There are two challenges when it comes to getting paid as a freelancer, the relationship you have with your client and the means of getting paid.
The good news is that we’ve been through this struggle before and after invoicing more than a million dollars across the course of a freelance career, this is what we know about how you get paid.
Have A Signed Contract
If you want to reduce the odds of a client disappearing with your work and leaving you with no cash.
Start by having a signed contract outlining all your responsibilities and the client’s responsibilities.
You don’t need a lawyer to draft a contract (though if your contract values are large enough – it’s not a bad idea).
You can download a template contract from The Freelancers Union for free and use that.
If a client refuses to use a contract? Run. Don’t walk. Away.
There is no good reason for not using a contract when supplying services.
Always Take A Deposit
Then, before you start work, make sure that you have not only asked for a deposit but that that deposit is already in the bank (or if you use an online platform such as Upwork – that the contract value is sitting in escrow).
Your client already pays plenty of deposits for work in the rest of their life.
If they want a new kitchen? A deposit goes to the builder. If they want nearly any professional service? They pay a deposit.
A deposit should be 50% of the contract value on a short contract (under one month) and the equivalent of a month’s value on a longer contract.
Get The Balance Before You Deliver The Final Product
You can change this up if you’ve worked with a client for long periods of time and trust them, but the best thing you can do is insist on the balance of payment before you deliver the final outputs.
This exchange should be near immediate.
The client pays and the moment you have the money, you send the work.
Don’t keep them hanging around once you have the cash, that’s not fair.
Services To Get Paid As A Freelancer
Wise (formerly Transferwise)
Wise is one of the best cash transfer services available.
If your money is crossing borders and changing from one currency to another, their rates are super low when compared to standard transfer services.
You can get a Wise debit card to withdraw your money from an ATM or wire it to any bank account you control quickly and easily.
We find that their app is also very handy and allows you to check payments and transfers when you’re on the move.
The only disadvantage with Wise is that you may not qualify for the debit card if you don’t live in certain locations.
Check out Wise here.
WorldRemit is an excellent alternative to Western Union.
If you want money wired to a developing nation that you can collect in person or send to a bank account or mobile cash account, World Remit is low cost and super effective.
Not only is it cheaper than Western Union, much cheaper, but it’s also much less hassle.
Our experience with Western Union is that they keep making the client jump through administrative hoops to complete a transfer.
With WorldRemit the first time that a payment goes through? All future payments will go through without a hitch.
It’s better to choose payment providers that don’t drive a client mad.
Check out WorldRemit here.
PayPal is, well, problematic as a payment provider. On the upside? It’s a fast and efficient way to get money from client to freelancer and PayPal is a trusted brand.
On the downside? Their fees are, frankly, daylight robbery with lousy exchange rates plus a hefty percentage being taken as a direct fee on each transaction.
It’s a good choice if the client is worried that you’ll take their money and run, because PayPal offers payment protection guarantees (though you need to be very specific in your contract about how such a guarantee may be activated – and specify that if they take their money back, that all IP generated under the contract reverts to your ownership).
Otherwise? We’d avoid it.
Check out PayPal here.
Square is essentially a similar service to PayPal and while many will swear blind that it’s something special – it’s not, it’s a mid-range and mid-value payment processor.
It can handle credit card payments for you but then so can Wise and WorldRemit and they won’t charge you as much as Square does for the pleasure.
We’d also note that some of Square’s shareholders are the kind of big tech oligarchs that you might not want to hand bags of your cash to, though this is also true for PayPal.
Check out Square here.
You could also ask the client to pay by the traditional bank transfer.
This has the advantage of a fixed fee for the whole transfer but it’s often heftier than that charged by Wise or WorldRemit.
Some large corporations, however, may prefer this method of transfer.
Don’t forget to specify in the contract who pays the bank fees though.
This is really only a consideration if you’re based in the USA, now.
The rest of the world has pretty much abandoned the checkbook for electronic transfer.
Our biggest concern with checks is that they aren’t your money until a few days after they’ve officially cleared.
If a check “bounces”, your bank will take the money back from you, even if they told you it had cleared.
So, you might want to consider your delivery schedule for clients that pay by check.
Bitcoin, Eth, Dogecoin and there are thousands of other options out there.
In principle, we love the idea of being paid in crypto and writing contracts in crypto, it’s a frictionless instant transaction, after all.
In reality, these currencies are so volatile that writing contracts in them is a recipe for disaster.
Let’s say you agree that a month’s work is worth 1/10th of a Bitcoin.
That’s about $6,000 at today’s prices.
But by the end of the contract the value of a Bitcoin has gone up to $100,000 and the client now needs to find $10,000 to pay you. Things are going to get ugly.
Conversely, if Bitcoin has collapsed to $20,000, you’re now only getting $2,000 rather than $6,000. Happy? We thought not.
Getting paid as a freelancer is all about dotting your i’s and crossing your t’s on a contract and taking a deposit and ensuring that you get paid before final delivery of outputs.
Then, it’s just a question of how you want to get paid and as you can see, there are plenty of options for freelancers out there, today.
If you want to stay on top of your finances as a freelancer, you should check out our guide to how working from home affects your taxes, how your home insurance can be affected by remote working and our guide to e-residency in Estonia which might be the best place to get paid.