When Clients Take a Long Time To Pay

If you’re a business owner or independent contractor, you’ve probably dealt with clients who fail to remunerate you in a timely manner. It can be awkward.

Of course, you’d like your late-paying client to expedite the payment you’ve earned. On the other hand, you don’t want to alienate someone who might otherwise have been inclined to retain your services again in the future, and perhaps tell h/er friends and associates how exemplary your work was.

How can you encourage clients to make timelier payments without sounding overly pushy, souring a professional relationship, and potentially undermining your reputation?

Agree in advance on a payments system that is convenient for the client.

You’ll probably find that different clients have their own preferences with respect to payment methods. Some may favour writing cheques, others may be more comfortable with PayPal, bank transfers, credit card, or even in-person cash transactions.

Set up accounts with multiple secure payment processing services and through your bank. If the client can choose among several payment options, s/he is likely to find one that is convenient for h/er.

Expect to receive payments late, and plan ahead.

As a general rule, you shouldn’t depend on timely payments from invoiced clients. Instead, try to keep a fairly robust cash reserve on hand to cover your own short- and medium-term expenses.

Although you want to encourage all clients to pay on time, realistically you’ll almost certainly encounter laggards here and there. One way to compensate for this is to request payment on a date well in advance of the time when you actually need the money—if possible, leave a margin of at least ten days.

Remember: you’re unlikely to suffer significantly negative consequences from being paid earlier than you expected.

Be clear and specific about when you expect to be compensated.

“Payment on this invoice is due within 20 days” as opposed to “Payment due upon receipt.” (In the latter case, your client could invoke the phony excuse that s/he received your invoice late.)

The clearer and more comprehensible the instructions, the less of an excuse the client has for failing to follow them.

Consider an early-bird discount.

No one enjoys wasting money, and by offering your client a slight discount for early payment, you introduce a direct economic incentive in favour of timelier compensation. Even a discount of one or two percent can provide your client sufficient impetus to get the ball rolling sooner.

Alternatively, you could institute a penalty of one or two percent for late payment.

Send cordial reminders.

If a week or more has passed since the deadline you originally established for payment, it’s reasonable to send the lagging client a gentle reminder, indicating that you would appreciate being compensated for your work as soon as reasonably possible.

Withholding of services is a drastic, but sometimes necessary, step.

You won’t need to resort to withholding services in the vast majority of cases. However, you may encounter a handful of situations in your career where there is simply no reasonable alternative. Your client has failed to pay up despite numerous polite reminders, and you need to draw a line in the sand. 

Your skills have value in the marketplace, you can’t afford to work for free, and you don’t want to garner a reputation for being overly lax on clients who refuse to keep their end of the bargain.

Co-working Spaces for the Self-employed

With a rising popularity in self-employment and freelancing, co-working spaces have become a popular phenomenon that has been embraced by those who work independently, but crave a sense of community in response to working in relative isolation.

Co-working spaces are essentially communal open-space offices and are an affordable solution to having a working environment outside of your home that is not a private office. They are popular among freelancers, entrepreneurs, start-ups and independent contractors.  A simple Google search will show that there are a wide range of co-working opportunities in most major cities in North America.

Besides being an affordable alternative to a private office, a co-working environment can provide many other advantages.

Escaping Isolation

Working in a home or private office can leave one craving face-to-face interaction from others during the day – especially those who aren’t clients! Self-employment can be isolating when your day to day activities are individual ventures. Co-working spaces provide the opportunity to work independently while being surrounded by others. Taking regular coffee breaks or having engaging in some water cooler gossip can help break up the day, create new friendships, and give you a chance to clear your mind from the daily grind of self-employment.

Creating a Community

Those who work in co-working spaces generally have the same values and influences, as they are usually made up of entrepreneurs and freelancers who are working hard to develop and build their business.  As the co-working environment is usually an open concept, it aids in developing relationships and finding inspiration from those around you. As friendships form, the community will naturally rally around each other and help each other out, building a mutual bonding through independent work that one can’t experience when working alone.

Networking

With a sense of community in the co-working space, networking opportunities will naturally follow. It’s great to find contacts that may be able to help you out in the future and for you to offer your services as well. Looking for a copywriter? Chances are someone in your co-working space has a recommendation. It’s much easier to go with a trusted referral rather than searching online and hoping for the best. Surrounding yourself with like-minded individuals can help your business grow and can build some strong and lasting relationships.  

A Tale of Two Independents – What’s in a Name?

Jerry and Steve each operate their own web services company. Strictly speaking they are each a company of just one and the bulk of their work involves coding, formatting, updating and maintaining the functionality of various websites. They are about the same age, have a similar education and work experience, and provide essentially the same services regarding each of their clients as completely separate contracts. The only real difference is that Jerry calls himself a freelance web developer whereas Steve has given himself the title of “Consultant” for his firm Omni-Global Web.

Candice, Rachel, and Tamara are the support staff for a new surgical clinic operating in a ritzy part of town and, with a particular budget, they’ve been asked to set up the website that will represent the clinic on the web. Since none of them have the requisite skillset to do the job themselves, they sit down and hash out what they are looking for and promptly place an ad seeking a Webmaster which outlines what the job entails and what demonstrable skills the applicants should have. Both Jerry and Steve apply with a concise and well thought out email along with links to various samples of their work. Jerry applies as himself, but Steve applies as Omni-Global Web and offers his own personal information merely as a point of contact. Both quote the same price.

When reviewing the various applicants, Candice, Rachel and Tamara describe their feelings about Jerry and Steve:

Candice (about Jerry): “I like his work, I’m just concerned that as a freelancer he may not be able to give our project the time and care that it requires. These Guys that work as agents for hire, I just find they’re grabbing at every job out there and don’t put their full effort into their contracts the way real professionals do.”

Rachel and Tamara feel that Candice makes a very compelling argument.

Tamara (about Steve and Omni-Global Web): “I’m really impressed. There’s something neat and tidy about this company’s work. I think they should be our first call and hopefully they’ll be willing to take us on.”

Rachel nods her head in agreement, and Candice assumes control grabbing the phone.

“Omni-Global Web! Steve speaking.”

“Hello Steve, my name is Candice and your company got in touch with us recently about providing us with services for our website and we were wondering if Omni-Global Web might still be able to help us out?”

“I imagine that will be possible, how about we set up a time to talk about what you need?”

Steve eventually got the job without any referral or previous business with anyone involved with the clinic, and Jerry never received so much as a phone call back. Even Steve will tell you that it wasn’t his finest work, but the clients were happy and they paid well and on time.

The Moral of the Story

The reason why Steve got the job (and subsequently paid) and Jerry didn’t is pretty simple, but says a lot about the people that hire contract workers and how they think.

First, Candice had a negative impression about what it means to be a freelancer, and her bias, no matter how unfounded, still earned merit with her peers as being valid. Second, the fact that it was a company, and not just an individual, planted the expectation in Tamara’s mind that there was a larger degree of legitimacy to the work coming from Steve. It didn’t matter who’s work was actually better, as both were capable of doing the job that was asked, but Steve and his title of consultant created a more acceptable framework in the minds of Candice, Rachel and Tamara. Lastly, the way Candice, Rachel and Tamara viewed how both Jerry and Steve might accept being offered the work was completely different. Candice had an image of Jerry attempting to gather up any work he could get as though, working for himself, he was just happy to have something to work on to pay the next few bills. When she finally called and spoke to Steve it was almost as though she hoped Steve would accept them as clients. To Candice, Rachel, and Tamara it would have been a privilege for Jerry to work for them, but with the way they viewed Steve it was a privilege for them to have him work on their website.

If you are a small business owner and you work for yourself it’s important to make these nuanced considerations to have any chance of competing in a market place where contractors are consistently bringing more and more diversified skills to the table. Never forget that how to market and promote one’s self is itself a skill, and the difference between freelancer and consultant, however slight in practice, can be profound in light of the expectation it creates in the minds of potential clients.

Etiquette in the Virtual Office Environment

The office is a constantly evolving environment. In fact, the tech boom has given rise to a brand new work environment unlike the world has ever seen. Globalization and the internet have transformed the way we do business, altering the landscape and changing the way workers, united under the banner of a common vocational purpose, interact and see a project to completion.

Online office environments, like oDesk and Elance, have become an increasingly common way to infuse expertise into small businesses by outsourcing skills and aspects of a project that may not fall within the core competencies of its key constituents. In fact, it is now possible to see a project from acorn to oak by building a workforce of contractors from around the world operating in a virtual office environment which tracks their time and progress.

Operating through the soft barrier and anonymity that is the internet, it’s easier than ever to be detached from some of the more mundane aspects of the job. In their infancy, virtual office environments were a breeding ground for employers looking to get something for nothing by offering the promise of work to desperate contractors. Thankfully, the market has found a way to regulate itself and, though the problem does still persist, it is no longer the norm. Employers will be keen to protect themselves from contractors looking to make a quick buck and leaving them in the lurch with poorly executed, or incomplete, work. On the other hand, most contractors will be inclined to protect themselves, and usually only want to be compensated fairly for their time and their expertise. It’s important to remember that there is an element of give and take that is essential to making the relationship function optimally.  

As tempting as it might be for an employer to contract the data entry services of someone working for $1 per hour in a distant country, there’s no guarantee that what is needed will be communicated effectively or that the work will be done correctly. One might even be persuaded to convince several prospective contractors to complete samples in order to prove that they are capable of completing the work and then running off with the aggregate without compensating a single contractor for their work.

When dealing with any contractor in an online environment the key is to first give them the benefit of the doubt. Knowing that they are capable of what they say they are is important and most will be able to provide a track record of successfully completed work. Inherent in the system of most E-offices is a feedback system and, although abuses are not unheard of, there is also some legitimacy to them and should be another factor to consider before making a hire. Lastly, reach out – a virtual office relationship is still a relationship and a quick Skype call can go a long way to establishing trust between contractor and employer. Employers demonstrate that they are the real deal, with honest money to pay for an honest service, and this informal interview process is usually enough to unveil the wizard behind the curtain.

No matter who you hire for what service, keeping the lines of communication open is essential and a “set it and forget it” mentality is never a recommended approach. As your business grows, so will your relationships and it’s important to nurture them and keep in mind that sacrificing some early returns can, with the right amount of patience, generate greater stability over the long haul. 

How to Deal With Freelance Employee Contracts

Today, every online business has the potential for global reach. On top of selling products to customers around the world, we can also hire people to work for us, regardless of their location!

Freelance employees can fill the gaps needed by a company who require to have temporary or short contract work completed within a specified timeframe. Even though a freelancer can work for your company for several years, it doesn't make them a full-time employee that gets all the perks. The freelance worker is typically someone who might be working offsite and easily reachable online. That means the company doesn't have to expand their office space to assimilate more workers.

It's a win/win all around.

Types of Freelance Workers

Before you consider hiring a freelance employee, you'll need to understand the different types of workers and the contracts required. The different categories of freelancers are:

Independent Contractors: The United States Internal Revenue Service describes independent contractors as someone that you as the employer, "have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result." In other words, you assign an independent contractor a task and how they accomplish that task it up to them. They could work on it at midnight or 3:00 p.m.

On-Call Workers: These types of freelancers are called upon only as needed. When a company has an overflow of work that won't require a lot of training, they will use an on-call worker.

Temporary Help Agency Workers: These would be workers hired and paid by a temp agency. As the employer you would pay the temp agency to handle all the screening and interviewing. Basically, you tell the temp agency what you need and they send the employee to you.

Contract Firm Workers: These are workers who are provided by a company contracted specifically for that task. For instance, there could be contract workers as SEO contractors, customer service agents or even social media consultants. For the most part these workers will already be trained in the job. Often contract workers are hired in groups as opposed to the single temp agency worker.

Contract Stipulations

It is vitally important that every type of freelance worker you hire sign a contract. Included in this contract are the specific duties you will require from them, their compensation and deadlines.

Most importantly, you also have to spell out ownership of the actual work. If you hire a freelance graphic designer to rebuild your website, you will own what they create. It can't be used by another company. There are also confidentiality agreements and delivery terms that should be spelled out in the contract. No work should begin without a contract being signed by that freelancer.

How to Manage your Independent Contractors

Every day more workers are joining the ranks of the independent contractor. As someone who is considering tapping into this potential workforce you want to make sure that freelancer is going to get the job done right. Here’s what you need to do to make sure you’re getting the work you’ve contracted for.

1.      Make the Interview Call

A lot of freelance work can be conducted exclusively via the internet. This means you can search, hire and accept work all through email. However, to make sure the independent contractor you’re considering is reliable, reach out for a quick telephone interview. You can put forth your expectations and find out more about the candidate over the phone then you could with an email exchange.

2.      Write an Employee Contract

If you expect nothing then you’ll never get disappointed. However, if you want a freelancer to achieve certain goals then put them in a contract. There should be no question as to your expectations of their performance, their compensation and what measures it would take to terminate the contract. Start out by being on the same page.

3.      Set Specific Deadlines

Every project should have a delivery date. Your freelancer should be well aware of those dates and be able to deliver on time. What they don’t need to know is if the deadlines you’re providing are the actual deadlines. There is nothing wrong with a little padding on your side! That way you can make any corrections or fill in the gaps if that contractor doesn’t deliver. And all the deadlines should be in writing.

4.      Don’t Micromanage

With every new type of employee there will be a learning curve. You’ll want to make sure they understand the assignment and that they are delivering on time and on budget. In the beginning of a new working relationship, you might feel the need to check in on the progress. Nothing wrong with that. But once that contractor has proven they can deliver, let them do the work. No need to keep poking them for progress.

5.      Make Yourself Available For Clarification

It goes without saying that your employee can ask you for clarification about an aspect of a project. The key is to make sure you’re responding to their query in a timely manner. You don’t want them to stop the work while waiting a day for your answer. This could prove to be a challenge if you’re managing someone in a different time zone. Keep checking your email when you’ve got a deadline approaching.

6.      Reserve the Right to Terminate

If you reach the point that a freelancer isn’t living up to their end of the contract, then you’re well within your rights to terminate the agreement and move on. There are too many talented folks out there who can deliver exactly what you’re looking for without the hassle.