How to get paid without stealing children

Are you familiar with the story of the Pied Piper of Hamelin?

Hamelin has a serious rat problem - it's overrun with them. The mayor is desperate for a solution but has no idea what to do.

Then along comes the Pied Piper. He tells the mayor he can get rid of the rats in return for a payment of gold. The mayor agrees to the terms.

The Pied Piper picks up his pipe and plays, and the rats follow him out of Hamelin never to be seen again. The problem is solved, and everyone is happy.

But when the Piper returns for his gold, the mayor refuses to pay. Obviously, the Piper is not happy about this - he's fulfilled his part of the deal but the mayor isn't fulfilling his. So the Piper decides to take drastic action. He picks up his pipe and all the children follow him out of town, never to be seen again.

Unfortunately, the Piper's story is all too familiar to freelancers. Not the stealing children part, but the delivering on a promise and then not getting paid part.

Almost every day, I see posts from frustrated freelancers chasing unpaid invoices and asking for advice on how to deal with non-payers.

And I don't know why it's such a common problem because the solution is simple - get paid upfront.

Getting paid upfront solves problems before they occur

Our Pied Piper could have avoided taking drastic action if he had asked for payment in advance.?

And freelancers (including you if you aren't already) can get paid in advance as well.?

Trust me when I say it prevents so many headaches. Not only do you never have to worry whether you're going to be paid promptly (or at all), but you never have those awkward "are you happy for me to invoice" or "just checking you received my invoice" conversations.

I know how awkward these conversations can feel because I've been there. Luckily, I never had anyone refuse to pay, but there were clients I had to chase and chase for outstanding money.?

I once spent three months chasing a ￡90 invoice - ridiculous, right? It took more time writing and sending the chasing emails and messages than it took me to do the work in the first place.?

And that's why I switched to charging upfront. I started off by charging 25% deposit on big projects. I didn't get any pushback, so I quickly changed this to 50% upfront.?After a while, I switched completely to 100% upfront.

And do you know what? Nobody questioned it.?

I rarely take on copywriting projects anymore, but when I do take them on, it's payment upfront. And all my training and mentoring services are payment upfront.

Some of my clients are on Direct Debit, others pay BACS. I have Stripe set up for my online courses and consultations as well as on all invoices. I make it easy for people to pay.

I get the odd request for phased payment, which is usually not a problem, but I've never lost a client because I charge upfront.?

If only I'd started doing it earlier.

Why are so many freelancers reluctant to ask for money upfront?

There's this weird misconception among freelancers that clients won't be prepared to pay upfront. It's bullshit.?

We pay for loads of stuff upfront - it's not unusual.?

You don't go on holiday, have a lovely time, and then pay when you get back. You pay for your holiday before you fly.?

And just because some people in your industry accept payment on completion, it doesn't mean you have to.?

Some hotels charge you when you book, some take payment at check-in, and some let you pay when you leave.

Same with eating out - sometimes you pay when you order, and sometimes you pay at the end of your meal.?

You never say "well this other company does it this way" - you just accept the terms of that particular business.?

If your client wants to work with you, they will accept your terms. And if they don't, you can choose whether you want to be flexible or not.?

When you get the money part out of the way at the start it never becomes an issue.?Plus, you have more control over your cashflow.

Managing payment for fixed-priced projects

Fixed price work is the easiest type of work to get paid upfront for. The client has agreed your price, so they clearly have the budget for it. And if they have the budget for it, then it doesn't matter whether they pay now or at the end - on paper the money has been accounted for (or at least it should have been).?

So once your quote has been accepted, you send the invoice. As soon as payment is made, you schedule the work.?

If the project is time-sensitive, add a note to your proposal:

To complete this project by X date, I'll need confirmation and payment by Y date.

And stick to it. Don't start the work until payment is made.

Phased payment

If you aren't confident charging the full amount upfront or the project is high-value or complex, you can offer a phased payment plan.?

For example, when I had my home office installed, it was something along the lines of: 10% upfront deposit, 80% of the balance paid the week before installation, and 10% final payment once the installation was complete and any issues were fully rectified.?

This could easily be applied to other types of work - a website project, for example. 50% upfront, 40% once the site is designed but before it goes live, final 10% once any amendments or tweaks have been completed.?

Or if you're delivering a project in phases, you take payment before each phase. And if payment isn't made, you don't start work on the next phase until it is.

Retainer packages

Fixed-price retainer work is easy to manage. Get your clients to set up a direct debit and then take payment at the start of each month before work is completed.?

I've done this with blog packages where I'm creating blog posts for clients each month - the DD comes out on the first of the month and I send the completed blog posts by the date we've agreed.?

I do it for ongoing mentoring clients too - if they want to continue working with me after our initial 12 weeks, I set up DD and they pay on a rolling basis (although I've had clients pay for a year upfront as well - either way works for me).?

If the retainer work isn't fixed or it's on an ad-hoc basis, setting up a direct debit is still the right way to go - you just amend the amount you invoice each month.?

For example, if you work on an hourly rate, you could set a minimum charge of, let's say, 10 hours per month and the client pays for the first 10 hours upfront. Any additional hours get added to next month's invoice. Any hours they don't use can be carried forward (depending on your terms).?

Payment options

BACS is probably the most common way of taking payments and it's easy enough to include payment details on your invoices.?

If you want to give clients a choice, you can use a payment processor such as PayPal or Stripe. I use Stripe and recommend it. It makes it easy to take online payments.?

If you use Xero for accounting, you can integrate Stripe so it adds a 'pay now' link to your invoices. Clients can still pay by BACS but they have the added option of making a credit or debit card payment using Stripe. Some people prefer doing it this way and I'm a believer in making it as easy as possible for people to pay.?

Stripe is free, but you do pay a small fee on any transactions. I think it's worth it for the convenience it offers both you and your clients - you can always account for it in your pricing if you have tight profit margins.?

Go Cardless is great for taking direct debit payments. Again, I use it in my business and a lot of my suppliers use it too as it's really easy to set up (and easy for clients to set up their end). I recommend it for retainer work or clients you'll be working with regularly. Again, you can integrate it with Xero to make life even easier.?

Another payment option is escrow - I've never used it myself, but it can be beneficial if clients aren't sold on the idea of paying upfront.

Escrow is essentially a holding account managed by a third party. You agree the terms with the client, they pay the money into escrow, and then you do the work. Once you've delivered the agreed work, the money is released to you.

If the client decides they don't want to pay, you're covered. As long as you can prove to the escrow company that you have delivered to the agreed terms, they'll give you your money.?

Escrow protects both parties - the client pays upfront, so you know the money is there and will be transferred as soon as the work is complete. The client feels comfortable paying upfront because they get their money back if you don't deliver what has been agreed.?

This can be great if your invoices are very high value (escrow is often used in the buying and selling of property) or if clients are wary of paying upfront.

Are you getting paid upfront?

There are plenty of people and companies out there who are happy to pay upfront. I actually prefer it myself and offer to pay suppliers upfront even if they don't insist on it.

Why? Because once I've decided to buy, I've committed the money, and it's easier to see where I am with my accounts if I pay it out straight away.

And because I get paid in advance myself, I'm never waiting for outstanding invoices to be paid, so I have the cash there to pay with.

You might be worried charging upfront will put people off - it won't.

And if it does, you need to find out why.

If it's because the client doesn't trust you, then you have some work to do. And your problem is bigger than getting paid - do you really want to work with someone who is worried you might screw them over? It's not a great way to start a relationship.

If it's because they don't have the money (maybe they are waiting on invoices to clear), then are you sure you want to take on the risk? If you agree to wait for them to get paid before you get paid, you might never get paid. What if the money doesn't come in? What if they do have the money, but have no intention of paying you? If it's just a case of them not having the funds, then why not wait until they do have the funds?

So find out why they won't pay upfront. If they have a valid reason, you can always work with them to find a compromise that works for both of you.

You don't have to suddenly change your payment terms for existing clients if they are good payers. But why not make the change for any new clients you take on going forward and for any of those clients who have a history of dragging their heels when it comes to paying their invoices??

I changed from charging on completion to charging upfront and you can too. If you need help doing it, drop me a message.

Thanks for reading

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Lisa