Create an Effective Income Collection System
A Freelancer's Guide to Reducing Erratic Payments and Cheques
Mar 4, 2009
Freelancers tend to face problems with late cheque payments; it is rather common issue in the industry. Since these cheques represent their livelihood, it would be worthwhile to have certain procedures in place to ensure timely receipt of payments. This will help reduce income uncertainty, minimise time and effort in chasing payments and allow freelancers to keep a record of clients who are errant in their payments.
Get to Know the Client
Firstly, freelancers should get to know their clients. By requesting all pertinent information about them, it would be easier to follow up with income collection in the long run.
Request full names, ask for copies of identification cards or business registration certificates, in addition to contact information, including telephone numbers and/or mailing addresses. If a client is reluctant to provide such information, you would be able to predict difficulties with respect to the relationship in the long run.
Create a Contract with a Required Downpayment
Before embarking on a project, freelancers should have a contract in place with a downpayment commitment of up to 40%. This downpayment is non-refundable.
Have prospective clients sign a contract that requires a downpayment and allow them to follow up with the rest of the payment once the project is completed or prior to the project completion. Just like buying physical goods, clients are required to pay upfront before receiving their products. This should be no different for freelance service providers. Of course, it is up to you if you wish to hand over the completed project first before requesting the rest of the payment or request for the payment before handing over the completed project within the stipulated timeframe.
Create a Professional Invoice
Professional invoices warrant income collection. Design a clear and concise invoice with the service letterhead.
Freelancers need to be diligent in designing all documents relevant to their service. An invoice template is sufficient but should contain all relevant information as to how payments should be made. Also, invoice clients early so they have time to brief through the document and clarify any issues at hand. Within the invoice, stipulate the required deadline for the payment to be made.
Follow up with a Friendly ReminderFriendly reminders tend to work if the initial correspondences slipped through the cracks or go caught in administrative backlogs.
If the payment is running late, resend the invoice with a courtesy note. If this does not work, follow-up with a friendly reminder by e-mail. Clients would usually pay up at this point.
Use other Forms of Communication
If e-mail does not work, locate other contact details of the client.
This is where the importance of getting to know the client materialises. Use all forms of contact to reach the client, such as through a phone call or a physical visit, if it is possible. Though system outages are infrequent, they do happen and he or she or the company may have had problems with their electronic mailing systems.
Quit while You are Ahead
Sometimes it is just not worth the hassle. Following up with clients on late payments can just mean shifting your time, money and energy away from other worthwhile pojects.
If you have not handed your project over to the client, be content with the downpayment and write off the rest of the payments as bad debts. Do the same even if you have handed the final product to the client. You can consider legal action later. Nevertheless, if it is a service you are providing, the finished product can be used as a foundation for your next project, so in reality, you have not wasted all effort on this client.
If you have an ongoing contract with an errant paymaster and income is consistently erratic twinned with a recent string of non-payments, then quit while you are ahead. Let them know courteously that you are teminating your contract and start looking out for other opportunities. You can still consider legal action later.
Find Freelance Support Networks or Legal AidDepending on where you are, you may want to get help. Freelance support networks and legal aid and advice are available for freelancers. They will also help you record errant paymasters and keep them in their records for future references. You may also want to warn freelancers in your network about such incidences to keep these type of clients at bay.
