by Loren Pritchett
The difference between a successful freelance writer and an unsuccessful one usually boils down to how well you run your business. As an independent contractor, it’s as important to keep those checks coming in as it is to deliver clear, compelling content on deadline. Unfortunately, collecting what you’re owed can be a tough task, especially amid an economic downturn, when many companies delay their cash outlays, including payments to suppliers. The good news: You can protect your bottom line by being organized, professional, and assertive with your clients. Here are half a dozen tips that’ll help you avoid hassles–and getting stiffed.
1. Negotiate a clear contract.
Erik Sherman, a Massachusetts-based freelance journalist, recommends researching your potential new client before entering into any sort of binding contract. “Find out if they have the funds to pay you. Check with writers they’ve worked with in the past, look up their financial statements, and run credit checks,” he said. “Check their cash on hand versus their debts and see if they are paying people.” By conducting a proper background check, you can avoid clients who have a bad history of paying debts. If you need help, agencies like Dun & Bradstreet can assist you in checking a company’s credit report (for a fee), whether you’re working with an established publication or a new one.
Be wary of start-ups because their funding can dry up at a moment’s notice and your payment might go along with it, urges Kelly Bastone, a freelancer based in Colorado. Before entering into a contract, ask your client where the company gets its funding and what its payment policies are. If it’s a large or long-term job, ask whether you may bill them in increments. That way, you’ll have some leverage (i.e., you can stop working on a project) if a payment is past due.
Once you are confident your client is able to pay and you’ve agreed to do the work, read the contract closely. Make sure that the terms (your rate, payment due date, kill fee for non-use, etc.) accurately reflect your verbal agreement. If you don’t have a formal contract, send an email outlining your expectations. Tell your client when you plan to submit invoices and what methods of payment you accept. “Send an invoice with the story whether the agreement is pay-on-delivery or pay-on-publication,” Sherman said. “There is no way for the editor to ignore it if the invoice is attached with the story.”
If any problems arise after the project is completed, you can refer the client to your contract and/or to the email trail to prompt proper compensation.
2. Clearly organize your invoice and billing system.
It is important to have a foolproof billing system in place, so that your clients don’t have any questions–or reasons for delay–when it’s time to pay up. Start by building a simple, coherent invoice. You can find free invoice templates in Microsoft Word and online through Billing Manager and FreshBooks, or you can use a spreadsheet like Excel to make your own. (Sometimes your client may provide one.)
In general, an invoice should feature your name, your company name, mailing address, email address, and phone and fax numbers. The invoice should also include space for itemizing services and expenses, your taxpayer I.D., the date the invoice is due, to whom checks should be made payable, and acceptable payment methods. Once you have created an invoice template, decide your payment terms. Some companies give their clients 30 days to pay an invoice, while others allow up to 60 days.
Be fair to yourself, but also set a reasonable deadline for your clients. Consider establishing a penalty for late payments. Be upfront with your policies from the beginning, and state them clearly on your invoices. By eliminating guesswork, you can cut down on the time it takes to receive payment.
3. Find out who pays the bills–and when.
“Make friends with the accounting people,” Sherman said. “Often they get blamed for everything because they know the information, but they share it with you because they don’t want all the grief falling on them. It is usually not their fault, so treat them respectfully.”
Although you are dealing with an editor directly, he or she may not be the person who ultimately handles your payment. Be sure to ask where to send your invoice and who needs to receive a copy. Make a note of this contact information for future reference; your editor may also prefer that you direct any follow-up questions to accounts payable. Some clients will prefer an electronic copy of your invoice, followed by a printout sent through the mail. It is also helpful to know when your clients pay out. Some companies only cut checks on the 1st or 15th of the month. By knowing these dates, you can easily check the status of an invoice if a payment is overdue. Copy your editor on all inquiries.
4. Establish a standard collection procedure.
To eliminate extra work for yourself, set up a system for monitoring outstanding invoices and recording when they’ve been paid. This will help you at tax time, too. Keep a log, electronic or otherwise, of whom you’ve billed and when payments are due.
Bastone uses a simple paper ledger to track her outgoing invoices and incoming payments. She notes various details of each article, including its deadline, the date she invoiced the client, and whether she’s been paid. She says her system helps her recognize holes when she does her bookkeeping. “It’s a low-tech system,” she said. “But it serves as a visual trigger that lets me know who hasn’t sent payment.”
Whether you use a handwritten tracking sheet or a color-coded Excel document, having a visual reminder of overdue invoices will help you realize when it’s time to follow up with your client. When a payment is a week past its due date (sufficient time for a check to have arrived if it was cut on the last day), shoot your client a friendly e-mail reminder or give them a call to make sure the invoice has been processed. Express your willingness to resolve any issues that may be delaying payment, particularly if you’re working with a new client. Remember to thank them for allowing you to work on that particular project, ask when you can expect a check, and save a copy of all correspondence.
If you do not receive a check by the date promised, resubmit your invoice indicating the payment is overdue. Be sure to keep a copy for your records.
5. Write a formal letter.
If a client fails to respond to your resubmitted invoice within 30 days, send it again–this time in the form of a letter, via certified mail, requesting immediate payment for the services provided. (If you are working on a subsequent job, you also might try to use that as leverage, saying that you are unable to finish until you are paid for prior work.) Attach a copy of the original invoice. You will be notified when the letter has been delivered, which will help prevent the client from claiming that it was never received. This should resolve the problem. But, if you still aren’t paid within 30 days, it is clear your client either has no intention of paying or lacks the funds to do so.
6. Cut your losses.
After several attempts to collect, it is time to cut your losses or consider the next steps. If you are unwilling to end your quest for compensation, you may want to complain to the Better Business Bureau or a government watchdog or take the issue to small-claims court or a collection agency. It will be paramount to consider how much the client owes you compared with how much money you’ll spend in court fees and how much time you’ll spend filing a claim, waiting for a hearing, and appearing in court. Small-claims filing fees vary by state and can range from $20 to $200. The maximum claim amount is $5,000 and can be as low as $1,000 in some states. You can research your state’s small-claims court procedures online. If you’d rather stay out of court, consider hiring a collection agency.
Bastone successfully collected payment from a delinquent client at no cost. “It was quite a lot of work and phone calls to get the payment,” she said. “But the collection agency was able to collect my money, and the client had to pay their fee.” Again, make sure your potential losses outweigh how much you stand to get paid.
However you go about collecting overdue funds, always remain professional. Bad-mouthing a client or using uncivil means of collection is bound to backfire, damaging future prospects and possibly your reputation. Think twice before firing off angry emails or using abusive language on the phone. Whether you receive payment or not, the big payoff here is learning whom to work with again–or whom to avoid–and how to improve your invoicing system.
“Don’t feel squeamish about getting paid,” Bastone advised. “Don’t approach your clients with your hat in your hand–you’ve entered a professional exchange that you’ve both agreed on, so don’t be apologetic.”
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