How to get paid WHEN you are worth

Great interview on Colbert Report on Feb. 17. Stephen interviewed Jeffrey Leonard, who wrote an article in Washington Monthly about how large business is using small business to finance operations.

Specifically, companies that used to pay the usual Net-30 (paying 30 days after invoice received) are now advised by finance consultants to sit on the money much longer, changing their policies to Net-60 or even Net-90 and Net-180.

This interview was an eye opener for me. I’ve always believed that getting paid quickly is super, super important for freelancers and consultants, but it seems to me that this topic gets way less attention in freelancer forums than the large sums some individuals claim to charge.

Net-60 is simply the tip of the iceberg, I fear. Leonard didn’t address the mammoth companies that are headed for bankruptcy. What happens when you are owed money and the company goes under, at least in terms of its creditors, even if executives are still employed?

How can you be sure that the money will actually show up on day 60 or whenever? After all, finance executives pride themselves on billing more efficiently than they pay out.

And for that matter, how do self-employed people continue to eat, pay rent and keep the utilities turned on during these long intervals?

There’s a lot more talk among freelancers and consultant about how much to charge than when to require payment, but frankly, I care as much, if not more, about speed versus amount. If you are not paid for a long time after the work is completed, you can’t really feel confident that you will ever get paid.

Lately I’ve been asking—and receiving—payment via PayPal. When writing online content, where the pieces tend to be rather brief and not all that lucrative one by one, I often wait till one piece (or several) is done before requiring any payment. However, I invoice frequently rather than waiting till once a month and I am paid immediately. Very little time—and money—are at risk because I would not start on more work until the first invoice is paid.

A company that says it doesn’t pay by PayPal is suspect. After all, PayPal can be processed with charge cards as well as by accessing a bank account, and all executives have charge cards to pick up a meal at the airport or order a book from Amazon.

Sure, I’m open to reasonable alternatives. But I’d like to know if everyone is subject to extended waits or just those who accept them without questioning.

I recall a story I heard at a freelancer’s group in perhaps 1995 about a consultant who presented training seminars for large corporations. She made it clear that when she finished her part of the program, the event planner would meet her in the hallway with a check for the full amount in an envelope. There would be no exceptions. If that “wasn’t corporate policy,” she would turn down the assignment. Simple as that. Those companies that wanted her complied. Do you think they met all the other speakers at the door with a check?

It’s not that I don’t trust my clients. I do. I have wonderful clients. And when I see my payment easily and quickly transfer into my account, I feel so good about the relationship and work with even greater enthusiasm.

I recommend this professional practice in these times.

http://www.colbertnation.com/the-colbert-report-videos/374633/february-17-2011/jeffrey-leonard

Originally posted 2-20-11