10 tips for freelancers to avoid unpaid invoices and late payments

Missed or delayed payments are one of the most demotivating things that can happen to a freelancer. Unfortunately, some freelancers work hours on a project and don’t receive compensation afterward.

This experience becomes even more frustrating when freelancing is your only source of income. Following the tips in this guide will help you minimize the risk of late payments or unpaid bills.

1. Check in regularly with customers

man on his desk having a virtual meeting with a woman
no attribution required: Unsplash

Effective communication is key to building strong customer relationships, which helps you get paid. As they say, “out of sight, out of mind”. Since some customers may be disorganized or too busy, it behooves you to implement a system and be more intentional in your communications. Here are some tips for keeping your client regularly informed:

  • Schedule regular meetings and send meeting reminders through an appointment automation platform such as Calendment.
  • Use your client’s favorite instant messaging platform to send follow-ups.
  • Give more than you take. You can send free resources or gifts on special occasions to build trust with your customers.
  • Organize client files in one of the most secure cloud storage servicesso your customers can easily access it if they have any questions about your performance.
  • Keep them updated on your progress using a project management board like Trello.

2. Create a contract

Photo of the employment contract

An employment contract helps your clients take your role as a professional seriously. An agreement sets expectations on both sides and emphasizes that your relationship is professional. It also serves as a form of protection for you and your client, so that you can agree on fair terms in case your client does not pay on time.

Review your agreement before sending it. Some things you can add to your document:

  • Specific deliverables or milestones.
  • When will you be paid and what is the exact cost?
  • Payment options.
  • Additional charges for late payment.

If you don’t know how to create a customer contract, you can look for a template on a platform like Legal models. The site allows you to customize and download an “Independent Contractor Agreement” in Word or PDF format.

3. Submit a full invoice

Screenshot of the Bookipi invoice

You can choose from the best free invoicing apps for freelancers and small business owners. For example, a free invoicing app like Bookipi helps you send and track invoices. The app lets you itemize your charges and add payment terms, in addition to other useful features.

You can also preview your invoice before emailing it or sharing it via a link. The app also sends reminders if your customer forgets to pay you after a prescribed period. Each time you send an invoice, include all the necessary details to help you get paid on time:

  • A breakdown of expenses
  • Payment terms
  • Payment options
  • Payment deadline

4. Offer upfront payment incentives

Hand showing a sale tag

Incentives may include discounts, gift certificates, exclusive sales, free upgrades, or any rewards for customers who pay in advance. Choose an incentive that will motivate them to send their payments sooner. For example, you can offer a 20% discount if they set up automatic credit card payments or pay in advance for the whole year.

5. Impose a penalty

hand holding a stopwatch with credit card and money in the background

Some customers might take advantage of you when you’re too lenient with late payments or unpaid invoices. Because they think you’re okay with the delay, they might prioritize expenses over the “bigger” expenses first. To avoid this, you can also give late payment penalties. For example, a delay of half a month may result in a 2% charge.

If you are going to charge late fees, make sure your customer knows this in advance by including this condition in your contract. As a reminder, also include late payments in your invoice. If your client paid you on time, you could simply zero out the late fees.

While giving a penalty can motivate customers to pay on time, be sensitive enough when times require some empathy. For example, their business could be affected by the recession or they could have a personal emergency. In these cases, you can waive the fee. Your customer will be grateful for your consideration and you will have acquired a loyal customer.

6. Make checkout easy for customers

Person holding a phone with a payment app open.

Are there any reasons that make it difficult for customers to pay, leading to late payments? There’s no excuse for not having multiple payment options when you have digital options available. You can choose to get paid by debit card, credit card, or apps like PayPal and Payoneer.

Go through it freelancer’s guide to alternative payment methods, and choose the one that best applies to you and your customers. If you can’t decide, you can also ask your customers which payment channels they prefer.

7. Protect your output

Macbook pro on the desk with blank white screen

There’s nothing more frustrating than seeing your unpaid work on someone else’s site. To avoid this, protect your release and don’t publish it until you get paid. For example, you can ask for a 50% deposit before you get to work.

If you’re a graphic designer, use watermarks and don’t post a high-res version of your project unless you’re sure of payment. You can also upload the project to your site, use it as a working example, or modify it and sell it to another client. That way your hard work isn’t completely wasted.

8. Choose platforms with payment protection

screenshot from upwork website

Freelance sites such as Upwork have drawbacks, but one of the benefits is that they give you payment protection. If you meet Upwork’s criteria for hourly payment protection, you’ll be paid for login hours in the Upwork desktop application. Customers must deposit funds in escrow if you are paid a fixed price. These are then communicated to you once your work has been approved.

Listing on credible freelance sites can save you time and stress when dealing with disputes. They may have provisions allowing you to file a dispute in the event of non-payment. If you and your client reach an impasse, the site acts as a third party or mediator to decide the outcome of your dispute.

9. Avoid employment scams

Laptop with scam alert written on it

If you’re a new freelancer, familiarize yourself with common scams, such as money laundering, too-good-to-be-true promises, and pyramid schemes. Unfortunately, even independent sites that offer payment protection can be a hotbed of scams.

Also, be wary of job postings on Craigslist, Facebook, and other online platforms. Do a background check, protect your documents and learn how to identify scammers on freelancing sites and social networks.

Bonsai dashboard screenshot

Business management tools help you organize the most common freelance tasks from a single platform. For instance, Bonsai lets you send invoices, track your hours, use document templates, and track your expenses from their dashboard. If you feel overwhelmed with multiple applications, use a one-stop solution like this to help you get paid faster.

If you are comfortable with tracking your hours and as an hourly paid freelancer, consider using one of the free, fast and amazing time tracking tools to record your daily activity.

Is it time to end your contract?

How long has it been since you got paid? If your customer has a habit of not paying, move on and terminate your contract. If they experience a downturn in business, wish them the best and end on a positive note. Think of it this way: you open doors to better freelancing opportunities once you let go.

A missed payment for a job you worked hard for is never your fault. But the reality is that both new and experienced freelancers are susceptible to this problem. By following these tips, you can avoid legal disputes and minimize the risk of late and unpaid payments.

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