Many people would say “nothing.” After all, for a person trying to make a living, what you are paid is darned important.
Some would give a more spiritual answer. Perhaps self-fulfillment is more important. Doing work you love. Making the world a better place to live in.
I can’t argue against those values. Work is about more than money. But for this article, I’m going back to the financial side of it.
So here is my answer as to what is more important than how much you are paid. It’s how quickly you are paid.
Sadly, the waiting time for corporate payment to self-employed, work-at-home freelancers is often much longer than it used to be. Payment far too often stretches out for interminable periods . . . or at least what seems far too long if we need the money for food, rent, and other necessities of life. Sometimes payment never shows up. As time extends and the funds never appear, we suspect we will never get paid.
Unfortunately, there are few remedies. Small claims court may have been successful in years gone by, but when we live in a different state if not a different country from our clients, small claims court is impractical. Even if we were to get a finding in our favor, how would we collect?
Sometimes, solopreneurs, have an attorney write a letter on the attorney’s letterhead. That’s a laugh. How will the attorney enforce it? Is the recipient really scared? (Probably not.)
It may be that the client will go bankrupt. Even the largest, most prestigious firms go bankrupt. They often can stay in business, but collecting from them is almost impossible, especially for the little guy for whom collection fees or legal fees would be far in excess of the amount owed.
There are even times when the client demands to pay less than the original agreed upon amount, figuring the self-employed individual will jump at underpayment rather than collect nothing at all.
Certainly, a substantial pay rate feels good, but if the payments lag our expenses or we have trouble collecting at all, a high fee is close to worthless.
It’s more important to get paid promptly than to get paid highly if we have to choose between the two.
Here are seven ways to get paid on time:
1. Structure the payment plan to receive full payment upfront.
This is most workable for smaller projects, but some self-employed individuals do this even on larger projects. As you grow your confidence to charge higher fees, employ this same confidence to require more favorable payment plans.
2. Demand partial payment upfront before work starts.
When the first payment is received promptly, that’s a good sign of the creditworthiness of the client. They say they need your work ASAP? Fine. They can pay immediately via PayPal or overnight the check.
3. Set up a payment plan that concludes in a timely manner.
Some freelancers have three or four payment points throughout the project. Some require the final payment before the completed assignment is delivered. Great idea!
4. Cut the price in return for faster payment.
Sometimes a client, especially a smaller concern, will say they can’t afford your rates and ask if you can make an exception. Here’s a change that may benefit both them and you: Reduce the fee substantially if they pay the full amount within an hour.
How it works: Simply say, “After we get off the phone, I’ll invoice you via PayPal, and you will pay within the hour.” This can work like a dream.
Not only do you have the money immediately, but individuals who have the power and the decisiveness to accept the offer and pay right away are usually the best clients and absolutely delightful to work with. Although you earn less, the headaches are less. Plus it’s very motivational to already have the money in the bank.
5. Require that all hard fees (that are not for work time) be paid upfront.
Have them pay for airline tickets, hotel arrangements, research materials, subcontractors, etc. directly or reimburse you immediately. You never want to pay for anything yourself and then pray for reimbursement.
6. Define the period between invoicing and actual payment.
Thirty days from invoicing to payment seems to be typical, but some clients—often the largest companies—unilaterally proclaim that they pay in 60 days or even 90. If you wait to start work until you have the check, this may not be a problem at the beginning of the project, but it may be a big deal for payment due upon completion. Clarify terms in advance, either through a mutually signed contract or an email explaining terms of service.
7. Work with an international internet job board for contract assignments.
These opportunities attract multiple applicants because they are easy to identify and apply for. This may depress rates. However, there are some advantages. First, their nature makes it easy to find and apply for assignments. More importantly, many of them set aside client payments in advance and have rules in place to help assure prompt payment. If you have had problems collecting in the past, this aspect of job boards may be highly attractive.
Why it matters? The big picture
People of all ages are taking the plunge, and now we are seeing more people in their twenties and thirties who have gone directly from school to self-employment. Except for perhaps part-time jobs in their youth, they have never worked for someone else
If everyone plunged into self-employment following an extended, successful career, or if at least if everyone choosing to work for himself has saved enough to support himself for six months or even a year, the speed of payment would not be such a big deal. We would all be able to support ourselves financially until that “check is in the mail” showed up in our mailbox.
However, self-employment no longer waits for most of us until the lag time before collecting is acceptable. If the new economy is to work, we must be paid in a timely way.
According to data from BLS, 16 million Americans are self-employed. Working independently has become the American dream, and ever-growing percentages of the population are breaking free from corporate employment to pursue their dream of independent self-fulfillment.
The speed of payment does matter. Those of us who work-at-home independently without a long-term assignment or actual job must concern ourselves with this issue and encourage others in this environment to do the same.
How do you get paid on time? Drop us a note below, we’d love to hear from you!