I think the most liberating and rewarding feeling from my first year or so as a freelancer was the one I got every time I emailed an invoice to a client. If you’ve done this for a while, you start to get numb to the awesomeness of that act. But when you’re fresh and new—WOW!— what a rush.
Sending invoices, though, is like making wishes. You’re sending a request to your client, but that doesn’t mean the money is in your bank account yet. They need to take action, and that’s the frightening part. It means that days could go by between sending them the invoice and you receiving the payment. Or weeks. In some cases, even months.
I’ve heard countless stories—nightmares, really—about freelancers still waiting on money owed from clients many weeks after the work has been completed. It’s more common that I would like to believe, and it upsets me. Honestly, I can’t think of anything that upsets me more in the freelance world.
It’s a powerless feeling when you’re waiting on payment for an invoice. You might have been counting on that pay check to cover your rent this month, or to pay for groceries, or fund your oldest’s braces. I know a secret, though: even though it might seem like there’s nothing you can do, you have a lot of power to change the game.
Oh, you want proof? Sure, I can back up that claim. To do so, though, we need to have a chat about what “Net” payment terms are.
Net I have a lot of friends who are freelancers and, after talking to them for years, I have noticed a pattern. Nearly all of them are waiting on clients to pay them for work they’ve already completed. When I ask them why, they tell me it’s because those clients pay their invoices Net 30 or sometimes Net 60.
Those terms, “Net #”, mean that the payment due for an invoice is received 10, 15, 30 or 60 days after receipt. It’s technically an expectation set by the party doing the billing, but oftentimes the accounts payable department of large companies will impose their own turnaround time on their vendors (sad, but you and I are merely vendors at the end of the day).
I’m not a fan of this. If my due date is today, I expect payment today. For my small, mom-and-pop clients this is relatively easy to teach. Sometimes, though, the client is larger than a one-person shop, and different departments come into play.
Most freelancers look at a situation like that and swallow the bitter pill that means waiting a month or more for their rightful wages. They toss up their hands and lament the evil corporate system that they have no control over, and then suffer through the wait. Not me, though.
In my experience, the larger the company, the more likely it is that the client has a business credit card. They have no need to submit my invoice to another department; they can simply pay with their corporate credit card and get reimbursed with all their other expenses at the end of the month. The key here is making it clear to these clients that this is even an option. They aren’t used to paying vendors with their credit card, but once you teach them, you’ve removed a lot of friction from that process.
I think of this as empowering my clients. Yes, they can pay my invoice today. And this means they won’t have to wait as long to get the things from me that they are paying for. There are other principles that can help to trim your Net timeframe down significantly. Here are three.
Making Payments Easy:
I mentioned in the previous chapter that I include a payment link when I email the PDF invoice to a client. There are a few systems out there that can fit that model, but I have a favorite service. First, let me tell you about how it works for me, and then I can list out a few other options to look into if my choice isn’t your speed.
I want my clients to pay me with a credit card. I have this goal for a couple of reasons: it’s easier for them, and I hate going to the bank to deposit checks. But to make that possible, I needed to create a payment gateway where they could do that. I tried PayPal for a couple of years, but I switched to Stripe at the beginning of 2013 and never looked back.
Stripe is a credit card payment processing company. You’ll get lost on the website, though, because it’s targeted primarily at software engineers as a tool for building into the code of a website for transactions. Thankfully, though, other services are building it into their backend. Take, for example, Plasso, from Drew Wilson.
Plasso connects to your Stripe account (which is connected to your bank account), and then gives you the ability to create a blank “Pay Me” webpage with your logo on it. The page has a static (unchanging) web address, so you can save the link and reuse it each time. That page has an empty “amount” field, which the client fills in from their invoice, and then they enter their credit card info and click “Pay”.
Stripe has a cost, but it’s the standard 2.9% + .30 that you would pay anywhere else. Plasso is free of fees as long at you use that single Pay Me page, rather than one of their custom “spaces”. And when you do get paid through Stripe/Plasso, the funds received each day are transferred to your bank account one week later (though I’ve somehow been upgraded to a 2-day transfer delay, so your mileage may vary).
Other than Stripe, there is, of course, PayPal, but I honestly don’t recommend it. They can lock up your funds without notice, and that can cripple a freelancer. As an alternative, some of the online invoicing apps, like Harvest and FreshBooks, work with a number of payment gateway services. I don’t use an invoicing web app, but if you do, it’s worth looking into how well it integrates with Stripe.
No Goods Without Payment:
One other thing I do to guarantee quicker payment of my invoices is that I make it clear in my contract with each new client that no deliverables will be handed over until payment is received. You don’t walk out of a grocery store with a bag full of fresh produce without paying, and no client should expect any less. It sounds utopian and ideal, but it’s possible, and I live it every day. If they want their art files, they pay me first.
This is not what some people refer to as, “holding the client hostage.” No, that is when you hold onto key files or assets long after payment with the goal of forcing your client to return to you time and again for small projects they could potentially do on their own. That’s a poor practice that leads to a short freelance career (you’ve now been warned).
No, expecting payment before handing over the deliverables is simply a matter of following the chain of ownership of the items created. Until a client has fully paid for your work, the work is your property. Once they have paid, they can have it. It’s not aggressive or controlling; this is a policy that protects both parties from harming the business relationship and their individual reputations. Will some clients object? I guess so. In nearly a decade as a freelancer, across hundreds of projects and scores of clients, I’ve had no complaints. None. If you do it right, though, your expectation won’t even be noticed. Use the right language when you get final project approval
(“Great! I’ll get those files packages up while you take care of the invoice, and send them over once I receive notification of payment.”), and your clients will feel served, not captive. The results will speak for themselves, too. In a line of work with an average term of Net 30, I run a business operating at about Net 2 (yes, I get paid within an average of two days). Take my advice, and you might be able to claim the same.
I like getting paid right away and I have a feeling you will, too.
Late Notices and Fees:
The only language on my invoice that even hints that lateness is an option is in the footer of my invoice template. It reads: “Invoices not paid within 30 days of issue will be assessed a $25 late fee for each month overdue.” That’s in fine print at the bottom, though. Up top in giant characters is the true due date, listed as the date I created the invoice.
I can count on one hand the number of times I’ve had to bill a late fee to a client. I make my expectations clear when I send the invoice, and I’ve made the payment process as simple as possible, and this prevents most clients from postponing their invoices. The less friction there is in the process, the more immediate the payment.
I also use my monthly “dashboard” worksheet (something covered in The Freelancer’s Guide to Finances) to help keep clients accountable. Because I have an entire section dedicated to outstanding invoices, I can see at a glance when a client has been on that list for more than a day. Depending on the relationship I have with them (are they brand new, or a frequent, returning client?) and the nature of the project (is the invoice for a deposit that is postponing the project, or payment on printed items that need to be ordered soon to meet a deadline?), I can respond to these outstanding invoices appropriately.
When an email does need to be sent over, I don’t talk about late fees or make threats. I assume the best and just mention that I wanted to make sure that the invoice PDF and payment link made it to their inbox safely, and ask if they have any questions. If a phase of the project depends on that payment, I gently remind the client that paying speeds that up. Nothing aggressive or forceful; just a friendly email to remind them that I sent the invoice in the first place. Nine times out of ten that does the trick and payment follows shortly after.
Be clear about the process. Make the process simple. And don’t be a bully. It can’t get easier than that.