Freelancers: Here’s How To Get Paid Before The End Of The Year
If the Freelancers Union’s World’s Longest Invoice is any indicator (and it is), late payment is an epidemic among freelance writers, designers, photographers, and other self-employed individuals. Whether it’s just a few articles or the kind of project that makes the difference between paying rent and not, getting your clients to pony up can be difficult, especially during Q4 when budgets are tight. But it’s important that, before the close of the fiscal year, you’ve got your ducks in a row and your invoices paid out.
Getting paid by clients before the end of the year is important for a few reasons — none of which involve holiday shopping or travel, though those can also be factors. Chiefly, this is important where taxes are concerned. If your client is going to be submitting tax forms saying they’ve paid you, you should make sure you actually have that money in-hand by the time the ball drops on New Years Eve because, odds are, you’ll be paying taxes on it on your 2014 tax return. That is, unless your client has paid you under the threshold for taxable income ($600 per year, per payer in the US), in which case you do not.
For example, say you did two shoots with a client. The first was $550, the second, $300. If you’ve invoiced the client for both shoots, but they have only paid you for one and say they’ve paid you for both on their tax forms, you’ll be getting taxed for income you didn’t actually earn that year, which is both unfair to you (because the client didn’t actually pay you that year) and inaccurate. So, before the year closes, it’s important to shore up your invoices and make sure you’ve been paid.
Additionally, getting paid before the end of the year is essential when you’re tallying up your purchases — and possibly doing some big business spending, as well. The end of the year is a popular time for freelancers to buy equipment and tools they need (including items like computers, but also software and even home office furnishings), because they can write them off on their taxes. However, if you’re tapping your toes waiting for a client to pay you, you may miss the window and have to wait until 2016 to get that credit.
So how do you make sure you’ve got everything tied up in a nice financial bow by the close of the markets on December 31? First, make sure you know what’s owed to you and when. It may be too late to get it all in writing — though you should. A lot of freelancers work off-contract and that is a bad idea and a recipe for not getting paid — but it’s not too late to look at what the payment window really looks like. Some contracts stipulate up to four months for a payment window, which means work completely in September may not even really be legally due for payment yet. And, in all liklihood, the client won’t have considered you paid yet, either, which means that income will just roll over into the next year, which is a pain, but not illegal. Giving a quick look back at all of your contracts and invoiced may seem pretty time-consuming, but it can also help you get clarity on what you’re owed and when to consider mediation or legal assistance.
Once you’ve observed that you’re definitely owed money (and your client is past due), it’s best to proceed exactly the way your mother told you: By asking nicely.
Following up with clients is the best way to make sure you get what you’ve worked for. Simply send a polite email asking about the status, and offer to send another invoice if needed. Ensure that all of your invoices are dated so that they know when you sent them — and remind them of when you sent the invoice. Odds are, it’s a harmless oversight, but in the event that the client is actively trying to dodge payment, it’s helpful to have all of the dates clearly established. This is also why an invoicing app and a regimented system for invoicing is really key. And remember: The best way to make very sure you’re getting paid regularly is to invoice regularly and often. If you’re sloppy with your invoices, you can’t be that surprised when clients aren’t super-careful with their payment schedule.
You may also find it helpful to offer your clients alternative modes of payment. If cutting a check is difficult, offer to accept payment via PayPal or direct deposit to help speed up the process. This can help you get your money sooner, and ensure that you have a clear trail of payment — or non-payment. Or, if they’re absolutely bent on writing a check and putting it in the mail, ask (or, in your contract, demand) that they do so with a tracked envelope via the mail or a shipping service like UPS. This way, the question of where the check is is eliminated.
If you suspect your client is purposefully holding out on you, inform them that any further work will have to wait until you’ve been paid for everything that you’ve invoiced for. During the end-of-year crunch, this is often enough incentive to let your clients know that you mean business. However, even this isn’t a perfect plan — and sometimes, you do need to bring in a third party. In that case, the Freelancers Union has some great advice on your options, including mediation services and even small claims court. But the best way to ensure you get paid is to be timely and clear with your own invoices, which makes it easy for your clients to get you comped, quickly.
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