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Freelancers beware: You need more than a good contract

Yes, as everyone recommends, it’s good to have a good contract in place. A contract clarifies to both parties what the assignment is about and the terms under which the work is completed.

However, there’s also a problem. A contract is a legal agreement and if both parties don’t adhere to it, the ultimate remedies are legal processes. These can be expensive. Furthermore, they don’t really guarantee collection.

In fact, it’s amazing how seldom freelancers actually take legal action beyond having an attorney who sends a letter and more important, how often they collect.

I see sales pages and freelancer articles every day about how successful professional freelancers are and how much money they are making while enjoying lots of freedom and fun. I feel certain that if they were suing and collecting, I’d be reading about that too.

But I’m not.

So here is what’s better than the perfect contract: Advance payment of the full fee (preferably) or at least staged payment.

In case of the latter, ideally the final payment should be received before the product is released for client use. If not, the final payment should be a small percentage of the total fee and certainly not more than half.

Signs of possible problems down the road

Sometimes clients want lots of work now with payment far down the horizon. Here’s a representative story:

The client wants lots of short blog posts, starting now. He doesn’t want to be “bothered” by little invoices so he requests a single compiled invoice at the end of the month. Then he pays 30 days later. So you’re doing two months of work before you find out if the client is good for the money.

Some clients are okay.

Perhaps you have a long-standing relationship with the client. If it’s not broken, don’t fix it. Sometimes you sense you can trust the prospect. If so, you may want to give it a try.

Or you may want to start with a small assignment to test the waters.

However, it’s quite common for apparently trustworthy clients to pay in full on time until unexpectedly, they don’t.

Some prospects are not okay.

They usually tell you they are not okay. Not directly, as in “I don’t pay my bills.” But maybe you’ve heard other telltale signs of problems ahead:

  • “It’s so hard to find qualified service providers.” No, it’s not if you pay as promised.

  • “I can’t pay you until I get paid for the work,” which is said by agencies and similar contractors. Are they saying they have collection problems and that justifies them stiffing you?

  • “I don’t want to pay that much. I need a lower rate.” If you are open to negotiations, decide upfront that cutting their bill is balanced out by better terms of payment.

  • “Our company is so big and prominent that we set the terms of payment. We pay 60 days out.” That’s probably what Donald Trump says. He’d call it the “art” of the negotiation.

In summary, freelancers beware.

Originally posted 3-20-17

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