Freelancers: Track down those unpaid invoices using these tips
Photo by Scott Graham on Unsplash
Freelancers and sole entrepreneurs wear many hats. In addition to being the heart of the business, you’re responsible for administration and communication with clients. Finances are up to you, and you’re at the helm of advertising for your services.
Doing it alone and being singularly responsible for money coming in can be stressful. This is exacerbated when clients don’t pay on time, or worse — when they don’t pay at all.
Read on to learn how to track down unpaid invoices effectively and efficiently.
Create an emergency fund and have a backup plan
First, you should learn how to protect yourself during those early stages of freelancing as you’re finding your groove with invoicing.
If one or more clients don’t pay on time, and your personal income is dipping or plateauing, an emergency fund can offer you a comforting buffer.
An emergency fund is an account with approximately six months’ worth of living expenses. It can cushion the blow if a major personal emergency presents itself — like a medical expense or an auto repair.
If you need cash flow to cover a personal emergency, and it comes when you haven’t saved sufficiently, you may need to use a loan or a line of credit to cover these unexpected costs. You can learn more about online loans at Fora Credit.
Remember that an online loan or a line of credit is not for anticipated issues; they’re fall-back plans for personal emergencies and when your emergency account falls short.
Make your payment expectations transparent
When you’re signing on a new client, let them know about your invoicing process and your expected payment timeline during the early stages of your communications.
Offer discounts
Offering clients a discount — that won’t see you falling short financially — is a great way to entice early payments. A five or ten percent discount for early payment can increase the likelihood of you being paid on time and make you stand out from the crowd when you’re pitching for projects.
Automate invoicing
An automated invoicing system that sends reminders until the invoice is paid is a great way to keep on top of incoming finances without having to dedicate too much of your precious time to the process.
Deploy the personal touch
If an invoice is unpaid following the final automated reminder, try to call. Automation is ideal for the most part, but sometimes a personal touch gets the job done.
Go into the phone call offering the benefit of the doubt; emails get lost, after all. It would be a shame to lose a client due to crossed wires and genuine forgetfulness.
Find another contact
If your first contact is ignoring your calls and emails, find a secondary contact and start to include them in your reminder emails.
As a last resort — escalate
If your client still hasn’t paid and the payment window has elapsed, escalation might be your last resort. Who you turn to will depend on the scope of the claim and the dynamic of the relationship.
Mediation is an option through an impartial local mediator. Or a small claims court might be necessary — here, you’d represent yourself, meaning you get to avoid lawyer fees. For larger invoices, a legal trail might be warranted.
Ultimately, avoiding a legal dispute is ideal. It costs time, money, and undue stress. By setting up clear expectations for invoicing and doing your due diligence when it comes to partnering with new clients, you’re setting yourself up for positive transactions where clients always pay on time.
