Getting paid as a freelancer – 5 key tips for better cash flow

Freelancer working in a coffee shop

I know from personal experience that late payment of invoices can be one of the biggest challenges you face as a freelancer. When your clients are reluctant to pay on time, it doesn’t just put a strain on your customer relationship; it also puts a BIG strain on your bank balance, your cash-flow situation… and the long-term future of your freelance business.

Around half of the UK’s freelancers have considered quitting the self-employed life due to the hassle and financial insecurity of having to chase up late payment.

So, if you’re a freelancer, contractor or digital nomad who’s struggling to get paid, here are a few tips I’ve picked up along the way that will help you get paid faster – and will leave your cash flow looking a little more rosy at the end of the month.

1. Start using online invoicing right now!

If you’re not already using some form of online invoicing then you need to start – and I do mean pronto!

The days of painstakingly typing out each invoice in Word and posting them out manually to your clients are long gone. In the digital age, all of the big cloud accounting providers (you’re recording all your finances online, right?) have online invoicing built in. Xero, QuickBooks and FreeAgent  all let you create branded, professional-looking invoices in your accounting software, so you can quickly email an electronic version of the invoice straight to the client.

There’s no printing, no costly postage costs and you can instantly check if the client’s accounts payable team has opened the invoice. Pretty handy, eh!

If you’re using alternative payment options (more on these in a bit), you can even include a payment button in your e-invoice, making it as easy as possible to get paid.

2. Get a PO number or job reference if possible

The bigger the company you’re sending the invoice to, the more likely it is they’ll want a PO number quoted on the invoice. Many big finance teams will simply put your invoice to the bottom of the pile if there’s no PO or in-house job reference number shown on the invoice.

Most accounts payable teams will want to see proof that the work you’ve provided has been:

  • properly commissioned, quoted for and agreed upon, and
  • that the cost has been signed off from the relevant budget-holder’s cost centre.

So as soon as your quote has been accepted, or the work has been commissioned, ask your client contact to get you a PO number for the job. Quote this PO clearly in the reference space of your online invoice and attach an electronic copy of the purchase order, if they send you one.

In a nutshell, the more specific and detailed the information you provide on the invoice, the more likely it is the finance team will pass it for payment.

3. Chase the right person for payment

You may have done your design/writing/photography work for the lovely lady in the marketing team, but she’s not the person who actually presses ‘pay’ when it comes to settling your invoice.

Make sure you’re sending the invoice to the right people and you’ll end up being paid a lot faster! I make a habit of emailing the invoice to:

  • the main contact I work with and the person who commissioned the job,
  • AND to their main finance team email address too (ask your contact for the finance/accounts team addy as soon as you’re ready to send an invoice).

By copying in your main contact AND the accounts team, you’re making sure that both parties who are responsible for signing off and paying your bill have seen the invoice. And if the invoice is late, you have a contact for the finance team to start the process of chasing up payment.

US dollar bill

4. Use a more effective payment option

You may think there’s only one option for freelancers who want fast payment of their invoices – a simple bank transfer into the bank account you’ve stated on your e-invoice. But, in fact, there are other ways to get paid now that digital payments are more common.

  • Standing orders – if you’re on a regular retainer with a client, or performing the same service each month, asking their accounts team to set up a standing order can remove some of the uncertainty of late payment. On the plus side, you’ll get paid regularly and on time; but on the down side, they’re fiddly to set up and can only pay you a fixed amount – if the fee changes, the client has to amend their standing order amount.
  • Payment gateways – plenty of people now use PayPal and other similar online payment gateways to buy goods and service, so why not sign up for a PayPal business account and get paid directly into this account? It’s fast and relatively simple to set up, but it does mean you having to transfer money between your PayPal account, your main business bank account and reconcile all this in your online accounting software.
  • Direct Debit – Direct Debit used to be a relatively expensive and slow payment option to set up with a bank, but online-based solutions like GoCardless now make it incredibly quick and easy to set up. You invite clients to pay by Direct Debit and, once they accept, your invoices are paid automatically as soon as the invoice due date is reached – and, critically, the amount charged can be quickly changed, unlike the more inflexible standing order approach. It’s also pretty cheap – just a 1% fee for each transaction.
  • Cashless card payments – if you’re running a shop, cafe or any kind of customer-facing freelance business, taking card payments is really straightforward to set up these days. Solutions like iZettle or Vend give you card readers that plug straight into a mobile device and an app that’s connected to your online accounts. Clients can pay on their card, removing all the hassle and time of setting up bank payments.

5. Use tech to do some of the hard work

With the best will in the world, you’re never going to get a 100% success rate when it comes to payment. For whatever reasons, clients WILL sometimes pay you late. But when you do start seeing an increasing list of late invoices, there are ways to deal with this with minimal pain.

Credit control and chasing of late payment of invoices eats into your freelance business time – so why not let software do some of the hard work for you?

Cloud-based credit control apps, like Chaser, let you set up your own credit control chaser emails, and then fire them out to late-paying clients as soon as the invoice is overdue. With some well-written emails and the benefit of automated chasing, you can push the customer to pay – and not waste any of your own precious time on the process.

A messy desk in a startup

Make it easier to get paid

If you’re having problems getting clients to cough up the cash, I’d definitely suggest reviewing your invoicing, accounting and payment systems, and using all of these top tips to speed up payment of those all-important invoices.

The easier you can make it for clients to pay, the more likely it is your invoice will be settled on time – offering a choice of online payment options will definitely help your case, for a start.

If you’ve got any payment or credit control tips that work for you, I’d love to hear about them – one of the key things about making freelancing work is to ALWAYS be open to learning and sharing knowledge, I think, so feel free to share the love.

Share your payment tips and let’s make sure we ALL get paid a little faster in 2017!

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