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Are you a freelancer or a small business owner? Read on to find out how to track payments and make your work-life smoother!
how to track payments
Running a small business or working as a freelancer brings with it loads of advantages – but there’s one problem – ensuring that you indeed get paid for your work!
If you are a freelancer, you might have wondered whether your clients know the meaning of the word “free” in freelancer! It can be frustrating, chasing clients to pay up when you’d rather be doing more work.
If you own a small business, you might not have the luxury of a finance department doing your accounts for you, keeping track of payments, and hounding clients if they don’t pay! And since a regular inflow of cash is so essential for a business, you need to cover your bases before you enter a relationship with your client.
So what can you do to make things hassle-free? Here are a few tips for freelancers and small business owners on how to track payments.
Much of freelance work is based on trust, and you have to ensure that you won’t be short-changed. Before you accept an order or an assignment, run a check on the people you are dealing with. You can’t do much about individuals, but googling the company/business can give you an indication of what sort of clients they are, whether they’ve been known not to pay on time, or not pay at all. This should help you avoid, or be warned about what you might have in store. You might even get ideas on how to navigate your way around them.
If you haven’t worked with the client before, take on small projects in the beginning. Or take on only a few assignments at a time, and accept the next few only after you are paid for the first few. If everything goes smoothly, and once trust is built up, you can expand your work with them. And if things don’t go according to plan, it’ll ensure that you don’t burn yourself too much.
See how the client prefers to pay. Cheque? Online Transfer? Paypal? Ensure that you have all your systems in place, and have provided them with all the information that they will need to pay you.
If you are entering into a long-term project with a client, there are a few additional steps you can take to keep yourself safe.
Aim for frequent payments, made out at regular intervals. This will also stand you in good stead in case the company tanks!
If possible, get paid in advance, at least partially. If it is a long project, arrange to be paid at intervals, perhaps for each deliverable. You could also avoid making the final delivery/submission unless you have been fully compensated for your work. That way, you can deflect payment defaulters.
A contract can be your best friend. Setting down all your terms in writing, and deciding upon the timelines and deliverables right at the beginning, helps make the expectations clear, and avoids misunderstanding later on. And in the worst case that they don’t pay you, you will have the contract handy if you want to seek legal action.
Don’t worry that a contract will make you appear too firm and unyielding. It is just to protect your interests. And be wary of parties who don’t want to sign a contract!
If you’ve been doing work for the same person/organization for a long time, and you have built a trust-based relationship with them, you might want to consider dropping the formality of a contract, purely to establish goodwill.
There are various tools and apps available in the market to create invoices and track payments. An MS Excel spreadsheet can be sufficient for some of you. Apple’s iWork Numbers can also generate elegant invoices. But if you have large outflows and inflows, tools like Freshbooks, Zoho Invoice, Paypal Invoices and Quickbooks are available online. Here’s a list with brief reviews of 27 free invoicing tools that you can use. These tools are not only useful to keep a track of what you are owed, but the invoicing tools also send out payment due-date reminders and overdue reminders, freeing you of the stress of doing it yourself!
Yes, there are times when your payment is overdue, and you might have to get firm with someone with whom you’ve worked hard to build a relationship. But if you’re hesitating, remember that the money is yours – you have worked for it and it belongs to you. You are only asking for something that is yours. The client should be ashamed and feel awkward, not you!
If you are sending emails, watch your tone.
The first couple of mails can be friendly, with a casual reminder that the payment is overdue. After that, stay polite, but lose the friendly tone. Next, be matter-of-fact, and mention a date by which you expect to be paid. If everything else fails, you can threaten legal action, if need be. And be prepared to follow up on your threat!
It helps to make a phone call to ask for payment. Though this can be even more awkward than asking over email, it could get better results. Make sure to get their phone number and address right at the beginning, though!
Sometimes, approaching the higher-ups in the organization will get things moving. So explore that avenue too.
And then there might be times when nothing works – no reminders or threats bear fruit – and you are not paid at all. If the amounts involved are huge, you could take legal recourse, but sometimes, the time and effort and money needed for taking legal action is too great compared to the money you’re owed, and you’ll have to make a decision whether to let it go.
There are sites like Pay Me Please where journalists can submit the name of the defaulting media organizations. Local groups and organizations specific to your business might guide you on further steps to take. Writing about your experiences and putting it up online helps too, so that others can benefit from your experience. And if your peers come together to boycott the defaulting company – that might bring results too!
It’s not enough to be good at your work – you’ve got to be money-savvy too to survive as a small-business-owner or a freelancer. These tips should give you a start on the journey where all the money owed to you does reach you!
*Photo credit: LendingMemo (Used under the Creative Commons Attribution License.)
Shruthi Rao is a writer and editor. read more...
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