The fun part of being a designer, developer or creative, is solving problems in new and unique ways, building up our portfolio with examples of real-world client work. The creative process is what we thrive on. Whether we are knee deep in web development code or up all night bringing our design ideas to life, we love the challenge.
There is one challenge, however, that we all dread — getting paid. Life would be great if clients paid on time and without hassle. But they don’t. Invoicing clients, and collecting on those invoices in a timely manner, can drive any freelancer or small agency to the brink of choosing another career.
Invoicing clients is never going to be fun, but it can be easier. At Pelago, we’ve been doing client work for ten years and have learned a few things about invoicing clients. The best practices in invoicing we employ today are a result of lessons learned — both successes and failures — in our day-to-day challenge of getting paid for our work.
Schedule multiple invoices per contract
When you deliver the final contract to your client for them to sign, be sure to include a payment schedule. Some agencies like to invoice 50% up front and 50% upon completion. Other agencies prefer to invoice 33% up front, 33% during a project milestone, and 33% upon completion. On larger projects we prefer to invoice in thirds as it helps regulate cash flow. Design and development projects are likely to carry on for weeks at a time, which can be disruptive to your monthly cash flow. This is perhaps the most important reason to invoice multiple times per project.
Net 15. Net 30. Net 60. Don’t give your clients another excuse to pay you later. We’ve worked with some companies who have an internal policy of paying an invoice 30 days after receiving it. Do you really want to tack on an extra 15 days to that? Mark all of your invoices net zero, or due upon receipt. It’s true most clients will not acknowledge the terms governing when an invoice is due, so mark it zero anyways. You may still not get paid as soon as you would like, but at least you have made your terms clear.
Companies are lazy
If a client hasn’t paid an invoice there is a good possibility it was just hung up somewhere in accounting or simply forgotten. Often times a phone call will help remedy the situation. Offer to drive over and pick up the check if you have to. Anything you can do to get around the general laziness of larger companies will help you get paid more efficiently.
Think of the final invoice as more of a trade
Once the project has been completed, both the designer and the client have something the other wants. You’ve got their web site, they’ve got your money. Unless you have a rock solid relationship with the client, do not deliver the final project until you have received your final payment. Yeah, it sucks being the bad guy while the client comes up with reasons why the payment can’t be processed for another few days. But then days turn into weeks, weeks turn into months, and your client is making money and you aren’t.
Use an online invoicing app
Keeping track of multiple projects and invoices can become overwhelming and can distract you from the business of your business — designing and developing creative projects. Using online invoicing software, such as Intervals, will help you spend less time invoicing and collecting payments, and more time doing fun design and development work.
Another thing we do at Pelago is push pre-pay maintenance contracts once a project is complete. It helps with cash flow and creates a very structured relationship between us and our client. Most of our maintenance contracts are like a bucket of hours with tiers on turnaround time and discounted rates. The more the client pays up front the less the hourly rate and the quicker the turnaround time. It is a way for us to commit to our client and our client to commit to us.