This post originally started out as a comment that I was going to leave on this article over at FreelaceSwitch, but after a couple of paragraphs I decided that it was something that I cared enough about to turn into a full article. It's a really great post about new year's advice for freelancers, but there was one point in particular that I felt was really more of an unfinished thought rather than a piece of succinct advice.

The Story So Far

[caption id="attachment_944" align="alignright" width="189" caption="The original FreelaceSwitch article."][/caption]

In the FreelanceSwitch article, the author lists the following conditions for an 'ideal project profile'

  • A web writing, speaking, consulting or UX design assignment at my current or higher fee
  • The assignment takes less than 15 hours a week to produce and is completed within one month or less.
  • The client is okay with a remote working arrangement – face-to-face meetings are not necessary.
  • The client is okay with deliverables created in my choice of software.
  • Almost all communication will take place via email, using my email account (no agency aliases). If conference calls are needed, they are a maximum of once a week and one hour or less in duration. No instant messenger required.
  • Invoice is paid in full within 30 days.
All of these are really good, I very much enjoyed the post as a whole and there are some awesome rules of thumb to follow there, it was just the very last point that bugged me.


I'm so glad you asked!

My Take on 30 Day Payment Terms

Why 30 day payment terms? The author makes it sound like having an invoice paid within 30 days is a really good thing to work towards, but it's really not! I see freelancers put "30 days" on all their invoices and I never understand why... it's like some magical number that people just pluck out of the air because they're used to hearing "30 day money back guarantee" and similar sales pitches and warranties on products.

As a freelancer (or a small business), 30 day payment terms are a nightmare, you constantly have to plan your cashflow a month in advance, and then if the payment is late you're looking at some seriously overdue money coming into your account. Don't even get me started on what it does to your tax returns! It's pretty much a 1-way slippery slope to losing track of your cash flow and going under.

Don't just slap "30 days" on all your invoices because that's what you see other companies do. Banks started handing out unsecured loans just cause that's what other banks were doing, and look where that got everyone. Yes that's a generalisation and is slightly dramatic, but the principle is there. Just like my view on IE6 browser support, you need to do what's right for you, not what's right for "everyone".

How I do it

My payment terms have always been 7 calendar days, and not only have I never had any client (including multibillion dollar corporates) complain about it, but I've also only ever had one late payment... and I still got paid in 10 days rather than 30... no biggie!

That's just for the initial deposit by the way - for the final payment, the work doesn't go live until the client has paid the final invoice. Simple.

My latest scheme is to set fixed payment dates from the get-go to circumvent clients stalling with a lot of revisions. It's not cool when you agree to 50% up front and 50% when it's done in a week's time, then the client takes a month to give you access details to the server... so any client delays now affect the live-date, but not the final payment date.

I'll say something like "The site will take us 4 weeks of actual work to complete, so we'll be charging 50% up front, and 50% in 4 weeks time. The time it takes to actually launch the site and set it 'live' will depend on how many changes you request and how quickly you're able to sign-off the completed work, but the payment timeline is fixed."

Why is this good? Because instead of saying "in 4 weeks time I'll send you an invoice, which is due in a further 30 days" - I'm saying "in 4 weeks time the final payment is due".

So far so good - I haven't had any clients complain at all, and I've had no payment problems at all. It's also worth noting that all my clients at the moment are awesome, and it was only the FreelanceSwitch post that inspired me to write this up, I'm not in any way complaining :)

What About You?

I'd love to hear about your most effective (or ineffective) strategies for getting paid on time, maybe even some nightmare stories? Drop me a line in the comments below!

Post photo by cybrgrl