I just started freelancing and am struggling with how long I should let clients have to pay. I think inside of 30 days is all I should put up with but I don’t know what’s standard (if anything is).
30 days maximum. Late fees accruing daily after that. Have it in your contract.
It really depends from the field, the standards, the competition, what you can shoulder and how much you are willing to compromise to meet the client if your views differ but you want to keep them (assuming they pay reliably).
Some fields and countries even 120 days could be common/normal, as it’s accepted that money trickles through many layers and can take time to reach some people. Some others anything longer than third in advance, third on design approval and third one week from end + 5 business day for the transaction is considered unacceptable.
For a from home contractor in the States I’d say three weeks + bank time, so a four week total at the most, would be reasonable and common enough.
Frontload split and milestone payments are up to you and the fine balance between trusting the client and not making them feel insulted.
“Some fields and countries even 120 days could be common/normal,”
Ha, isn’t that a kick in the head, landlords on the other hand expect the rent check by the first of the month, and grocery stores before you leave.
Cashflow needs really dictate what you need. You could make the terms, but typically larger companies take 30-120 days. We’ve even had clients take up to 12 months. Usually the larger the balance, the longer it takes. We try to work on monthly billing cycles with large accounts.
The problem is that most clients are also waiting for clients to pay. So their 30 day wait, turns into your 60 day wait. When I freelanced, I made new clients cash on delivery. Sometimes I tried to get a deposit if possible. After several jobs and when a relationship of trust is fostered, I would move onto 30 days.
Unfortunately, you need cashflow and multiple sources of income to comfortable handle delayed payments. Its is standard practice it seems and may make you less marketable if you don’t have that flexibility.
Maybe you could work on attaining quick pay clients first, then develop the longer term clients when you have a solid base of “bread and butter” clients.
On one hand you have the whole point about your landlord wanting the money on time, and your supermarket stubbornly refusing you pay six months later. When you put it like that, it does sound insane, and in some cases it is both insane, and downright exploitative, especially when unnecessary middle men come into the picture (we’ll pay you when the client pays us, yet they offer no additional benefit to either side).
In some other cases though there are healthy microeconomies that over the years have stabilised around that (some even longer, in fact), and while the ones involving individuals and such long waits are rare, they do exist, and might not necessarily be speculation and exploitation on someone’s side up the ladder, just how that particular economic cycle moves.
I have a good friend who works by that model (after a 10% frontload and some very small milestone payments) because it ended up enabling his clients to turn a higher profit, and buy more. It works for both, they stick to it to mutual advantage.
At the end of the day, way I see it, the important thing is both sides respect what they agreed on.
If you signed something with no frontloading and payment one year after final delivery, there is nothing bad in the client paying you 365 days after you deliver, you agree to it.
I’d find worse a two weeks agreement that gets pushed to three, because the unforeseen delays and the repeated lies are usually more damaging than an agreed on long term if you’re a good manager and agreed to something you could sustain in first place.
We also don’t deal much with the debt/credit derivates of virtual money in our fields, so hard cash tends to be king, whenever delivered, but for companies turning around enough commission work, and associated with the right institutions and companies, virtual capital from a gap between credit and debt can mean a lot of money.
Yeah, the whole.thing is a real mess. Sometimes clients with great cash flow actually pay quicker or at least within 2 weeks.
Lack of cash.flow.and getting burned a few times can really crush you if you are not careful.
You should be flexible with your client but at a some point you have to decide that cash flow is their problem. If they need more capital to finance their company they need to find it.
True, but they’ll just hire someone else that will let them roll 30+ days or so someone dirt cheap on elance so payment is nothing that petty cash won’t cover. You’ll need a mix. You should find fast turn around c.o.d. clients and then the longer turnaround time clients. The quickies are normally low pay overall ($25-$5k), but may average a higher hourly rate. The higher paying gigs ($10k-$100k) usually take longer to complete and require time to pay (client is collecting from their client).
The fast gigs pay the groceries and rent/mortgage and utilities. The long range, fat budget jobs build your reserve and provide a little bit of luxury spending.
excellent advice. Still I think 30 days is plenty for most cases and others seem to feel the same so I doubt it would drive a decent client away. If I’ve got LOTS of trust we might talk a bout a longer timeline but that seems like asking for trouble (for both parties).
I agree with you. Personally, I always want to get paid as soon as a job is complete. This issue is easily a century old if not older. It will not change anytime soon. However, you can choose what types of clients you do business with and your terms. How successful you are will only show itself over time. I hate being an employee, but I suck wind when it comes to freelancing full time (I’ve made about 3 runs at it so far). I’m not really a fan of part-time freelancing either now that I’m a father of four. I really admired some of my mentors that rocked it. I know they only had time to create product about 20-30 hours per week. They spent about 10-15 hours a week on administrative tasks and about 20 hours on marketing and self promotion.
The running joke was that they only worked 1/2 days. They just had to pick which half they wanted to work.
I don’t know if waiting 30 days is right. I usually want my client to pay after the work is done before i sent him the file. It can be 1-2 days usually. It maybe better to set milestones or a upfront payment before proceeding.
In the US you can put a clause stating that you own the IP until last payment is received. If they don’t pay you then they can be sued for quite a lot of money. I’ve been reluctant to do this because it seems adversarily but I might need to get over it.
You actually ALWAYS own the IP when contracting, unless the contract clearly states otherwise. The clauses are needed for you to renounce it, and by default, in that case, it’s not renounced until the contract is completely fulfilled by both parties.
Get a contract written by a lawyer and a basic consult if you’re not familiar with such things, it will be a few hundred bucks, but some of the best spent ever if you plan on making a living this way for more than just one safe job or two.
Keep in mind WHO you are working for. There are times where you will be a lot more lenient to clients you have worked with successfully in the past.
Above all else though, if you state 30 days in the contract, and they fail to meet the stated time frame, then do NOT take on more work from them until they pay.
Another good assessment of the clients ability to pay you is an upfront percentage of the fee.
If nothing special is stated in the contract or on the invoice, maximum delays depends on your local legislation. Ususally it’s between 30 and 45 days after the reception of the invoice. It used to be 90 days in France, 120 days in Italy… You can apply a penalty after that (say 11% annual rate) or a discount before that for early payment (everything being stated on the invoice).
I try force in instant pay when opening new relations.
That means whenever we send invoices we put current dato as latest payment day.
This is the base from which we work from - some, and its hard for me to get the accurate number but I have a feeling its around 30-40% accepts these terms.
The rest we discuss with all the way up to 30 days payment after invoice was sent.
I can see its very different based on previous posts on this thread, so seems to depend on where your clients are located ( and how good you are with a tounge )
50% 30 days after delivery.
EDIT: I should be clear that it also depends on the size of the project/budget. Sometimes 25% to get started is enough for operations until completion.
I would never do 50% upfront.
It makes the clients think they cant be trusted in my optics.
It might work other places in the world or even have to be like that based on local b2b environments.
Clients are aware that when we request upfront payment it’s because we are investing every cent into their project. Your already established relationship with a client should have removed any doubt of you mishandling their cash.
But, again, depending on the project size and budget, upfront payment can change.