Have you ever been stiffed by a client? You convinced them to hire you, everyone was eager to get started, and everything seemed to be going great. You finished the work on time and sent the last (or only) invoice for the project. Then you waited, and waited, and waited… nothing.
The client either paid you late or never paid you at all.
Legal protection isn’t practical
Freelancers Union, an online community of over 300,000 freelancers, conducted surveys that indicated that over 77% of freelancers struggle with late or non-paying clients and lose an average of $6,000 per year.
They believe the solution is political advocacy for new laws to protect freelancers from situations like this. In other words, it’s the client’s fault for not paying and legal protection is the solution.
I don’t quite see it this way.
Freelancers are each their own business and it’s not the government’s job to put laws in place to protect them more than any other business.
Freelancers have a right to create the rules they operate under (such as when and how to request payments) and it’s their job to ensure they get paid for their work just like any other business.
While it may be the client’s fault for not paying and laws to protect freelancers are great, it’s the practicality I take issue with.
No matter how many laws you put in place to protect freelancers, it’s costly, stressful, and time-consuming for freelancers to chase after missed payments through the legal system.
Contracts are costly to write (and enforce)
When I first started freelancing, I used to think contracts were the answer. If you want to get paid, you need a contract, right?
So I downloaded templates from the internet, stitched bits and pieces together, customized them to fit my business, and forced my clients to sign them before starting the project.
This makeshift contract contained lots of pseudo-legal jargon I thought would protect me from late or non-paying clients.
But even if you have a signed contract in place, tracking down a late or non-paying client is costly, time-intensive, and incredibly frustrating. You’ll often lose more money tracking down the missing payment than it was worth to begin with.
Most freelancers can’t afford to pursue legal action and will be left unpaid.
That said, contracts are still an important part of doing business because they set clear expectations between you and the client. That’s why one year I decided to bite the bullet and spent over $1,500+ having a lawyer draft a legally-binding Master Services Agreement.
I’ve made that contract along with my 10-page proposal template available for just $59. If you’re looking to improve this area of your freelance business, check out the proposal and contract bundle using the link above!
Why clients don’t pay
Freelance clients are notorious for holding payments hostage — more so than any other industry. You can find stories like these all over the internet:
- “This freelancer waited months to get paid…”
- “She waited 120 days to get paid…”
- “You won’t believe how long this freelancer waited…”
- “This freelancer settled for half of what they were owed…”
Can you see what they all have in common? Every freelancer asked for payment after the work was already completed.
But the root of the issue is deeper than that. If you’re struggling with collecting payments from clients, it’s most likely because:
- The client didn’t trust you to begin with
- You didn’t set clear expectations with the client
- The client felt like your work wasn’t worth the money
Unfortunately, this can happen to anyone — even if you set clear expectations and deliver high-quality work. Some clients are just toxic and while there are red flags to watch out for, it’s not always obvious upfront. So what can you do?
Collecting 100% upfront payment
The best way to make sure you get paid is to actually get paid. The only way to guarantee you get paid for your work is to collect 100% payment upfront.
If you’re thinking, “That’s crazy talk. No client will ever pay upfront…”, keep reading!
Clients will pay upfront, but you have to do 3 things:
- Earn their trust
- Position the upfront payment as optional
- Provide an incentive
No matter what payment schedule I suggest for my projects, I always give my clients the option to pay 100% upfront in exchange for a 10% discount on the total cost of the project. This creates a financial incentive for the client to pay you upfront. It also forces them to compare your options against each other instead of comparing you to another freelancer.
I’ve been shocked at how well this has worked over the years, even with first-time clients.
I’ve had first-time clients pay up to $45,000 to take advantage of the 10% discount. Of course, I did an effective job scoping the work and earning their trust before presenting the proposal, but collecting 100% payment upfront is absolutely possible.
This instantly eliminates all your risk and showcases that the client has a great deal of trust in you before you even start work. That’s a huge incentive to do your absolute best work as quickly as possible for them!
When you do this, the money effectively becomes the contract. And while it’s good to use a contract alongside a proposal, nothing compares to having all the money in your bank account before you even start work.
When you collect payment upfront, you no longer have to worry about:
- The number of revisions
- Getting paid on time
- Enforcing legal contracts
- Sending multiple invoices
- Project abandonment
Some freelancers won’t even put a client’s project on their calendar until the down payment has cleared their bank. Then, in addition to a contract, you can present your client with a proposal, which focuses on setting the right expectations instead of on legal jargon to make sure you get paid.
Overcoming client objections
Upfront payment might sound like a dream come true for freelancers, but why would clients ever agree to this? It might seem like a huge risk for them — and if you don’t successfully earn their trust, they’ll see it that way too.
But when done correctly, upfront payment establishes trust in the best way possible. No matter what, but it’s imperative that you collect a down payment at a minimum.
I tell my clients that I require a down payment in order to schedule the project into my calendar — and I won’t start work until the payment hits my bank account.
That way, everyone is committed. I know that the client has the money and isn’t going to walk away halfway through the project. Likewise, they know that time for their project is completely reserved in my calendar.
If your prospective client is still skeptical, you can offer them testimonials from past clients, your work history, portfolio, or experience, and a mutually-signed proposal. This is usually enough to comfortably collect an upfront payment.
Not every client will agree to pay 100% upfront — and that’s ok. To standardize how you structure your payments your clients, you might consider using a tiered payment system like this:
- $0 – $5,000 = 1 payment (100%)
- $5,000 – $10,000 = 2 payments (50% + 50%)
- $10,000 – $20,000 = 3 payments (50% + 25% + 25%)
When a client isn’t comfortable providing full payment upfront, it’s ok to divide the total cost into multiple installments. The important thing is that you always receive payment before starting the next part of the project.
It’s also in your best interest to associate each payment with a date on the calendar rather than a deliverable. That way, there is no room for lengthy revision cycles before payment is made and even if a client decides to cancel the project, you aren’t missing out on any income (although you may have a gap to fill in your calendar).
So, freelancers, stop blaming your clients for not paying and start controlling when you get paid. It’s as simple as asking for payment upfront!
Last updated on February 27th, 2023