Leaving your job to become a full-time freelancer is indeed exciting -- until you realize that you have to send invoices in order to get paid. Yup, you can say goodbye to those regular paychecks.
Welcome to the world of billing and collections.
No matter how long you’ve been freelancing, invoicing is no one’s favorite part of the job. Neither is waiting to get paid and trying to collect on late payments without sounding like a collection agency. So, how do you manage your invoices and get paid on time without breaking a sweat?
Take a look at our top five tips:
1. Discuss invoicing and payment with your client right from the get-go.
Establish clear expectations clear in the event you have to follow up. When I start working with a new client, I speak to my direct contact before I send my first invoice. Some of the things I ask:
- Is there a particular person whom the invoice should go to, perhaps the director of accounting or an outside billing company?
- Should the invoice be sent in a particular format, such as an attached Word document?
- Is there a specific date that you prefer to receive the invoice, such as the first of each month?
Once you understand your client’s invoice parameters, you can ask them how they plan to pay you, such as via check or PayPal. Some companies now pay freelancers through an online human resources service like Bill.com or Gusto.com. To use these payment services, your client may ask you to create an account so your payments can be deposited directly into your bank account.
If you have your own terms, it’s also important that you discuss these with your client. For example, you may require payment within 30 days, or charge a late fee or interest for invoices paid after two months.
2. Spell out the details.
According to Due.com, 18% of all invoices are paid within 24 hours and 63% are paid on time and within 30 days. At the same time, 16% don’t get paid at all. How do you make sure your invoices are not part of this 16%?
For starters, you should include all of your project details in your invoice. For example, state the following information: The actual project completed, invoice amount, due date, payment terms, applicable late fees, how you wish to receive payment (check, PayPal, direct deposit etc.), your contact information, and your company logo (if you have one).
Due.com notes that invoices with a logo increase your chances of being paid by 300%. Although Due.com did not discuss the reasoning behind this, it seems reasonable to assume that presenting your company in a professional manner, complete with a logo, prompts clients to pay you on time because they take you and your brand seriously.
3. Be polite.
Being polite and cordial may actually help you get paid faster.
In fact, a statement like, "Please pay your invoice within (30 days)" or "Thank you for your business" may increase the percentage of invoices paid by more than five percent, according to cloud accounting firm Freshbooks.
While you’re minding your manners, you should also make sure your invoice makes you sound businesslike, yet not too stern. Why? Freshbooks notes a simple change of phrase from "net 30" to "payable in 30 days" can actually lead to faster and more frequent payment of your invoices. Sometimes, it’s all in how you craft your messaging.
4. Send out gentle reminders.
After following the above guidelines, what should you do if you still haven’t been paid by your invoice due date? In this case, a gentle nudge is in order. I’d love to say this has never happened to me -- but no such luck. I’ve had to send emails asking for payment countless times.
Here are my suggestions if you find yourself in this uncomfortable position:
- Send a short email with a personal note with your invoice attached again. You can start by saying hello and thanking your client for the work. Afterwards, include a friendly reminder that you haven’t yet received payment for the completed job.
- Wait a few days. If you get no response, call your direct contact and either leave a voicemail message or talk to him over the phone. To start off a conversation, you can begin with chit-chat to lead in, and then mention you are following up on your invoice.
- If you don’t hear back from your direct contact, send a reminder note to the human resources director or whomever handles payroll. In my experience, it pays off: your emails and phone call can usually result in payment within a week.
5. Be persistent and professional.
Despite your reminders and calls, you may find yourself in a predicament where you’ve been promised payment yet it still hasn’t arrived. In this case, it may be necessary to send daily emails and even call a few times a week.
If payment still hasn’t been remitted, send another invoice about every two weeks including a line with the number of days the invoice is past due.
As a last resort, send another email stating that you will be charging interest or a late fee. Include an invoice with the total amount plus your fee. Hopefully, this will prompt your client to remit the invoice amount right away.
On a personal note, I’ve been a freelancer for 20 years and have only had an issue with non-payment once -- and that was when a client was on the brink of bankruptcy. After a full year of persistent emails and calls, I finally got paid.
Needless to say, after that experience I took my work elsewhere.