Freelancers: say goodbye to overdue payments
It’s not always easy to manage your finances when you’re self employed. You may often encounter clients who have an overdue payment or who don’t pay at all. In this article, we discuss some ways to deal with overdue invoices, in order to protect yourself and your business.
Who does this concern?
There are a number of freelancers on the market coming from different industries and who are either on freelance platforms or run their freelance business indepenently or do both. Those who do missions through online freelance platforms won't have problems with overdue payments as they are guaranteed and managed by the platform. However, if your freelance business occurs outside of platform systems, you risk having to deal with overdue invoices. It is therefore necessary to put in place some precautions in order to protect yourself from this problem.
How to avoid bad payers
There are a few ways that you can undertake in order to weed out bad payers and protect yourself against the possibility of overdue payment. First of, it is recommended that you mention your prices and subsequent method of payment as soon as you begin discussions with a potential client. That way, the other party will be aware of the necessary budget to allocate in order to benefit from your services early on.
You can propose a follow-up meeting with the client in order to better evaluate his needs and provide him with a clear and precise quote. Do not be embarrassed to bring up the matter of payment, as bad payers will not be embarrassed to leave your bills unpaid, but most of all, a frank and transparent discussion at the start of a project will limit the risk of issues later on.
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Establish clear prices
Secondly, it is recommended that you create a price list which you can send to the client. This will allow you to clearly communicate your rates from the start in order to avoid misunderstandings. A client who is interested in a service displayed on the list will have the option of prepaying (payment for the service before it has been delivered). As a freelancer, you know that you will complete the work, and you will be certain that your invoice will be paid. Finally, a price list will also let your client know if your prices are out of his budget and that he doesn’t have the means to pay you.
Prepayment: a real solution
Prepayments are increasingly used by freelancers in order to protect themselves from delinquent payers. It is not recommended that you provide services before receiving any remuneration. Never deliver without having receiving any payment whatsoever, or if you do, take it upon yourself to only deliver part of the work.
The deposit is another popular method which allows you to cover up to 50% of your fee. To do this, you are advised to provide a quotation at the start of the project, stipulating that you require a deposit before you start work. If you set an average price for your work you will have an amount on which to base your deposit.
If your client agrees to prepay his bill, you should give him preferential treatment. Giving him a discount between 5 to 10% will encourage him to go with pre-payment.
Using a timetable for large projects
If your client asks you to deliver a major project, both in terms of time and money, or if he is having trouble making payment, you can propose a timetable. This will allow you to send out several invoices over the course of the project and receive regular payment. Moreover, a timetable will reduce the risk of overdue invoices. Don’t forget that you need to be able to cover your monthly expenses. A timetable is therefore a last resort if you cannot come to an agreement with your client regarding the payment of the invoice in question.
To conclude, as a freelancer you should not be shy when dealing with your clients. Be honest and bring up the subject of payment from the start. You need to make your client understand that your work is serious and that he must pay on time. Establishing these ground rules will rapidly put a stop to bad payers.