When you’re a freelancer, managing your cash flow can be a tough job. While your expenses are mostly fixed, your income depends heavily on getting paid on time by your clients. But what happens when your client, despite repeated demands, refuses to pay us on time? Or worst, they just start ghosting you and refuse to acknowledge the work you’ve completed?
It is going to happen occasionally, in fact, I’m having a struggle with a client right now. But there are several steps you can take to ensure that you will be paid on time by all your clients.
1) Establish a Good Professional Reputation to Attract High-Quality Clients
When you are a freelancer, you will almost never meet a client in person and sometimes all of your interactions take place via Email. So, it’s important to build up your professional reputation in any way you can. In my VA business, about 75% of my clients come to me via referrals from existing clients. A recommendation from a satisfied client is the best reputation-builder of all.
You also build up your reputation by having a professional-looking website, following through on every commitment to your clients, having professional contracts and on-boarding of clients, and answering every Email or contact promptly. These types of actions will help you attract high-quality clients who are more likely to pay well and pay on time.
A recommendation from a satisfied client is the best reputation-builder of all
2) Be Choosy About Your Clients
When a potential client first approaches me, the first thing I do is to spend a bit of time checking out their website and all their social media accounts. That’s a great way to tell if they take their business seriously. Do they have a professional-looking website? Have they been blogging for a while? How often are they posting and are they using high-quality photos? That’s going to tell you a lot about the difference between a client that is going to be ideal to work with and one that might not.
I won’t usually turn down a client flat, but I will sometimes start off a little slower with a less than ideal client. I might suggest starting out with some clean-up work or a site review rather than jumping into a full-time management relationship.
3) To Get Paid on Time – Be Very Clear About Your Expectations
As part of the on-boarding process, I will negotiate my rates with potential clients and discuss my billing procedures and due dates. My bills are due by the 5th of the month for everyone. It’s just easier that way.
This means that all clients are paying for the month in advance, which is a good policy. For website work, I will sometimes accept payment after the fact, because those are smaller, short-term projects, but if you can get paid up front even in part, that’s your best situation.
I also specify in my contracts (more about contracts later on) that I charge late fees of $5 per day after the due date, so that’s a good way to get paid on time.
4) Make Payment Processes Clear and Easy
This may seem a bit obvious, but you want to make payment process as easy as possible for your clients. I invoice via Paypal and I send my invoices like clockwork on the 28th or 29th of each month. About half of my clients pay immediately, but I have a reminder set for myself on the 4th of the month to issue reminders for any slow-poke payers so they can hopefully get their payments in by the 5th of the month and avoid the late fees.
Then on the 6th of the month, if there are any late payers, I resend their invoices each day with the $5/day late fee added. That nearly always gets results, but if that doesn’t work after a week or so, I reach out to them to see what the issue is. At that point, I do stop work on their account until their bill is caught up.
5) Having a Contract is an Absolute MUST to Get Paid on Time
When I first started in my VA Business (hire me here), I didn’t use contracts and as a result, I rarely got paid on time. I knew contracts were important, but I didn’t really know how to set one up and I think I was a bit shy about asking a client to sign one. But you can’t be shy if you’re going to do well in business. So, I finally used my connections in some of my VA groups on Facebook to come up with a proper contract and customize it to my needs.
The funny thing is that rather than being a turn-off for potential clients, it seems to be a considerable reassurance for them. I have a simple but professional-looking contract and every client signs it with no argument at all.
A contract is so important to a good business relationship. You can definite so many expectations such as preferred communication, billing dates, late fees, your exit strategy, etc. That exit strategy has been especially helpful. I require clients to give at least 30 days notice if they want to terminate. Since I will usually schedule each client’s Pinterest pins for several weeks at a time, that keeps me from not getting paid for work I’ve completed.
A written contract ensures an added protection that a mere handshake could not give. I also have a clause in mine saying that they cannot sue me if something goes wrong with their account. Pinterest is a tricky beast and more than one account has been permanently shut down even if you’ve done everything right and taken every precaution. It’s never happened to one of my clients and I hope it never will, but I want to be prepared, just in case. So you want to figure in every kind of problem you could have and make sure it is included in your contract right from the beginning.
If you would like a professional contract template created by a lawyer, I have a link for one here – FREELANCER CONTRACT TEMPLATE. Note that this is an affiliate link and I will receive compensation at no cost to you if you choose to purchase it.
6) Maintain Good Communications with your Clients
If you do have a client that is a consistent slow payer or if you feel like you might be in danger of not getting paid, it’s important to reach out to your client. Even though it’s sometimes tempting to be angry or accusatory, that’s definitely the wrong way to go about it. Be professional and remember that you only know your part of the story. They may have had a family emergency or other circumstance beyond their control, so be kind and give them a chance to explain. Then you can come up with a solution that will be fair and agreeable to both parties.
However, if the client doesn’t respond after a week or so (ghosting you or choosing not to respond), then it’s time to be a bit more aggressive. If you have a signed contract, you can use legal means to defend it. You can send a letter from a lawyer or even start a suit in small claims court. I’ve never had to do that, because my clients usually are honest and pay up and the one time I was stiffed, it was a small amount, but I am prepared to do what is needed to protect my income stream. I really want to emphasize that the contract is the key to everything.
The time you would waste chasing around trying to collect bad debts could be used to work on more profitable projects. So choose your clients carefully, make your terms crystal clear through a written contract, and make it as easy as possible to get yourself paid on time. If a client is hesitant to sign a contract with you, they may not be a client worth having. Following these guidelines will make your life so much easier and your business much more profitable with a predictable cash flow.