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Finance Freel

Finance Freel

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Published by: kidalive on Nov 03, 2012
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10/04/2013

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For some companies, freelancers are the best thing that ever

happened. After all, they’re not like those pesky employees who

expect a paycheck with benefts every two weeks. And, you can

take your sweet old time about paying them. Hey, why not drag it

out for months? After all, Freddie Freelancer isn’t working in our

offce — he’s 1,000 miles away! Or, after the work is done, you can

announce that you don’t like what was done and refuse to pay

anything. Such a deal!

Sorry to say it, but there are some evil people and organizations

out there in the business world. And we freelancers need to pro-

tect ourselves. The frst and best place to create this protection is

within the contracts that we and our clients sign. You can put foot-

draggers on notice by saying:

All Invoices are payable within 15 days upon receipt.

Delinquent invoices shall be assessed a $15.00 charge

if payment is not received within 15 days of the due

date. If an amount remains delinquent 30 days after its

due date, an additional 1.5% penalty shall be added for

each month of delinquency. At 90

days past due, delinquent invoices

shall be turned over to a collection

agency.

Your contract should also state that

the client agrees to pay you for your

work. You’re not doing the job with the
hope of being paid, you will to be paid

just like the client would pay his or her

employees — even when they mess up.

While I’m on the lawyer-ly topic, I recommend that you at least

have the name of a collection attorney in your contact fle. Just in

case you need to have a sternly-worded letter from a lawyer sent to

Have your lawyer review
this or any other language
before including it in your
contracts.

The Joys of Getting Paid Promptly

64

a client who owes you money. You might also want to know which

are the reputable collection agencies in your area. (Ask around!)

Collection agencies will take anywhere from 10% to 50% of the

amount due as their fee, but this is better than winding up with

nothing.

You could also take your non-paying client to small claims court,

or whatever your country’s equivalent is. You don’t need a lawyer,

but you will need excellent documentation to show to the judge. By

this, I mean signed contracts, records of your attempts to contact

the client (save those e-mails!), examples of completed work (don’t

delete those project work fles!), and anything else that could help

you win your case. Just keep in mind that winning your case means

just that. You still have to collect the money.

If you have clients who fall into the non-evil category — and most of

us do — they may simply become leisurely about paying you. This

might be because they’ve misplaced your invoice. Or they were

distracted by a family emergency. A quick phone call or e-mail

might be all that’s needed to prompt them for payment.

Or, they might have fallen on hard times. There’s a lot of that going

around. In this instance, you may want to work out a payment plan.

Just make sure that the client sticks to it.

Collections is one of those areas where no business wants to go,

but every business must. For an in-depth look at this topic, I rec-

ommend Leonard Sklar’s book, The Check Is Not In The Mail.

The Joy of Taxes

66

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