Late payments shouldn't be part of the territory for freelancers
I have a friend who was recently accused of failing to pay one of his contractors on time. Because my friend is a well-known public figure, the contractor decided to post a video on YouTube airing out her grievances. To date, the video has almost 18,000 views. I watched most of the hour-long video and came to the conclusion that both my friend and the contractor were at fault. She completed the work without a contract–and, indeed, based on the time stamps and screen shots that the contractor shared, my friend did not pay her in a timely manner.
But that’s not the interesting part of this story. After watching the clip, I decided to read the comments. That’s when I started to see a pattern emerging. Several people were intimating or stating directly that the contractor was overreacting because she shouldn’t have expected to be paid in a timely manner.
One commenter wrote: “Ok. Let’s be clear [if you do] any freelance work, contract work [you should] expect your money to be late. . .this is widely known in the industry.”
Several people liked the comment, but no one disagreed with the commenter. As someone who has experienced a late payment or two over the course of my freelance career, the callous assumption that a freelancer should expect late payments rubbed me the wrong way. It’s one thing if something is an outlier and it is something totally different if something becomes so normalized that no one questions whether it is ethical (or legal).
This led me to think about how other people’s perceptions of what freelancers do or deserve may affect the way freelancers are treated, including whether it is accepted that late payments are job hazards, similar to the potential hazards that other professionals must contend with. Curious as to whether this belief was an anomaly, I reached out to some of my freelancing colleagues. Several agreed that they had grown used to late payments. One even stated, “It comes with the territory.”
But it shouldn’t.
Not only should we not accept this, but we also need to make sure that we are putting some safety nets in place to make sure that we, as freelancers, are not contributing to the idea that fair and timely compensation is reserved for W-2 employees.
Get it in writing
One of the most egregious mistakes that a freelancer or contractor can make is work without a contract. Phone conversations are great; so are e-mails and text messages. But you must insist upon a legally binding contract, even for small amounts.
If possible, have a lawyer review it or better yet, have a lawyer create one for you. There are some great contract templates online, but it never hurts to make sure that the contract’s language and clauses are applicable in your state. Lastly, make sure both parties sign and date it and keep copies in a safe place.
Payment due date
I have heard of instances when late payments were the result of a misunderstanding or logistical misstep: An email recipient may be on vacation or your contact person may have left the organization. These are innocent mistakes that can be easily rectified.
But what about the not-so-innocent “mistakes”? First, know what you will and will not accept in terms of payment due dates. Second, don’t assume that your pay schedule will be the same for every client. My recommendation is that you ask before you begin. I have one client who pays 60 days net. Two months is a long time to wait for a payment, but that is his system and I know that before I begin any projects for him. A different freelancer may decide to decline because that payment schedule does not work for her.
Additionally, if your client uses an invoicing system and they stipulate that you will be paid 10 days after you invoice them, make sure that you are clear about whether that is 10 business days or 10 calendar days. If not, you may find yourself waiting around for a check that has not been mailed yet.
Most importantly, to ensure that everyone is clear about expectations, embed the due date and all appropriate language in the contract. When determining when you expect to be paid and even how the payment will be made, be as explicit as possible.
Failure to make timely payment clause
When I first started, I used a pretty generic contract, but over time, I realized the importance of having my lawyer add a clause that stipulated what the consequences were for failure to pay by the stated date. I use a specific dollar amount as a fine, but I have seen other contracts that indicate that additional interest will be added on after the due date until the contract is paid in full.
This penalty can serve as an added incentive for a client who may be inclined to dismiss the importance of making a payment on time. (Of course, there is still a place for grace for clients who may be experiencing some extenuating circumstances, but that should be handled on a case by case basis.)
In terms of recourse when a client continues to pay late or refuses to pay, I recommend that you consult someone who is familiar with the contract laws in your state. Freelancing isn’t free and your payments shouldn’t be late either.