As part of our Nedbank Money Secrets series, I will be sharing some of the best tools, policies and practices that can either make a freelancer’s life easier, or complicate things far beyond imagination.
I first entered the turbulent world of freelancing nine years ago. In the last decade of navigating this unpredictable landscape, one thing that remains a point of contention is invoicing, and more specifically, being paid on time. A day doesn’t go by where I don’t see someone complaining about a client who has kept them waiting weeks or months for payment. As freelancers or independent service providers, one thing we bartered in exchange for the freedom of our time is the security of a salary that is paid without fail at the end of every month.
And while there is no golden rule on how to be paid on time – every time, there are a few things to take into consideration from the perspective of both client and service provider which will ensure that the unnecessary hurdles we encounter can be removed from our path.
To Do List for Clients:
- Provide a contract outlining all agreed-upon deliverables from the service provider.
- Ensure that your service providers complete their vendor applications before the project commences.
- Be transparent about agency fees, tax deductions and payment schedules.
- Pay deposits for work that requires a financial investment from the service provider before the commencement of the job and communicate timeously should you be made aware of any payment delays.
To-Do List for Service Providers:
- Insist on a contract, and if you take on multiple projects for a client, renew the agreement for each job.
- Have your vendor documentation saved in a cloud folder and ready for use at all times, these documents include BEE certificates or exemption letters, proof of bank account and proof of business address.
- VAT and Tax information – familiarize yourself with the quoting and invoicing process of your client, as well as their payment schedules. Insist on a deposit as good faith when taking on a new client as well as when you are required to make a financial investment into the new project eg. travel, manufacturing or reproduction of product or supplying samples of your work. Whenever possible, have the contact details of the client’s accounts department and copy them in your invoicing email threads.
Keeping the aforementioned in mind, it is also important for clients to understand the consequences of late payments to their service providers.
How does late payment affect your service provider?
A domino-effect of non-payment sees your service provider not being able to pay their staff or suppliers. During tax season, unpaid invoices are a nightmare to account for when filing and affect the accuracy of tax calculations when their books don’t balance. A betrayal of good faith may lead to a loss of a service provider, or at the very least, a loss of their desire to meet deadlines due to lack of payment.
How could you be sabotaging yourself and hindering the payment process?
Admin is the bane of most people’s existence but is also a common reason why you don’t get paid on time. If you are required to log your hours, update your timesheet every day. Hubstuff and Tsheets are some of the tools you use to track your hours.
Also, use invoicing software that will help you track your paperwork and send out reminders on your behalf. Both Wave and Akaunting are super helpful.
Accuracy of Information: In order to ensure that your invoice is accepted on its first submission, ensure that you have completed all the information correctly and followed the client’s specific process.
Since adopting these practices myself, I have seen a significant reduction in the number of late payments on invoices, very often I have no outstanding invoices past their due date. Taking a more accountable and intentional approach to your financial security as a freelancer will yield great rewards.