Chasing clients for late payments is one of the activities every freelancer would want to avoid.
Those conversations about money tend to get uncomfortable. Moreover, getting paid late can have a significant impact on a freelancer’s cash flow, as freelancers are usually working from project to project. No matter whether you are working for a nonprofit or a big enterprise client, you deserve to get paid on time.
In this article, we explain how you can get paid faster without engaging in uncomfortable conversations with your clients.
1. Set up automatic invoice reminders
While some customers will intentionally shift invoice payment into the indefinite future, others just forget. So, what can you do to remind clients of payments in a nice way?
Some invoicing tools help you automate this process by setting payment reminders. This way, you don't have to worry about reminders. With the majority of invoicing tools these days, you can write a personalized reminder message when creating an invoice and define when it should be sent to your clients.
This practice is especially useful if you are working with a lot of clients and your process of sending reminders has become inconsistent.
2. Use expense automation solutions
When working as a subcontractor, you may bear expenses that your clients usually reimburse after you finish the project. For example, a freelance editor can hire a graphic designer to create visual content for an article or a proofreader to improve on its grammar – all this to manage a content workflow more effectively. At the end of each month, the client would reimburse the expenses.
This way of cooperation is especially widespread among companies that prefer to outsource almost any process and prefer one person to manage all workflows.
As a freelancer, you often can’t carry all expenses before you get paid, as it can significantly hurt your cash flow. That is where expense automation solutions can come in handy. Companies that use this software can pay freelancers faster, even before they finish a project. So how does it work?
- You spend the money on a product or service.
- You log it in the expense automation tool and submit a copy of a receipt.
- The financial controller or accountant is notified and can proceed with reimbursing the cost.
If the company you are working with is not using such a tool yet, this is the moment for you to suggest your client getting interested in this solution!
3. Sign documents online
Do you remember when you had to travel to a client’s office to sign your contract? These days, you can use online signature software that helps save time on paperwork. How can online signatures help get clients to pay?
First of all, the faster the document is signed, the faster clients can make an upfront payment for your services and you can start working on your project. But that’s not all!
The other reason for using online signature software is that some tools connect with Apple Pay and a bunch of other payment services. After clients sign a contract, they are automatically redirected to the payment gateway.
Online signature software is one of the remote work tools you should be using if you are working with international clients.
4. Ask for a late fee
Unfortunately, a stick is often more effective than a carrot when clients are not paying on time. Instead of encouraging early payments with a small discount, you can use a late fee as a mechanism for creating an incentive. Clients that intend to pay on time would not be against signing a contract mentioning a late fee in one of its clauses.
Those clients who predict having problems with their cash flow at some point will back off signing such contracts. But would you really want to work with them?
Here is how you can include late payments in your contract:
The amount you charge should not be large, usually not exceeding 1.5% of the project fee, unless you find a larger fee easy to justify. You should also set a due date on your invoice and bring it up to your client. If a client skips paying, send an invoice reflecting the change in the final sum once the deadline is passed.
5. Choose clients wisely
Instead of worrying about clients not paying on time, you can do your best to prevent such situations from happening. The solution is simple – examine the profile of a customer who never pays on time and avoid working with clients similar to that one.
If a new client who wants to work with you is just too similar to that client profile and raises red flags, it’s always better to pass on such projects. But how can you identify those problem clients?
If you have a personal webpage or social media profile, add video testimonials from the clients you consider to be your ideal customers. For example, you want to work only with established companies and avoid working with startups that often have problems with cash flow.
By collecting a few testimonials from the clients that represent established companies, you can turn away startups that will examine your webpage online. They will realize you are not focusing on the companies with their challenges.
6. Build your personal brand
By building your brand, you can get more gigs to choose from. You can become more selective in who you work with and start cooperation with the companies you can trust.
Instead of remaining another candidate on a freelance jobs website, you can finally stand out from a crowd and win more respect. By creating more industry-specific content, you can get clients to connect with you faster.
There is another positive aspect to becoming an industry thought leader that can improve your cash flow significantly: With a solid personal brand, you can stop selling your time, rather investing it in working out more scalable ways of earning money. There are at least two ways you can try out if you have grown your brand.
By using membership site platforms, you can launch an online course, sell it, and get paid for a product you created once and can sell forever.
Starting blogging and growing your reach is another way. You can earn money as a blogger by selling advertisement space or joining an ad network, working on affiliate marketing, or selling digital products to your readers.
Getting clients to pay on time doesn't have to be time-consuming – most of the time, you don’t have to send dozens of follow-ups before getting your check. By introducing small routines, you'll improve your chances for getting paid faster. You can also go a step further and work on diversifying your income to not worry about late payments again.