Sunday, December 23, 2012

7 Ways for Freelancers to Avoid Getting Stiffed for Payments

It’s the seventh circle of hell for freelancers of all experience levels: getting shafted for pay by a deadbeat client.
The best way to drill any lesson into your head is to learn by experience……but I honestly feel like many freelancers can avoid the headaches of payment problems if they follow a system to secure their finances, and don’t just rely on their gut.
What steps can you take to avoid these nightmarish situations?
Today, you’re going to find out! :)

1.) Always Investigate Your Client

No, you don’t have to get out the camouflage gear and binoculars, but you should at least do somestalking on your potential clients, because you can never know too much about who wants to pay you.
As someone who’s worked with many early-stage startups, I try not to be too critical on judging new businesses, but generally speaking the longer they’ve been around, the better.
Some other things you should be looking for:
  1. How “public” are they? (Any founders or big personalities active on social media?)
  2. What do customers say about them?
  3. Have they been featured in any respectable publications?
  4. Is it easy to get a hold of people who work there?
  5. How willing are they to answer your questions?
  6. Are their biggest concerns about your work related to price? (This is a big red flag)
The important thing to remember here is to not be afraid of asking questions, even if you have to go as far as asking for a reference from a previous client (I’ve done that before!).

2.) NO. FREE. SAMPLES!

Look, I understand that when you are just getting started with freelancing that it CAN be a plus to do some free work to land your first client, but if you’ve been established for any amount of time, I can’t repeat this enough: no free samples… EVER!
Do you know what kind of clients ask for free samples?
Cheapskates.
Clients who appreciate the work you do will take the time to check out some of your previous work, and they’ll be able to judge your abilities for their desired task from your public portfolio. (You do have one, right?)
Anyone who wants a free sample for their specific project isn’t really looking to see what you can do, they’re look for free work.
I’ll rest my case with a final tidbit from The Joker:
If you’re good at something, never do it for free.

3.) Raise Your Prices

In a weird way, this almost seems like bad advice, but I assure you from years of experience (and from talking with many other established freelancers), it’s one of the best tactics for avoiding deadbeat clients.
I could describe 100 reasons why, but the gist of it is this: bottom-dollar prices attract bottom of the barrel clients.
Not only does raising your freelance rates give you the opportunity to work on less projects for higher pay, you’ll also have the added benefit of only courting people who are willing to pay premium money.
These sorts of customers view your work as an “investment” above all else, and if the value you bring to them is worthwhile, they aren’t going to haggle with you on price.
Make sure you aren’t setting prices that will allow clients to undervalue your work; if you’re a hard worker and talented at what you do, charge like it.

4.) Keep Your Cool

This is one that gets newbie freelancers all the time: you’ve just landed a new client, they say that your prices/deadlines look great and they’re ready to get started.
One problem though…
“This is a fast-paced project! We’ll write up the contract shortly, but if you could just get started on the first 3 tasks, that’d be great!”
Negative!
Unless you have plenty of evidence that this client is 100% trustworthy, do not fall for this nonsense. If getting the contract written up is something they are supposed to complete, then it’s their problem, you shouldn’t have to start working for free before you have a GUARANTEE that you are going to get paid.
I’ll admit, I have some very relaxed terms with a few of my clients, but it’s because the trust has been there for a while and they’ve never let me down before.
When it comes to new clients though, get it in writing and don’t do a lick of work before you do.
Speaking of which…

5.) Leave a Paper Trail

If you don’t think you need a written contract for a client that you’ve never worked with, think about it this way…
Without a written contract, your client has no legal obligation to pay you. At all.
That means that if they decide to drop you from the project or just aren’t in the mood to pay you this decade, you have the options of:
  1. Doing nothing
  2. Whining about it on Twitter
Seriously, you have no legal way to acquire the money that you are owed without some sort of “paper” (digital or physical) trail that connects your client to you. Emails will often not suffice because most of the time, terms are not negotiated down to the specifics over email.
You’re currently on a website that offers beautiful proposal software for new client projects, so there’s your first step. Don’t be afraid to take things much further though: get the specifics of the project down in writing, answering the myriad of questions that pertain to your services (when/how you will be paid, do you retain rights to the work, what deadlines must be made, etc.)
Don’t get burned just because you were too timid (or too lazy) to do a little extra paperwork.

6.) Require an Advance / “If-then” Plan

One of the safest ways to assure that you get paid for the work you do is to schedule a payment plan for certain project milestones, including an advance for when you first begin your work.
This way, if things go bad, you’ll have been paid for whatever work has already been completed, and the money will be sitting in your account.
Another fantastic way to bulletproof your contract is through “if-then” plans.
The process is simple: set up outcomes (that the client must agree to) in your contract in the form of these “if-then” plans. An example would be something like, “If a payment is made late, then I will halt work until it is completed.”
Some of these specifics that you come up with may seem too obvious, but the advantage lies in establishing them before you start working (and in creating a list of terms that you can re-use for other clients).
This way, you won’t have to “wing it” every-time you receive a late payment from a client: you have a set system (that they agreed too) on what you’ll do when certain things occur, so there’s no stress on your end and no confusion on your client’s end about what is going to happen next.

7.) Consulting? Set a Time Limit

Consulting is an excellent way to supplement your income by taking your knowledge and sharing it with others, charging appropriately for the cost of your time.
Although I mentioned above that you shouldn’t ever do free samples, I don’t hold the same stance of offering free consulting… well, sort of.
While offering consulting is a great way to expand your network and grow your business organically due to the referrals you’ll inevitably get, remember that time is money.
It’s nice to be able to say, “Sure, we can sit down and talk about your business”, and it’s even a smart marketing strategy to do so, but you need to be VERY stringent about the time you are willing to take with these sorts of prospects.
If you are willing to stick around for a full 30 minutes with someone who may be able to help get the word out about your business (or someone who’s work you simply admire), do it, but don’t get stuck with them for 2 hours because you can’t force yourself to end the discussion.
Bottom line: it pays to be polite, but if you are using consulting as a paid source of income or a free way to network/market your business, you need to be careful with your time, those free “extended” chats can really add up.
Thanks for reading, and I’ll see you in the comments!

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