- Freelance payment statistics
- Setting your payment terms
- Enforcing your payment terms
- Chasing late payments
Freelance payment statisticsStatistics from The Credit Protection Association (CPA) in 2019 found that:
- 41% of clients hiring freelancers in the UK pay late
- On average, late invoices were overdue by 2.5 weeks before being paid
- Only 7% of freelancers add late payment charges to their contracts
Setting your payment termsAs a freelancer, it’s up to you to decide your payment terms. 30 days is the standard timeframe between date of invoice and expected payment date, but you can reduce that period to one or two weeks, if you wish. It’s also perfectly reasonable to request payment at staggered intervals, especially in the case of big projects. This can be a good idea to prevent having to wait until your work is completed and signed off in entirety before being paid for your time. Occasionally, it may be necessary to agree to a client’s payment terms. Some firms have set procedures for paying their suppliers, this is especially true when it comes to larger organisations. Often big companies might have 45, 60 and even 90-day payment terms. Whether you decide to accept such terms will almost certainly come down to how much you want the work and can afford to work within these established timelines. The most important factor is to make sure you have a contract in place before you commit to any work. In it you should lay out your payment terms so that you have something you can refer back to if they fail to pay up when the time comes. In some small claims cases, an email chain which shows an agreed price and payment period may suffice as evidence.
InvoicingYour invoice should detail the work you have done and request the full payment amount you are owed. To make sure your invoice is both legal and easy for your client to pay, make sure it includes: ? Client name and address
? Your name and address
? Your invoice number
? Invoice date
? Your registered business address and company number, if you have one
? Your VAT registration number, if you’re registered.
? Total VAT you have charged
? Client order or job number (if applicable)
? The title of the project / name of the job
? Details about the work completed, including hours spent, where relevant
? Dates you completed the work
? The amount your client should pay
? Payment terms e.g. payment within 30 days.
? Your bank details if you wish them to transfer money, or account name if payment is by cheque Read more about invoicing in the Freelancer’s guide to invoicing.
Enforcing your payment termsEnforcing your payment terms begins with making sure you’re agreeing to work for a client who is likely to pay up when they receive your invoice for work done. There are several ways to make sure you stack the odds in your favour, including:
Do your homework
- Use your network – a strong network of other freelancers or people working in your industry may be able to tell you more about a company you’re considering accepting work from. You could even make use of your social network by asking if anyone has heard of the company in question. Otherwise, sometimes sharing the details of a particular job will give people you know and trust an opportunity to save you from a potential scam.
- Ask questions – if you’ve never heard of a company before, try posting on a public forum to see if anyone can tell you more information you may otherwise have missed.
- Check social media accounts – if people have posted complaints, insults or negative reviews on a company attitude it may warn you off accepting a job you’re not 100% about.
- Be cautious about accepting ‘free work’ – while it’s not unusual for a client to ask you to complete a test project in order to review your ability to complete the job in question, proceed with caution if they then start to ask for revisions. If it feels like work, you should be getting paid for it.
Keep track of paymentsDon’t rely on your memory to keep track of payments. This might seem fine when you’re first starting out, but eventually you want to have enough clients that you need a system to keep things in order. There are several useful apps for keeping track of your work and cash flow, but an organised spreadsheet will also do the job. Whatever method you opt for keeping track of your payments, make sure you record:
- Invoices sent
- Amount owed
- Payment due date
- Payments received and payments pending