ICBA Blog

Your Guide to Getting Paid as an Independent Contractor

We offer solutions for preventing late payments and getting the funds when they are past due

As an independent contractor, you know that doing the actual work can sometimes be only half the battle. One of the struggles that can crop up for freelancers is securing on-time and in-full payment for services rendered. Sometimes the process goes smoothly. The money appears in your account, or a check arrives in your mailbox (almost like magic). Then in other situations, you spend valuable productivity hours chasing down clients who have overdue invoices. We’ve got the solutions to help you prevent the problem of late payments or deadbeat clients as well as to collect the cash quickly when someone’s seemingly skipped out on the bill.

Use a pro invoicing system
A robust invoicing program really is one of the best tools in your arsenal for getting paid. It helps you keep track of who owes you what when. If you’re still sending paper invoices or emailing self-created PDFs with no way of digitally tracking your cashflow, it’s time to step into the new millennium. Sign up for a software program like FreshBooks, 17Hats, Harvest, or QuickBooks Self-Employed. If you’re already using one of these programs, task it with doing some of the dirty work.

These systems handle your unpleasant bookkeeping tasks automatically. At a glance, you’ll be able to tell if you’ve got an outstanding invoice or if one is about to become overdue. You can also set up reminders to poke your client, say, for example, five days before or five days after the due date. If your contract stipulates late fees, you can tell the system to update the invoice automatically when it becomes past due. Another handy feature is visibility on whether your client has even viewed your invoice. If you work with the same clients frequently, your system will keep track of the average time it takes someone or a company to pay. You’ll know then that if a client usually pays within 10 days, but hasn’t viewed your invoice after a week, it’s time to reach out.

If you contract with a large organization, that company might require you to use its own invoicing portal or a specific system. Using several platforms can be frustrating. But if you make a duplicate invoice within your main software program (for your own reference), you’ll still have everything in one place.

Create iron-clad work-for-hire agreements/contracts
The first rule of freelancing is to never start work on a project without a signed agreement regarding what you’ll be doing for a client and when you’ll be paid. A company might provide you with a contract. If so, read it in its entirety, and don’t be afraid to speak up if something sounds sketchy or you’re unclear about a clause. If you’re able to provide your own contract to the business, that’s in your best interest because it gives you more control.

You can and should include payment terms.
The following are possibilities to consider, and they can be used together or individually:

Get a deposit: You may want to secure an upfront deposit. This might be a small portion of the fee just to ensure a client’s payment worthiness before you begin the work, or you might charge 50% of the total. You can even charge the full fee up front.

Seek installment payments: If you’re working with a client over a long period of time, you might prefer to incorporate interval payments tied to pre-determined deliverables or dates. For example, an installment might be due when you present the first draft of a logo design before moving on to the next phase of work. Or maybe you prefer payment for the deliverable before you begin.

Charge late fees: If you’re expecting to be paid 30 days after work completion, you could incorporate a late fee, say 10%, for every 15 days the invoice is past due.

Determine a payment preference: Do you incur bank fees for credit card payments? Or does the convenience of immediate funds outweigh the cost? Perhaps you prefer receiving a paper check in the mail. Here’s your opportunity to request a payment preference or stipulate a fee for a specific type.

Investigate
Before working with a client, do a little PI work. If you’re a freelance writer, for example, you can check out Who Pays Writers? to see if the publication has any bad marks. Search the web for any nonpayment complaints against clients in other industries. The Better Business Bureau can also be a good resource. Don’t be afraid to go with your gut. If a potential client has your hinky meter on high, there’s probably a good reason.

Follow this step-by-step guide if you’ve got a past-due invoice.

  1. Double check. Has the invoice been sent? (Make sure it’s not still just in draft status.) Have you followed the client’s invoicing protocols, if they have any? (Did they need your tax ID number or a special order code?) Has the client opened the invoice?
  2. Reach out. Send the invoice again with a friendly reminder note. Or make a call.
  3. Stop work. If you have ongoing work for this client, discontinue it and hang on to any assets until you get the situation resolved.
  4. Get peskier. If you don’t receive a response or the invoice still goes unpaid after a few days, set up those automatic notices within your system to go out daily. Become a squeaky wheel. You can always blame it on the system, but really, you have no reason to apologize.
  5. Go higher up the chain. If the invoice remains unpaid after a few weeks, and you can’t get ahold of the person with whom you secured the work, you might have better luck with a manager, a CEO, or even accounts payable. Send a few emails or make calls.
  6. Remind the client of your agreement. If you aren’t having any luck getting a response, send your original work-for-hire contract to anyone you’ve previously emailed. Remind them that if the invoice isn’t paid you may be forced to take legal action.
  7. Take legal action.
    If you live in New York City, the Freelance Isn’t Free Act protects you, and you can file a claim. And in some cases, you’re protected under the law if you live outside of NYC and work for a company based there. More cities will likely be incorporating these safeguards in the future, as well. You may need to seek a lawyer. If you work in a creative field, check with your local arts council. Often there’s a Volunteer Lawyers and Accountants for the Arts program that can help you secure your cash.