Kissimmee, Florida — There is, by far, one instance that rises above all others regarding when freelancers should absolutely walk away from a project: When you are not being paid on time!
Here’s the reality: If you take the necessary precautions, collecting payments from clients should be as fluid and as stress-free as enjoying an ice cold glass of sweetened tea on a scorching hot southern summer day. Anything less is immediate grounds for walking away from a project.
My policy is simple. I have zero tolerance for non-payment or unscheduled deferments. There is completely and unequivocally no excuse that is ever reasonable. Think of it like this: Just like the client expects services rendered in a timely fashion, a freelancer’s policy regarding the collection of payment for work performed should carry the exact same degree of expectation. And your clients should be aware of this from the onset of your business relationship. Honestly, if they expect anything different, you may want to reconsider the motives of that particular prospective client.
When it comes to the work a freelancer has committed to perform for a client or payment for the work performed by a client, I refer you to an axiom that I have lived by for most of my adult life: Excuses ONLY satisfy those who make them.
An excuse is essentially intended to appease or placate its target. But the simple truth is that its foremost directive is actually to make the person requesting to be excused feel just a little better. The hard, cold reality is actually much simpler than that: Excuses are nice, but they don’t pay bills and they don’t close deals. You or your company require timely compensation. It’s just that simple.
SO HOW CAN I PREVENT PAYMENT ISSUES?
Now that’s the real question: What are some measures that you can take so not to find yourself walking away from the project due to non-payment, deferred payments, or insufficient funds?
There are 3 methods that you can apply based on your assessment of the client. It’s these 3 methods that may prevent you from having to face this fatal question.
- ASK FOR A DEPOSIT. If you are a freelancer, you are probably not feeling as if you should ask for a deposit. New or inexperienced freelancers tend to undervalue their services for lack of experience even when their talent may far exceed their competition. The unfortunate reality is if you do not request a deposit from a client that you are questioning whether or not he or she has the actual ability to pay for the services that you will be providing then you are setting yourself up for a tremendous disappointment and a major life learning lesson.
In most industries, deposits are fairly standard. Generally, with small to medium-sized businesses (SMBs), it’s almost expected. They realize that they are building up their business credit, and it is not unusual or going against professional protocol to request a deposit.
Oftentimes it’s the larger corporations that take greater issue with the idea of a deposit based on the job responsibility they are offering. And to a certain point, you could “almost” understand. Who in their right minds should question companies as established as Coca Cola Enterprises, McDonald’s, Wal-Mart, or the United States Government. But it is also that arrogance that often fuels that company or company rep with the gall to play games when it comes to paying you on time. On top of that, they realize that working for their company brings a certain prestige, allure, and increased credibility to your personal professional value and portfolio. That is a position that many freelancers find themselves in as they slowly go broke waiting for this huge company to finally pay them for their services.
The bottom line is that you must assess you and your company’s requirements. Consider what you require from the very beginning. If you are in doubt, this is easy to rectify simply by requiring a deposit and assigning a strict or designated payment schedule. That way if a payment is late or absent, regardless of the size of the company, you are given fair warning that this company may be an issue.
Again, this is a professional call. But don’t be afraid to ask for a deposit. You are simply asking for what you are entitled as their freelancer in the first play. Scheduled payments or net terms are more of professional courtesy but definitely NOT an anomaly.
Another consideration when in doubt is advance payment. I personally don’t know if I would ever pay someone the entire amount for services that have yet to be rendered. From a client’s perspective, that can be difficult to swallow. But this is also based on the service that is being extended, and that company’s credit history.
- LAYOUT PAYMENT TERMS AND EXPECTATIONS FROM THE VERY BEGINNING. Be certain to outline in your freelance or independent contractor agreement that prompt and timely payment is a contingency to sustaining your service within the agreement and the company.
Effective communication within any business relationship is always key. Make certain that the client understands your payment expectations from the very start of your business relationship. If they have any questions, the beginning of the relationship is a perfect time to flesh those out. It’s the one time where if there is an issue or disagreement, you can both walk away from the opportunity as professionals whether you get the deal or not. Any later and it could definitely impact any future deals that you and that client will do. That goes for the client as much as it does for you.
- BECOME PERSONALLY ACQUAINTED WITH THE PERSON SIGNING YOUR CHECK. Make a practice of getting acquainted with these 3 people: (a) the person responsible for processing payment; (b) the person or people responsible for cutting the check; and (c) the person responsible for signing the check.
I mentioned this previously. Part of doing business is networking. In fact, successful professionals in every field make a point to network whenever a remote opportunity presents itself. The same rule applies to familiarize yourself or networking with key people in the company that has hired you for your freelancing services. It is not out of line for a freelancer to become acquainted with these 3 key people to ensure timely payment. In fact, it makes good business sense. If it is worked properly, they will often pay you even when they have deferred the payment of others. I’m not saying that this is right or wrong, but you or your company’s interest should take priority to you.
By becoming intimately acquainted with these individuals, you inadvertently extend a privilege to yourself that others will not have. You can actually call those key people directly to discuss impending issues and establishing methods for securing your payment in order to sustain your professional relationship and the terms of your agreement. What happens in many instances is that they make a point to look out for you as a professional courtesy or moral obligation. If not, you now have a better idea about where your relationship actually stands.
By transforming these key people into casual-professional acquaintances, you will be able to lessen your probability of finding yourself in need of walking away from the project unexpectedly.
- ONE LATE PAYMENT IS IMMEDIATE GROUNDS TO WALK AWAY FROM A PROJECT! There is really nothing else to add to this. It’s fairly cut and dry. Freelancers should treat late payments the same way that a man or woman should treat a physically abusive partner. If they do it once, there’s a high probability that they will do it again.
We all know that in business things happen. A late payment may present grounds for considering walking away from the project. Two late payments are the cause to make an immediate departure. But if the payment is not received at all, it’s definitely time to go.
Remember that the services that you are rendering and any agreement that you enter into regarding those services are contingent on the client meeting their payment obligations. Unless it is expressed otherwise, this is immediate grounds to walk away from the project. No one expects freelancers to work for an undetermined amount of time without payment. That includes the courts. So if you are not being timely paid, that creates an instant out for you within most contractual commitments. The truth is that a client should not even expect continued service if they are not meeting their scheduled payment commitments. It doesn’t make sense. Your time, talent, and money is a valuable commodity. This is possibly even more important for freelancers.
SO AM I SUGGESTING TO APPLY ALL OF THESE RULES?
In most cases, the answer is a hard yes! The only condition that you may want to reconsider are the payment arrangements, and whether or not you will request a deposit, advance payment, or a payment schedule. Honestly, with a most independent contractor or freelance agreements that are long term, your payments are set on the same schedule as the company’s W-2 employees. It tends to be easier for accounting purposes. And in most instances, this is completely fine as long as those payments are received on time. This decision is completely up to you. But be certain to lay out your payment terms from the onset of the business relationship. Be professional. Be confident. And be consistent within each business relationship.
By following these simple rules of thumb, you will be able to substantially reduce your chances of being forced into having to make the decision of whether or not you should walk away from the project. But if there is an issue with your pay, it may be time to go. That rule should be applied towards every type of client regardless of whether they are an SMB, a major corporation, or a government agency. If they want the time, they will pay the dime. But these are 4 of the easiest ways to prevent or resolve issues regarding how and when you get paid.