Its one of the sad truths that as a freelancer you simply don’t get paid on time for some jobs. Indeed, I have had months pass during which clients are seemingly reluctant to pay, despite having clearly completing the projects and jobs to their absolute delight. It’s these instances where I find myself going back to a piece of advice given to me many years ago: until you have the money in your bank, the job isn’t finished. Now, I don’t know about you, but not finishing jobs is not the reason I became a freelancer.
Reminders, Mediation and Arbitration
The first step with most disputes about payment is reminders. There is a definite skill to writing effective reminders. Sending the same reminder over and over again is unlikely to yield results. A good rule of thumb is to remind clients one month after an invoice is sent, then two weeks later and finally one two weeks after that. The first should be a friendly reminder, the second querying when payment will be made and asking for a response (if none has already been given) and the third should remind clients of the next step and also how much more awkward and annoying things will get should they not pay.
There are many mediation and arbitration services for freelancers in various fields, and generally the first port of call is likely to be a union. In general they are supportive of freelancers, and if you can show them that you are in the right, they will offer you resources such as specialist legal teams that you would otherwise have to pay a lot of money for. Make sure you are in contact with the correct person to help you before you encounter problems, and try to get as much information about the process of chasing up invoices from them as possible. This will give you a much better understanding of freelancers rights and help you prevent issues in the future.
Outsourcing is a two-way street. The client trusts you to work diligently on their project, even though in many cases you’re working off-site, but at the same time, you are often trusting them to deliver their half (namely payment) in a timely manner. While legal action is one that I wouldn’t recommend in all but the most desperate instances, it’s well worth knowing your rights in case things do get a little unpleasant.
I don’t have the space here to give you a complete breakdown of every country’s freelance laws, but here’s a quick guide to most of the major areas. Remember, if you work freelance for a company overseas, you’ll have to find out whether you claim on their system or your own country’s.
- US: Ensure you’re listed as an independent contractor, not a worker. US companies are obliged to pay in a “timely fashion”. There is no set rule for payment timing. Get payment confirmed in writing, either through contracts, or for smaller jobs, by email/post. You can cheaply pursue unpaid invoices between $2,000 and $7,500 through small claims court. For larger sums, after mediation, superior court is the only option, involving lawyers and associated costs.
- UK: Get payment terms confirmed in writing. Confirm through a contract that “opinionated oppositions” are not accepted, meaning that if you do the work, they cannot object to paying you. Late payment incurs fees and interest after 30 days. Sums under £5,000 can be dealt with cheaply in small claims court.
- Germany: Companies are obliged to pay within 30 days. After this period, court is the only option. Many German companies will not pay unless you have a German tax code, which can be obtained easily from the Finanzamt.
- China: Chinese employers have very different business practices, and have few laws to regulate overseas freelancers. It is famously difficult to resolve freelance payment issues with Chinese companies, so look at up-front payment as a preventative option.
Payment up Front
Pushing too hard for payment of invoices can, in some cases, ruin relationships with clients. If you find yourself encountering difficulties with your invoices, it’s well worth looking at milestoning your payments. This needn’t necessarily be all up front, but a good rule of thumb is that you can respectfully ask for 30% before you start the job.
Doing it like this often takes some selling to a new client, but it can be offered as a win-win in many situations. It might be beneficial for the client to have a review phase or two, after which you can suggest a milestone payment, subject to their approval of work done so far.
Payment and Contracts
Assessing your client’s likelihood to pay is often very difficult. However, knowing a little about payment techniques can help you identify when a client is giving you the brush off. For example, overseas payment can often take upwards of a week, however, a considerate client may agree to pay via Paypal, which makes payment that much easier. If a client is constantly deceiving you with regards to payment, saying that they have paid you when actually they haven’t, get them to send you a scan or screen grab of the payment reference from their bank. In most countries, forging this can lead to serious prosecution.
You’ll never know if you’re going to get paid in a timely manner before you start working with a client, but always be aware of their responsibility to you. In almost every case, a well-worked contract of freelance employment – of which there are many online that are free to be copy-pasted – will give you the benefits of a professional contract without the legal costs. If, for whatever reason, you don’t have a contract, at least make sure you have confirmation of the amount, detailed description of the work involved and the due payment date.
As a freelancer, you will inevitably come across companies or individuals who pay you late or don’t pay you at all. I have been on the wrong end of some terrible non-payment issues, amounting to a good deal of lost money and personal stress. There are two final tips to dealing with this, firstly, don’t take it personally. There are plenty of reasons why you may not get paid. In most cases it’s nothing to do with the quality of your work. Secondly, don’t waste time on invoices you can do nothing about. If a company liquidates or disappears, it’s likely beneficial to chalk it up to experience which, after all, is a kind of payment in itself. Oh, who am I kidding?