by Leo Wiles
15 April 2015
Help! I’ve been freelancing for almost a year now and loving it. That is, I’m loving the writing side of the job. Financially though I’m getting screwed. On average I’m waiting for almost two months to be paid. It’s got to the point where I’m thinking about throwing in the towel – got any suggestions before I do? Ben
Hi Ben. I’ve certainly been where you’re sitting. Unlike you however, I didn’t do anything about my cash flow crisis until it was too late. To deal with it, I fell back on old ways and landed a sanity-saving, mortgage-paying, full-time gig – and the next time I struck out on my own, I hired a life coach who had me think about how I was going to do it differently. Here’s what I learned.
Understand the T&C If the publisher has a 90-day policy or only pays on publication you’re going to have to suck it up. It’s a situation that can be extremely hard when your piece is languishing in a dead zone (with a vague promise that it may be resurrected and published a year on). So make a choice: stop writing for them or don’t rely on their money.
Know your client If you deal mainly with small businesses, then you need to choose a system such as Bpay or PayPal that may make it easier for their bookkeeper to pay you. I always state that I expect to be paid electronically and supply my account details. I find this way there’s a record of payment for both parties and with mobile banking these days, it’s a pretty straightforward transaction.
Don’t rely on other people To avoid the lean times I always had a corporate contract in the background that covered my major living expenses such as rates, utilities and mortgage. It takes the pressure off and gives you more freedom creatively.
Take it to the bank I cannot stress enough that as a freelancer who doesn’t receive holiday or sick pay, it’s crucial to have an emergency slush fund for those times when you find yourself with cash flow issues. The bank manager doesn’t care how many outstanding invoices you have – they just want their money!
Establish an invoice tracking system Being freelance means that you’re your own CFO, so emailing your invoice is no longer the end of it. If you’re swamped with clients, it may be worth buying some accounting software such as MYOB, Reckon, Sage or Cashflow Manager to help you keep track. There’s even free accounting software available, too. However, I found a simple spreadsheet tracking payments with column titles such as: date, client, commission, fee, due and paid was sufficient. I make notes in these columns with info such as reissued or names of people in accounts that have been helpful. It also allows me to make choices when I’m short on time on who I’ll work for and who I won’t accept commissions from (especially if they’re untimely payers who keep stonewalling or costing me time and money chasing them).
First contact Once a week, schedule time to chase payments that are overdue. [See point one to work out if your payment is overdue or simply on their schedule.] If the client is new or it’s the first time I’ve had a problem being paid with a regular, I email a friendly reminder with a reissued invoice. One freelancer even went as far as to include a thumbnail image of his children with a cheeky caption that they wouldn’t be fed until he got paid. Obviously this approach may not suit most people but it’s certainly going to be make your demands more memorable than those that can be pushed to the bottom of the outstanding pile.
Pick up the phone If my email hasn’t delivered results it’s time to call and check the lie of the land. Was it an oversight, did I miss the payment cycle, is the accountant away? Bottom line: when can I expect payment? With this information, I then update my spreadsheet and diarise the new due date. If it hasn’t turned up by the new due date I kick the matter upstairs to accounts. When a client is consistently late I automatically cc accounts in all my invoice transactions with that particular commissioning editor to speed things up. To date, no client has ever complained about this as I guess editors hate paperwork as much as you do. If the idea of chasing clients for money still finds you rocking in the corner, then you can invest in a hands off online accounting service such as a virtual PA service that will send automatic reminders to your clients or ask your partner to act as your PA and call up on your behalf.
Keep your business hat on From the get go make your expectations clear. Ensure your invoice and website clearly state that you expect to be paid within 14 working days of delivering said goods or services – then put your money where you mouth is. Two weeks later, reissue the invoice with a late fee of, say, 2 percent interest for each week it remains overdue. Personally, I think this strategy works best with corporate clients rather than editorial who have already set a fee and have a limited budget – this may piss them off and see you blacklisted from their titles. The same goes with threatening legal action or publicly bad mouthing an individual, a masthead or the firm. Unless you are out by tens of thousands of dollars, you’re better off seeing the non or late payment as a down payment in what not do for the future.
How do you deal with late or non-payment? Have you had success in the small claims court or by other legal means?
I would also say mix up your clients. If I had only magazine clients I would starve. The time between commission and payment can often be three months or more—and even then they are sometimes late. Fortunately I have a number of small business clients for whom I do smaller jobs on 7-day terms.
The first year is always a bit of a discovery process in terms of knowing who to trust to pay you on time. Use your experience to keep a record of who pays on time and who pays late (and who needs prompting) and you’ll soon have a cash flow pipeline that will also tell you when to give someone a nudge.
Always get the name and contact details of the person in accounts who will be handling your invoice so you don’t always have to harass the editor, though cc them in when you first raise the flag about a late payment.
That’s a great point Adeline. In fact I used to make sure that I never relied too heavily on one publishing house… after being burnt of course :).