Are you tired of your corporate job? Want to be your own master? If yes, then becoming a freelancer is the best option available to you. If you have skills, you can earn much more than an employed person. The average income of a US freelancer is $797 per week. (Source: Indeed). Pretty massive, right?
But it is not an easy task. A freelancer has to face various problems. One of the most common problems is delayed payments from your clients. Here, you will know the ways to get paid on time. But before that, let’s understand the ‘why’ first.
Why is it Important?
Who doesn’t love getting timely payments? After all, you can’t expect to pay off your expenses if you don’t get paid timely. The situation becomes critical when you are a full-time freelancer and don’t have any other income source. Hence, a freelancer needs to get paid aptly.
Besides these obvious reasons, there are many more reasons why you should get timely payment. Delayed payment affects your working capital and cash flows. It affects your future predictions regarding cash flows, which is essential for running a business.
Thus, they hinder the smooth functioning of the business. You can’t purchase new assets if you don’t receive timely payments. In extreme cases, it can even lead to shutting down the business. If that happens, then you will suffer physically and emotionally as well, besides struggling financially.
Understood the importance? Now, let’s know how you can solve the problem.
Ways to Ensure Timely Payments
It is a common problem that freelancers don’t get paid promptly. It is so because they are unregistered and unaware of their rights. So, the clients may exploit them by making delayed payments or not paying at all. To avoid being a victim, you can do the following:
Always Create a Freelancer Contract
Word of mouth is the most effective marketing tool as of now. But you can’t rely on it while making a deal. If you do a verbal agreement, you are digging your own grave. There are no legal rights for an oral agreement. If your clients default on payments, it will be next to impossible to recover them.
So, you must have a written agreement before starting a project. It should contain all the crucial details: Compensation, deadline, the scope of work, payment clause, termination, and all the terms and conditions you deem fit.
If you have a written agreement, you have legal rights against the client. The chances to recover your payment will improve significantly.
Always Request Advance Payments
It is a well-known fact that the client will be most active while reviewing the work done. At the time of payment, he becomes Mr. India. It may hurt you financially and psychologically, as you put your heart into the work. And you got nothing in the end, except a deceiving client. It might even discourage you in the future.
To avoid such a situation, you should request a portion of your compensation as advance payment. It helps you to secure the fee to some extent. And the client has relatively higher chances to pay the balance, as he has already paid a portion. Generally, 30 to 50% of your fee is an acceptable advance payment in many industries.
If you are too shy to do so, then freelancing is not your cup of tea. The key to survival is to unveil the curtain of shyness. Asking for an advance payment is your right.
Simplify the Payment Method
A freelancer needs to receive timely payments. But you can’t expect to receive payments if your clients are unable to pay you? The higher the time taken, the lesser are the chances that you will get paid appropriately.
So, you must simplify the payment method as much as possible. It will motivate the clients to pay you properly. And it solves your problem. But do you believe that it will be costly to do so?
If yes, then you are misled! With the help of Payment Links, you can collect payments instantly through Whatsapp, Email, SMS, and whatnot! And the clients can pay through various modes such as UPI, net banking, debit and credit cards, etc.
It doesn’t matter whether you are a tech guy or not. Everyone can use it conveniently. What’s more, you can even track payments effortlessly.
Send Payment Reminders to your Clients
We have a habit of forgetting everything trivial. It is such that people have to use calendar apps to remind them about important events.
Your clients are not an exception. Just like the rest, they too may forget to pay you. So, you should send payment reminders to your clients. It improves the chances of timely payments. But don’t go overboard while doing so. It may make them frustrated. And will do more harm than good. The ideal time gap between 2 reminders is a week. If you don’t receive the payment or a reply within a week, it is advisable to remind them again. Now, you can even call them to ensure faster communication.
If you are too busy, focus on the core areas. The payment links take care of it as well. You can send automated reminders for payments. That way, your clients will have a hard time delaying payments.
Charge a Late Fee in case of Delayed Payment
It is a well-known fact that time is money. What is the use of receiving delayed payment if you can’t use it in an emergency? That is why a late payment clause is a must in your freelance contract.
It discourages your client from delaying the payment. In case of delay, it ensures that you get compensated for the same.
Drop Late-Paying Clients
A client is next to god for a freelancer. After all, it is his source of income. But it doesn’t mean that you have to let yourself get exploited. If your client doesn’t care about you, it is better that you don’t care about them.
Observe the payment pattern of your clients. If they default payments frequently, you should drop them. The precious time you will waste chasing after them can be put to use in other projects. If you have built a brand, you won’t have any problem finding new clients.
Final Words
Becoming a freelancer is a viable option if you are tired of your 9-5 job. And you have marketable skills. Due to its attractiveness and increasing popularity, it is predicted that 80% of the global workforce can become a freelancer by 2030! (Source: Peerism)
But it is not an easy road. Prepare for anything. We hope that you can get paid on time by following the above methods.
FinStud 