{"id":2598,"date":"2022-04-11T14:04:02","date_gmt":"2022-04-11T18:04:02","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=2598"},"modified":"2022-04-11T14:04:19","modified_gmt":"2022-04-11T18:04:19","slug":"7-ways-freelancers-and-small-businesses-can-ensure-theyre-paid","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/7-ways-freelancers-and-small-businesses-can-ensure-theyre-paid\/","title":{"rendered":"7 Ways Freelancers and Small Businesses Can Ensure They\u2019re Paid"},"content":{"rendered":"\n

Few people want to work for free. However, some small-business owners and freelancers are doing just that, according to the Independent Economy Council. In an October 2021 survey of self-employed professionals across a range of industries, 72% of respondents had invoices that weren\u2019t paid by clients for completed work.<\/p>\n\n\n\n

In addition to being frustrating, not being paid for your work directly impacts your cash flow. Tapping into personal funds, accessing a line of credit and securing some type of short-term loan are options you may consider when experiencing a cash shortage. However, these temporary solutions aren\u2019t ideal and may not always be available. Instead, here are some steps you can take to help avoid nonpayment issues.<\/p>\n\n\n\n

1. Sign a contract<\/strong><\/p>\n\n\n\n

\u201cThe number one mistake freelancers make is not working under a signed contract,\u201d says Rafael Espinal, executive director of Freelancers Union, an organization that supports independent workers. \u201cHaving a written contract allows freelance workers to set the terms on when they\u2019ll get paid, how much they\u2019ll get paid; and it will also protect them if they don\u2019t get paid and they have to go to small claims court.\u201d<\/p>\n\n\n\n

2. Ask for an upfront deposit or retainer<\/strong><\/p>\n\n\n\n

Consultants and small businesses may also want to consider asking for an initial deposit when finalizing their contract. Getting money upfront provides legal proof that both parties have committed to the contract, ensures you\u2019ll receive some payment for your work, and can provide you with money for expenses related to the project. It may be helpful to let your client know that a retainer is common practice.<\/p>\n\n\n\n

3. Request payment at time of delivery<\/strong><\/p>\n\n\n\n

Ask for payment at the time goods and services are delivered, especially when working with a new customer. \u201cDon\u2019t be afraid to collect your money upfront,\u201d says Barry Moltz, a small-business expert and author. He says that \u201cgiving a customer credit is a privilege, not a right.\u201d After a customer establishes a consistent pattern of paying, you can then consider whether you want to offer them extended payment terms.<\/p>\n\n\n\n

4. Bill customers regularly for ongoing services<\/strong><\/p>\n\n\n\n

It\u2019s recommended that you bill your customers every month, at a minimum, when providing ongoing services. \u201cIn fact, a lot of people actually doing consulting services should really bill their clients every two weeks,\u201d say Moltz. By billing frequently, he says, \u201cyou don\u2019t get too far behind in the work you\u2019re doing and how you\u2019re getting paid for it.\u201d Invoicing software<\/a>, including some free options, can help you automate the billing process.<\/p>\n\n\n\n

5. Accept multiple payment methods<\/strong><\/p>\n\n\n\n

You can make it easy and convenient for your customers to pay for your products and services by accepting multiple forms of payment. Common payment options typically include cash, checks, credit cards, debit cards and mobile wallets. Software, specifically point-of-sale software<\/a>, is typically necessary to accept card and mobile wallet payments from customers.<\/p>\n\n\n\n

6. Watch for warning signs of potential nonpayment<\/strong><\/p>\n\n\n\n

There are red flags that can signal a client may not pay you for your work. According to Espinal, \u201cOne is that they don\u2019t respect your time.\u201d For example, if a client is constantly emailing you throughout the day, it can indicate a lack of respect for the time you need to work or meet with other clients. \u201cTwo, in that same vein, is if you find that they\u2019re bad communicators,\u201d says Espinal, which could include being \u201cunresponsive to your questions or your inquiries.\u201d Finally, \u201canother is that they question your rates multiple times,\u201d he says.<\/p>\n\n\n\n

7. Take legal action<\/strong><\/p>\n\n\n\n

Both Espinal and Moltz agree that legal action is an option to consider as a last resort when a client hasn\u2019t paid you. If you\u2019ve exhausted other options, taking a customer to small claims court may be the only way for you to collect on a delinquent payment. Regardless of whether you\u2019re successful in getting paid, such an action is likely to end any opportunity of working with the customer again in the future.<\/p>\n\n\n\n

In recent years, legislation has been enacted to protect freelance workers in some states. New York City\u2019s Freelance Isn\u2019t Free Act, passed in May 2017, gives freelance workers the right to work under a contract, receive timely payment and be protected from retaliation. A bill has been proposed to expand these rights to the entire state of New York. Similar laws have already passed in Minneapolis and Seattle. The U.S. Chamber of Commerce, SCORE, the National Business Association and similar organizations that advocate for the rights of business owners and the self-employed can be helpful resources.<\/p>\n\n\n\n

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