How often do you get that sinking feeling when the payment for all your hard work fails to arrive on time?
It’s a truly horrible experience and one which happens to most freelancers from time to time.
However - if it happens too regularly, it’s probably a sign that you need to tighten up your systems and adopt a tougher attitude to collecting your hard – earned dough.
Getting paid on time should be the primary objective of a freelancer. Second only to having the brilliant ideas that got you started in the first place. You are entitled to your money. You are also entitled to negotiate the best possible deal you can get, and to get paid on time. It takes guts to hold out for the best deal and confidence to ask for the best possible price. You are also entitled to that. Think this all through before you start. Be prepared.
So – how can you do that?
First, it’s all about how you set up the job and clarify expectations both ways.
Second, it’s about making sure your systems are in alignment, not in conflict.
Third, it’s about precision and clarity of communication.
Here’s a few tips to get things moving in the right direction:
1. Make clear arrangements in the first place
When you are discussing the details of the work and how it’s going to be delivered, include payment in that discussion – don’t leave it ’til later - it’s amazing how easily assumptions get made. Buyers assume you’ll be happy to wait, you assume that the buyer will act reasonably and in good time, and before you know it everything gets out of step and delays occur.
It’s much better to take a deep breath and sort it all out upfront. Uncomfortable as this might be for some, it’s a heck of lot less uncomfortable than trying to sort out a big mess later on.
2. Get a letter of agreement – if not a contract.
The bigger the company or organisation you work with, the more stringent their systems are likely to be, and the longer you might have to wait to get paid. Some big companies and local authorities make you wait 30 days, some much longer – a national brand I worked with a couple of weeks ago pays after 65 days.
They will want to send you a contract to sign, then an invoice number, then will ask you to invoice them at an appropriate time…and then the waiting begins. If it’s a smaller company, or an individual, then things are likely to be a bit easier. Whichever scenario you are dealing with, you must still get a written agreement that sets out all of the details.
3. Set clear payment terms
It’s really important that both parties agree when and how payment will be made. All at once or in instalments? If all at once, when? If instalments, how many and when? And what will trigger the payments – what must be delivered at each stage? For instance, working as a consultant it’s often normal for me to get one instalment when the contract has been signed, one at mid-point – on delivery of an interim report, and final payment when both parties are happy that the job is complete. However, even when things seem to be clear, there’s still some uncertainty - initial payment on signing sometimes means exactly that, and sometimes it means 28-30 days after signing. It pays to double check all this.
4. Get a purchase order right away
Ask them to send you a purchase order straight away – or at least supply you with a purchase order number – this goes on your invoice and some organisations will simply not pay if this detail has been missed off the invoice. And they often won’t point out mistakes like this – it’s your responsibility to get the details right.
5. Invoice immediately – or as soon as is prudent.
Don’t hang about – get the invoice sent to them – by email or by post (sometimes both) as soon as you can. Getting an invoice into the system early can save a lot of grief later on. Absurdly, one local authority I have worked with for years stopped accepting digital invoices and now asks for paper versions. I didn’t know, and a delay in payment occurred as a result. Check everything. About 2 weeks before you are expecting to be paid, ring them up and check if your invoice has been signed off and is in the system - they should be able to tell you the exact date when it will be paid. This check will often uncover glitches – for instance it may not have been been signed off, or passed to payment control. If you don’t check, your invoice could remain stuck at an earlier stage in the chain and you will suffer as a result.
6. Make your invoices clear and simple
I’m always astounded by just how many people don’t really know what an invoice should have on it. It should have all of the following:
- Your logo/company name
- If you are a limited company, your company registration number.
- Your address, email and telephone number
- Your invoice number – this is your identifier and you should keep a list of invoices sent anyway.
- Their purchase order number – that’s their identifier and they will give that to you.
- The date of invoicing
- A description of what you are invoicing for.
- The amount, referencing any contract or letter of agreement.
- If it’s one of a number of instalments, which instalment is it?
- The date you expect it to be paid.
- The name the payment should be made to.
- Your bank name, sort code and account number
- How you want to be paid – e.g. by cheque or bank transfer
- Your payment terms – 28 days, immediately, or whatever you agreed in the contract/letter of agreement.
Whatever you do, follow the payer’s instructions for invoicing - they are usually set out on the purchase order. Send it exactly where the invoicing department asks you to.
7. Other things you can do to speed up the process.
There are a number of other options that you can employ to speed up the process of payment.
- Ask for bank transfer rather than cheque – this can cut down the time that the payment takes to clear into your account.
- Ask for an up front payment. In certain situations it is fine to ask for a deposit or up front payment to take account of work you may have already started, for example.
- Offer split payments – give people the option to pay in two instalments – this can often help people decide if they can afford to get going with something right away. But negotiate a little extra to be added to each instalment to compensate for the fact that you won’t get paid all at once.
- Offer discounts for immediate payment. And by that I do mean immediate – straight away on receipt of your invoice. This can sometime help boost your cashflow at quiet times of the year.
Have you got a favourite technique for speeding up payments?
Got a question I haven’t answered? – ask me on Twitter (@petemosley) or join the Art of Work Facebook group – which is a great little community of over 660 active members. Please feel free to comment below, or send me a private email.