The real biggest problem facing freelancers and consultants
The biggest problem facing us self-employed freelancers and consultants is not “getting paid what we are worth.”
The biggest problem is getting paid. Period.
By this I mean getting paid the full amount agreed to in the agreed upon timeframe. At this point I’d like to reiterate what I’ve written in the past:
We cannot determine what we are worth. Our worth as individuals cannot be calculated. A firm number cannot be attached. On the other hand, we can get paid what our work is worth, also called “market value.”
With the internet causing us to compete with people around the globe of diverse backgrounds and levels of talent, it is difficult to determine even our market value. Suffice it to say that our market value is what others will agree to pay for our work. It’s generally higher than the pittance some online job boards offer and lower than the sky-high rates that certain internet gurus insist we should charge.
What is the solution?
It is commonly assumed that the solution to the problem of getting paid is to get a signed contract and then go through full collection procedures, including small claims court if necessary. However, while I read about the collection process and discuss it with fellow freelancers, I don’t know anyone who has actually undertaken it in at least a decade.
It has always been difficult to collect but it may have been possible to rely on the legal system back when self-employed professionals worked for companies in their own local communities. When your client is several states away or even in a foreign country, how can the court system work?
In other words, there’s no way to enforce the contract. So what’s the point?
The point is to reach agreement on all phases of the project, including payment. Our likelihood of getting paid on schedule improves if there has been an agreement, whether a signed contract or one-way email communication of terms of service from the service provider to the client.
Some have argued that when any one of us freelancers / consultants is not paid, the unpaid individual has an obligation to the greater freelance / consulting community to take legal action.
Sounds good but legal action is too expensive, time-consuming and emotionally wrenching to undertake if it is unlikely to be successful.
Another solution is to do no further work for the client until they pay off.
When there are collection problems, don’t undertake new work until you are paid for the old and assured that it won’t happen again.
Problem is that deadbeat clients assume you won’t do further work for them. They would rather not pay for completed work than benefit from your future services.
If they have quit answering your calls and responding to your emails, you know they have cut off the relationship.
The best solution is to restructure how we are paid.
The best way to get paid is all upfront.
However, just as we don’t trust our clients to pay promptly and in full at the end, they may not trust us to do anything at all if we are paid in full before starting. Not an unreasonable
fear in the internet world.
Therefore, it’s desirable to structure payment in multiple stages to keep moving the work forward. This may mean that payment is completed in full or substantially completed when the first polished draft is delivered.
If you send a good first draft and wait for revisions, you may find that the revisions never arrive. The client adjusts as they wish and then goes ahead and uses what they have, sometimes not even letting you know that the project is finished.
Let’s agree that 30 days to payment is quite sufficient. Actually, this is too long but it seems to be a widespread practice. (Unfortunately, some large companies are waiting 45 days or even longer.)
What if everyone did this?
If every freelancer / consultant invoiced upfront in full or at specified points in the project, self-employment would serve us much better. The more of us on the same page, the better for all of us.
Let’s address some of the objections
It’s too much of a nuisance for us to invoice frequently.
No it isn’t. Freelancers and consultants should keep track of hours and billable expenses on a daily basis to assure reliable figures.
If we can’t manage this, we should bill by the project, perhaps the entire amount up-front. Or maybe we should consider getting a regular job where Accounting handles this kind of this.
It’s a nuisance to the client to pay us frequently. Again, it’s not a nuisance. They can pay by charge card (via Paypal if the service provider does not have merchant account), the same way they pay for many other things.
If it’s not too much of a burden for the client to pay its employees on schedule, it’s not too much of a burden to pay us as scheduled. Would your client contact keep showing up at work every day if they weren’t paid on payday?
It’s just not the way things are done. Ahh, that’s the problem. I myself do not follow these suggestions consistently. More of us need to be onboard for it to work for any of us.
The client may think we are not successful if we need the money so quickly. Collecting what is due is essential to the existence of companies of all sizes. Banks don’t feel uncomfortable collecting their payments promptly.
The media claim that self-employment is continuously growing. An ever larger share of the population is freelancing and consulting. The only way this is good for our society is if practitioners are promptly paid what they are due.
I sense that it is becoming more difficult to get paid. When our clients have never met us in person and never will, it is easier for them to ignore our follow-up calls and simply not pay. If we are not paid, self-employment is way too stressful and a sure path to starvation.
Originally posted 8-5-14