ll wait 24 hours maximum before I start chasing up late payments. As an example: if Payment was due on the 20th of X month, I’ll start chasing it up on the 21st
There’s no need to be offensive or bad humoured about it, but do call, and when you do – be professional about it. Stay calm and polite, but be firm. Don’t accept the run around, there’s no excuse for none payment.
