Nobody wants to work for free, but unfortunately, some small-business owners and freelancers are doing just that. In fact, over 70% of freelancers have trouble getting paid at some point in their careers, according to research by the Freelancers Union. Not only is this frustrating, but it directly affects your cash flow. Resorting to tapping into your personal funds or accessing a line of credit to keep afloat can be stressful and not a situation anyone wants to be in.
To ensure you get paid and on time, we’ve rounded up a few steps you can take to help avoid nonpayment issues.
1. Have a written contract signed before you begin
One of the biggest mistakes freelancers or small business owners make is not working under a signed contract. Having a written contract to the agreed-upon payment terms can protect you and your business.
2. Ask for a deposit or request payment at time of delivery
Asking for an initial deposit when finalizing a contract with a new client is another way to ensure you get paid at least partially for the work. You can request 50% upfront and collect the remaining 50% once the work is complete. Another option is collecting the money once you deliver the work. After your client establishes a consistent payment pattern, you can consider extending payment terms with them as a sign of mutual trust.
3. Provide an incentive
It doesn’t hurt to add in a little incentive at the bottom of your invoice for an early payment reward. Some small businesses will offer a 1-to-2% discount off the total amount for early payments from clients. This is another great way to establish reliable relationships with your clients and it helps you get paid even faster.
4. Give them multiple options for payment methods
Ease and convenience are what clients like, and if you can provide a quick way for them to pay you, this is a win-win for both parties. Common payment options can include e-transfers, PayPal, or other types of point-of-sale systems software. You can also just ask them what’s the easiest way to pay and allow them to choose so they’re comfortable with the method.
5. Look out for red flags
If your client is beginning to build a track record of missed payment deadlines, then it’s time to consider breaking up your business relationship with them. It’s not worth the stress or the time to track down your money to collect it. Take your leave at this point and explain to your client why this relationship won’t work for you.