Getting Paid on Time as a Freelance Solopreneur

Freelancing offers tremendous freedom and flexibility. It allows you to be your own boss, set your own hours, and choose the projects that excite you. However, it also comes with its challenges. And getting paid on time is chief among them. 

A survey conducted by the Independent Economy Counsel found that 74% of freelance professionals are not being paid on time. The same study found that 59% of respondents are owed $50,000 or more for work they’ve already completed. 

Late payments are a pain in the ass in more ways than one. Of course, having to encourage, plead, and demand clients to pay what they owe is frustrating in and of itself. It can take up huge amounts of time and mental energy, especially if you don’t have someone who can handle such tasks for you.

Late payments can also pose a threat to your business. For many freelancers, maintaining consistent cash flow is a struggle. Timely payments are crucial to your ability to pay your own bills. So having to track down unpaid invoices is a hassle that can threaten the sustainability of your business.

One of my primary focuses is helping solopreneurs get paid without having to sue. That takes planning, and the patience to design processes that get you paid as soon as possible and without having to go back and forth with your clients. Here are some practical tips to help you get paid on time as a freelance solopreneur.

 

Get Your Agreement in Writing

First and foremost, you have to get your agreement in ink BEFORE YOU START WORKING. A contract sets clear expectations and creates a basis for accountability for both parties. Most importantly, the contract creates a basis for legal accountability if payments are not made in a timely manner.

It’s always a good idea for freelancers to have their own contract templates to use with clients. A standardized template saves time and helps ensure uniformity from one client to another. Even if the companies you’re working with typically provide their own templates, your own template can act as a valuable tool during negotiations by serving as a resource bank of important terms.

When drafting a contract, be sure to include:

• Scope of Work: Clearly define what you will deliver, so clients can’t claim you haven’t done what you promised.
• Payment Terms: Specify the total amount due, payment schedule, due dates, and acceptable payment methods.
• Discount for Early Payment and/or Late Fees: If you plan to incentivize payment using discounts for early payment or late fees, outline your expectations. 
• Refund Policy: Do you honor refund requests? And if so, under what circumstances? A detailed refund policy is key to avoiding chargebacks.
• Dispute Resolution: Include a clause that specifies your preferred process for resolving disputes. 
• Legal and Collection Fees: This clause specifies that you can recover legal fees from your client if you do need to take legal action and are successful. 

 

Require Payment Before You Start Work

Always get paid something up front. Consider requiring a deposit or full payment before beginning work. This approach can be particularly effective for new clients or large projects. Upfront payment demonstrates the client’s commitment and provides a little bit of insurance in case the client is late making their final payment.

For instance, you might require a 50% deposit before starting work, with the remaining balance due upon completion. This not only secures your initial investment in the project but also filters out clients who might be unwilling or unable to pay.

Upfront payments can also improve your cash flow and reduce financial stress. Knowing that you have already secured partial payment allows you to focus on delivering high-quality work without worrying about whether you’re essentially working as a volunteer.

 

Accept Quicker and Easier Payment Methods

Offering multiple, convenient payment options can significantly increase the likelihood of getting paid on time. Clients are more likely to pay promptly if the process is simple and straightforward. Accepting payments via credit cards, PayPal, or other electronic payment systems can expedite the payment process.

The fewer the steps required to make a payment, the more likely clients are to pay promptly. Making it easy for clients to pay eliminates excuses for delays. Consider integrating payment options directly into your invoices, allowing clients to pay with a click of a button.

Additionally, consider using accounting software that automates invoicing and payment reminders. Tools like QuickBooks, FreshBooks, and Xero can streamline the invoicing process, send automatic reminders for overdue payments, and accept online payments. This will save time you time and increases the likelihood of getting paid on time.

 

Require Automated Payments

If your clients are required to make recurring payments, automating those payments can entirely eliminate the risk of late payment. Many payment processing tools, like Stripe, allow solopreneurs to set up automatic recurring payments when clients sign-on. This way, you don’t have to worry about manually creating and sending an invoice every month. And you can do away with Net 30 terms that encourage clients to take their time with payments. 

Automated payments are not only great for you, but they’re often convenient for clients. Clients aren’t always late with payment because they’re trying to avoid paying. Sometimes, they simply forget. In these cases, automating the payment process can save clients time, and make it easier for them to pay you for a job well done. 

If you’re going to utilize automatic payments, make sure your agreement includes a clause authorizing automated payments. Under federal law, automatic recurring charges must be authorized by your client. So make sure your agreement outlines and collects client consent for all of the fees and charges that will be charged on a recurring basis.

 

Stick to your Boundaries

Let’s say you’ve followed the tips above, and you have a counteract that lays out payment terms in detail. It’s important to communicate your expectations verbally, and stick to them if your clients overstep your boundaries. This may include invoicing procedures, stop work policies, or late fees.

The reality is, clients don’t always read the contracts or policies that we send them. When it comes to getting paid on time, it’s important to work with the psychology of your clients. Communicating written policies verbally reinforces your expectations, and ensures that clients understand how to maintain a productive relationship with you.

Even when you’ve communicated your expectations in detail, you’ll encounter clients who don’t seem to respect your boundaries. These are the habitual line steppers. Whether they have bad intent or not, with habitual line steppers you have to stand on business and enforce your policies consistently. And if they still aren’t willing to respect your policies, you have to be comfortable with the idea of telling them to (politely) kick rocks. If you don’t they’ll end up making your life very difficult.

 

Choose your Clients Carefully

Keep in mind that you always have the right and ability to turn work down. Some clients aren’t worth working with, even if they are paying on time. Exercise your own best judgment when deciding whether to onboard a potential client. 

If you’ve heard from others that they don’t pay on time, or you get an uneasy feeling in your gut about whether they’ll respect your boundaries and payment terms, don’t hesitate to tell them you’re not accepting new clients at this time. Prioritize clients who will value your time and talent, and respect your boundaries.

 

Have your Lawyer on Speed Dial

Access to professional legal advice is an invaluable resource as you build a sustainable career as a freelance solopreneur. As I mentioned earlier, I hate being in court. As a transactional lawyer, I develop strategies and tools that allow my clients to get paid on time and with less hassle. I do that by helping my clients design rock solid agreements that fit their goals, and providing operational advice and support for the practical realities that they face. 

However, sometimes my clients still encounter customers who (for whatever reason) aren’t paying on time. In these situations, my job is to be a professional problem solver who can help them navigate potential disputes and get their needs met, without having to resort to the courts. 

As a professional, you understand how important it is to work with other professionals to close the gaps in your knowledge and gain access to the know-how that will give you the best outcomes. So find a lawyer who is (1) knowledgeable (2) communicative (3) trustworthy and (4) within your budget. And if you’re having trouble, I can surely suggest one for you!

 

Bottom Line

Implementing these strategies can improve your chances of getting paid on time, maintaining a steady cash flow for your freelance business. Setting clear expectations, making payment easy, and standing firm on your policies are key to creating a successful and financially stable freelance career. 

Remember, your time and expertise are valuable. Prompt payment is not just a business necessity, but a reflection of the respect you command as a professional. If you’re curious how MZA Legal can help you implement the tools and strategies above, feel free to schedule a free 10-minute discovery call at your convenience. We’re here if you need us!