Getting Paid On Time
Aunty EntityDear Aunty Entity
I’m project managing a large project for a client who, although are the nicest bunch of people, are so disorganised that sometimes I can wait three months for payment. Although I have steady work and not a lot of time to spare for other clients, two minute noodles more than 5 times a week is getting to be beyond a joke.
What can I do to get paid on time?
Cassy Stoner
Dear Cassy
Not getting paid on time is unfortunately one of the biggest problems freelancers face. Being the norm doesn’t make it right but instead of feeling powerless there are some things you can try to make sure your invoice stays in the front of the queue.
But first think about this: unless you work for two people and their cat in a garage, chances are your invoices go to that big holding pattern in the sky called ‘accounts’. If you are one of those people who joke about people going into accounts, disappearing for an indeterminate period of time before reappearing as a grey shell of their former selves then think of what can happen to your invoice.
You need to ensure your document includes all required information so that the person who says: ‘time is money, Jones’, has no excuse to put it in the ‘too hard’ basket on his way to catch the 4.45pm to the suburbs only to tell you that the invoice was never received when you phone up about it 5 months later.
Things to include on your invoice (may seem obvious to some but you’d be surprised):
- Your name
- Client name and project name if relevant
- Date of invoice
- Tax number/VAT/GST registration numbers if applicable
- Invoice number (for your/their records)
- Amount owing - clearly
- Itemise the invoice if relevant ie: copy writing, content management, project management rather than ‘stuff for that red and swirly green website for that breadhead bank’
- If there are job codes for certain tasks, use them
Other things you can do are:
- Invoice regularly and at the same time. If your client gets to expect your invoice at a certain time of the month/week this also helps manage expectations. Ask your client if they’d prefer a bi-weekly, weekly or monthly invoice from you if it makes it easier to pay.
- Smaller amounts are less frightening than larger lump sums. So don’t save up your invoice until the end of the project. Submit invoices regularly as agreed with your client.
- Keep track of your invoices by whatever means – spreadsheet, written ledger etc. If you don’t no one else will.
- Submitting a timesheet with your invoice (Excel will do), also lessens the chance of a query on hours when it’s itemised for people to see.
- Communicate. Grumbling to friends and colleagues doesn’t get your invoice paid. You need to talk to the people making the payment. A friendly reminder by email helps but it’s best to ask in person.
- If you are the project manager then you will probably be involved or at least be across the financials of the project. If you know that invoices to the project client are being submitted/paid on a regular basis then there is no reason why it shouldn’t flow through to you. If you are on friendly terms with the project client you can help by gently reminding them that the last invoice is overdue or ready for payment.
Dear Aunty Entity
I’ve started freelancing at a very hip agency. Unfortunately, my homemade cheese sandwich in greaseproof paper gets sneered at every day.
I’ve just started so I don’t have the money for the expensive sushi lunches the other PMs seem to have daily.
Should I change my tack to fit in and look as cool as the other staff?
Attila Hunny
Dear Attila
Agencies can be snooty places, full of fashion wannabes and people with trumped up senses of self importance because they work in an office with a foosball table or copies of Wallpaper nonchalantly strewn around the place.
Those sneery thin, black-clad members of staff proudly unwrapping their soft shell crab rolls while you’re humbly tucking in to your sanger are thin for one reason. They just spent most of their poxy day’s wage on their lunch just to look cool. So, if you’re still there in a few weeks time and swan in with the latest laptop gadget…. just look a little closer and see the little holes in that sleek prada jumper they have on. Hell, I’ve eaten cold baked beans out of the can at some gigs – that ensures no one harasses you in the afternoon.
Happy freelancing.
Philip Arthur Moore
February 13th, 2008
Although most freelancers are one-man and one-woman shows, it would really do us well to approach invoicing the same way that electricity companies approach our ovens. Attaching a late fee clause, be it percentage based or flat fee based, to invoices seems to do the trick with my clients. As much as it stinks to come across as the big bad wolf with regard to getting paid, the fact remains that we need that money, lest our own stoves go cold.
Brett Nyquist
February 13th, 2008
I would also suggest putting a payment due date on the invoice. I know that in some states it’s mandated that clients pay within 30 days an invoice, no matter what. I have never had to enforce this but know a couple friends who have. Just don’t let the client slack, or else they will continue to try and stretch the limits of when you get paid.
You wouldn’t go to the auto shop to get your car fixed and expect to pay 3 months after, would you?
riki
February 13th, 2008
@Brett: Yes I fully agree “due date” is an essential. I know I sort and pay my incoming electricity/phone bills etc by the due date so it only stands to reason that others would do the same. Which means of course if you don’t have a due date, you’re invoice is probably at the bottom of the pile.
riki
February 13th, 2008
Regarding payment in general and “Getting Paid on Time” I always think of it this way.
Before you start work for a new client, you’re in special kind of place. You’re asking questions, requesting sources files, information, account details and reviewing the brief. At this stage you should be accessing the client’s level of professionalism.
Until you begin to work on the project, you haven’t made a commitment and that’s the “special place”. You can walk away at this stage and you haven’t lost cent. But as soon as you start putting in hours and they owe you money, then you’re committed. The more money they owe, and the longer the terms of payment, the deeper that commitment gets.
I’m sure some clients like it that way because they know, they’ve got you by the short-n-curlys. But just remember, scooping from the bottom of the client barrel is going to adversely effect you’re other clients. You owe it to them as much as yourself, to look for the warning signs and learn from previous bad experience.
The trick is, don’t allow yourself to be placed in the position where somebody owes you a lot of money, unless they’re firmly committed to you for one reason or another. It’s you’re business and nobody should be dictating how you run your business or your terms of payment, within reason.
I don’t allow new clients to build up large debts. I make my terms known before I commit and I think clients respect that, especially if they can see that you have a clear business structure in place.
We all deal with accounts everyday, it’s just a matter of being upfront. After all you can’t do a good job for you’re client if you’re worried about money.
Rachelle Matherne - Five by Five PR
February 13th, 2008
Another suggestion to Cassy would be to include a due date on her invoices, and a schedule of late fees. For every month the check is late, tack on a percentage of the invoice total. I’m sure there other service providers, such as utilities, etc., do the same.
I realize accounting departments are huge and require a lot of processing, but three months is just ridiculous.
Rachelle
Anna
February 13th, 2008
This is a very tricky, multi-tiered issue… especially when you have been working for a client long-term, and suddenly they’re not seeing the same revenues they used to see. Apologies, excuses and more will be heard. I had to finally cut off one regular, who then insisted that I was trying to blackmail him. Good Lord! 6 months in arrears and $5,000 dollars at stake, I had no choice. Of course I continue to try to collect, asking for small amounts paid monthly towards the total, but with the new year here, I am considering calling this a write-off (they have not paid a penny).
Oh, and one other thing: I USED to make detailed invoices, showing time spent on tasks (design, production, travel time, admin, etc. with OfficeTime). BIG mistake. Keep your invoices more simple than not. If someone asks for the details, show it to them while explaining your notes. This is something best kept to yourself, no matter how good your relationship is with your client.
Tim
February 13th, 2008
Doesn’t it also make sense to have something like the folowing in your payment terms?
—
I work for so many hours, I send you a bill. You pay the bill by the due date. If payment is passed due by so much, I stop working on your project until you are paid up.
—
Or is thsi kind of policy just assumed?
Jason
February 13th, 2008
In our upcoming business tools suite, if an invoice is not paid by a certain time it will freeze the project. Meaning, if you are working on a large project requires multiple payments, if a status payment is paid, the project management side of the tools freezes work on the project. Also, the fact that an invoice is due is easy for a client to see when they log in.
When I work for as a consultant for small design firms, it is amazing how many times they just forget to pay an invoice. Smaller companies usually have people who wear many hats and get distracted. Sometimes a friendly reminder is helpful.
Also, just sending via email sometimes is not the best solution. Mainly because they see the invoice and think ‘Oh yeah I will get that paid a little later’. If you have a system that allows your client to login and view their invoices, this is nice. This allows them easy access to invoice at their discretion instead of trying to wade through email to find invoices and try to remember which are paid or not.
jcorn
February 13th, 2008
People tend to pay their bills in priority order. Priority order means they pay the companies or people who WILL report them to credit agencies such as FICO for late payment. Many freelancers won’t go that far and clients know it. I hesitate to do it myself. How many others here feel the same? When people’s financial reputation is on the line, they’ll pay. Trouble is, that could mean losing a client who might be financially stable or more willing to pay in the future. A judgment call, for sure.
Shycon Design
February 13th, 2008
Cash flow is essential to any business, and not getting paid on time can choke your business for weeks, if not months, and really bad cash flow will shut it down. Getting paid on time is essential… you shouldn’t mess around when it comes to money. Always let a client know how you’re going to bill, and be on their butts about it. All of the tips in the article are great, but it really is up to you to keep on your clients.
Philip Arthur Moore
February 13th, 2008
@riki: Awesome advice, particularly the part about no one dictating how your business runs.
Lindsey
February 14th, 2008
I’d second, third, etc. the recommendation to have a due date on the invoice. As this is something I usually work out in a contract, I feel comfortable putting a ‘Net 30′ or ‘Net 45′ on the invoice as the case may be.
Also, if the invoice remains unpaid, ask for a contact in the Accounts Payable department. Your general contact doesn’t want to/doesn’t have time to deal with financial issues. AP will be much more up to date on whether a check has been issued, etc. Always get an email and a phone number for AP if possible.
Jessica Satterfield
February 14th, 2008
One thing to keep in mind is that the Accounts Payable departments of most medium-to-large companies (100+ employees) look at the due date on the invoice to prioritize payment. I’m speaking from experience here with several of my clients — That means if you say “due in 30 days,” they will wait until right before (or sometimes slightly after) the 30-days point to send your payment. That way, they receive the interest from the money they haven’t sent yet. Since that seems to be a common practice, all that interest really adds up.
But here’s what you can do to get around that: I put “Payment due upon receipt” on my invoices to those type of companies. That way, the Accounts Payable clerk pays it right away. It works like a charm! Just be sure that your contact at the company is OK with you doing that. (Your legal agreement can still say 30 days, etc.) Which leads me to my next point. I have the following paragraph in all of my agreements:
Payment of each invoice is due within thirty (30) days from the date of invoice. All invoices forty-five (45) days outstanding, or greater, will result in an immediate hold on all Satterfield-related projects, programs and services. Services will remain on hold until client has paid in full all issued and unpaid invoices. As a courtesy, Satterfield will provide written notification to the client on the invoice due date.
Jessica Satterfield
http://www.TheSatterfieldAgency.com
Anna
February 14th, 2008
Fabulous advice from everybody. I have also always had ‘due upon receipt’ on my invoices, knowing full well that accounting will hold invoices until the last moment.
Being told (by the client) that I am ‘blackmailing’ them is simply poor judgement on their part. I’ve seen it all, and have been told once that I was a ‘mafia’ girl for calling one client every week, without fail, until I was paid.
It’s an ongoing battle for us designers/freelancers… but one that we will wise to, with experience and great sites like this!
Anna
Brian Zafron
February 16th, 2008
At the end of the day, the most important element in getting paid on time is not concentrating on the short-term, but on relationships. Sometimes, it’s best to for forget about immediate benefit (ie quick paycheck), for the purpose of seeking those relationships that will grow in the future (monetarily and from a “trust” perspective). BRIAN OUT BRIAN OUT
Jenn
February 19th, 2008
@Tim - I find that no policy is assumed by clients. Everything needs to be clearly stated. Think little kid with mommy’s back turned - if no one is there to enforce the rules, said rules no longer exist.
Nicky Mares
February 24th, 2008
XO:
I was hired for straightforward case of web design; this person approved of
the work; she discussed ongoing maintenance and requested that I
upload the site and supplied the account info in order for me to do
so. The agreement to maintain the site was made on my part only in
exchange for the unused disk space on the server, and free of charge;
basically an act of good will and the best intentions on my part; she
also requested to pay half at that point, half after upload; here is
when things got interesting. Although my policy is work first, pay
later, upload last; on the assumption that I would be maintaining the
site I foolishly thought I could trust the her.
This person never paid half first but I went ahead and uploaded the
site. Agh. A few days later she informed me that the site was “funky”
and had reverted seemingly by itself to its previous state, which was
a generic template that she had made using the template builder
provided with the web host. Hmm. This time she made a $50 payment,
which was 1/2 of the ‘half first’ or 1/4 of the total payment;
requesting me to again upload the site, and informing of the new
password to the account, which had inexplicably been changed. Ok-? In
an effort to be helpful I stated the obvious in asking this person
whether she had used the template builder, which still had the old
copy of the template stored, which the client denied as if being
accused of something.
It was only a few days later when no further payment or instructions
appeared from the client that I realized what was happening. Ms.
Menage had waited for me to upload the site, then promptly changed the
password to shut me out. The client then stupidly attempted to use the
template builder to modify the new website, inadvertently reinstating
the old one by mistake. I sent a two-page email, which went
unanswered, patiently explaining the differences between the template
editor and alternative means to edit the site, something I had
contacted her about two weeks earlier, requesting to set a time when
we could put our heads together to implement a customized solution; a
request that also had gone unanswered. I then wrote another two emails
over the course of two days patiently explaining my position in our
agreement, all the things I had done and were willing to do for the
benefit of her website, and explaining that the agreed upon fee for
the site was more than $50.
After a few days this person responded. This time I had apparently
crossed the line and been irrevocably disrespectful in some way with
my ’smart comments’; and no further pay would be forthcoming. Two
separate conversations are presented below.
Sadly, it is apparent that THIS CLIENT NEVER INTENDED TO PAY ME. It is
unfortunate that so many take advantage of Craigslist’s open market
system to cheat and connive their way through the system. Thank you
for taking the time to listen.
On 2/17/08, I wrote: (this is a small part of a 2-page letter)
Okay. Please don’t confuse content management with that Globuild
template builder they have got up on there. Templates are very limited
in that they can only allow you to change pictures and stuff around
within the look and style of a premade layout.
——————————— (etc.) ————————-
Because this is kind of starting to drag on and it seems we haven’t
been communicating very well and time has been getting wasted. I have
been trying to do everything you wanted me to do but when I asked you
a couple of weeks ago if we could set up a time to hook you up with
the content management you never got back to me; then last week you
On 2/17/08, Tanisha Clayton wrote: (apparently replying to a
completely different conversation)
> no. Any what else is new with this?
On 2/17/08, I wrote:
What part of what I said are you saying no to? I don’t know what else
is new with this because I don’t know what you are expecting me to do.
On 2/19/08, Tanisha Clayton wrote:
I dont even remember what this email was about. What’s with the bad
attitude? I spoke with Danielle and she says that you are very rude.
On 2/18/08, I wrote:
> Please complete payment for the site this week. You have my ongoing full support for minor issues such as technical problems with Globat, in addition to the number of pages in the Cover section, ad placement, and anything else relating to content management; in exchange for the extra space on the server I will be here to continuously support and update the site. But this is dragging on for too long and I really don’t know what more you expect from me. Please don’t dole out payments at me $50 at a time like that. This is a business and I am worth more than that.
On 2/19/08, Tanisha Clayton wrote:
I know that and I really don’t need all the smart comments. For all
that you can keep the $50 and take down the site. you and I both know
why I asked to only pay $50 and further you saw for your self that
something was funky with the site. Now that it’s up I have no problem
paying the remainder balance. The problem that I have is the smart
attitude further irritating me is the fact that I just got my email up
and running only to see emails like the one below.
Nicky Mares
February 25th, 2008
p.s. the completed project can be seen at http://nickysworld.net. The letter I sent to this client’s referral named Daniella read:
What changes will you be wanting to make on a monthly basis? I assume
you said something about having monthly specials on there so we can do
that. I can start by suggesting that we put your slideshow from your
myspace page on to your brands page, instead of having “To view
current collections click here” link to your myspace page - that seems
kinda unprofessional. Also having “for map and directions click here”
link to Msn Live Maps is pretty sad especially since it is only
showing a map of the entire western half of the U.S. on my computer
when I click on it.
Now if you’ll excuse me I have a migrane… X(