show me moneyThough we hopefully love what we do, we still want to get paid for our time, effort and talent. At Freelance Austin’s most recent lunchtime event, panelists Sherry Scott, owner of Resource Connections, LLC, and Fernando Labastida, chief content officer with Content Propulsion, shared some of their thoughts on making sure clients pay appropriately for services rendered. Incoming Freelance Austin chair Dana Marruffo, who is also the principal at Buzz Public Relations, LLC, served as a third panelist and facilitator, sharing her views, querying panelists, and inviting comments and suggestions from attendees.

Read on for some of the tips and takeaways shared during this lively and practical discussion.

Get your agreement in writing.

First and foremost, make sure to always have a working agreement or contract in writing. Having a written agreement protects both you and your client and goes a long way towards ensuring that both sides share expectations for the work that will be done, the type and amount of compensation you will receive, and when and how payment will occur.

Include payment terms and penalties in the contract.

Your contract should be specific regarding payment, including specifying the schedule upon which you will be paid. Consider including penalties for late payment or even a discount for early payment. You want your client to take your expectation to be paid in a timely manner seriously. Set the tone and don’t delay in seeking payment if it’s late.

Know ahead of time if the client’s organization has internal policies regarding payment cycles, so you can negotiate if necessary. Ensure you have agreement on how payment will work in your case. And, to maximize options available for timely payment, be sure you have a means to accept credit cards and can process them without the physical card.

Although contract terms allow you to assert your legal rights if necessary, forming positive relationships with clients, including the person who processes your payments, may be just as important and a far more pleasant way to get cooperation on payment issues. Some freelancers even give occasional price breaks on an informal basis—for instance, to protect their investment in an existing client relationship, or to gain some personal benefit such as getting paid earlier than usual.

Set fees according to time, effort, and resources needed.

Figuring out how to price your services is one of the biggest challenges freelancers face. Our Freelance Pricing Survey can give you some idea of what’s typical in the market but, even so, there’s a lot of variety in how different freelance professionals approach pricing.

Many freelancers use an hourly rate to price their work and develop proposals for clients. Some choose to disclose this rate to clients while others do not. Either way, developing proposals accurately can be time-consuming—depending on the complexity of the project—so something to consider is how you will recover these costs.

Freelance writers often get paid per unit (i.e. per word or page) and rates can vary widely depending on the publication. Even though these rates may be non-negotiable, it makes sense to try to determine how much work is required before you accept an assignment. For instance, it’s reasonable to be paid more per word or per page for an article that requires deep reporting and research than for one of the same length that simply aggregates readily available information.

At the end the day, being confident in the value of your work and charging accordingly is key to your long-term success.

Offering pricing options is a good strategy and there are several ways to do it.

If you tend to offer a wide range of products or services, it is sometimes helpful to ask for the client’s budget first, then negotiate from there regarding what products or services you can offer within that price range. But if your business offers very specific goods or services, pricing will likely be less flexible and based on unit costs. Even so, you can offer a menu of items to provide lower and higher priced options. Clients often choose the medium-priced or middle option when you offer three. So, if you go this route, try setting your mid-level option at the price and level of effort that works best for you.

Find software tools and financial institutions that best support your business.

Freelancers use a variety of software tools to run their businesses and the panelists pointed out the importance of ensuring financial institutions can provide specific services when needed, such as the ability to deal with foreign banks for international clients. Some software tools popular among freelancers include:

  • Fundbox—payment advancing service
  • FreshBooks—accounting software for small businesses
  • Square, PayPal, Stripe—payment-processing software. (Find a nice discussion of these and other payment processing options here.)

Take steps to protect yourself legally and professionally.

It’s advisable to set up a separate business bank account to handle transactions associated with your freelance work. Freelancers risk losing personal assets if they don’t place adequate legal buffers between professional activities and personal life. While you may not need to create an LLC, at least obtain advice about whether you would benefit from doing so.

Employing a CPA and/or an attorney might also be important, depending on the type, volume and complexity of the work you do. Finally, bartering can be a good way to fill gaps or obtain specific products or services. If you do barter, it’s a good idea to research the legal and tax implications, especially if you will have an on-going arrangement.

Overall, this month’s meeting was packed with useful information for any freelancer. If you missed the meeting this time around, you can always catch the next one on Selling Yourself: Persuasive Communication for the Freelancer on July 13 at our new meeting location, Fibercove.

Margaret Nicklas