Secure Your Paycheck
Freelancing, as opposed to working a traditional 9 to 5 job, can feel liberating, but it can carry some financial risks. For one, you're not guaranteed a timely paycheck, and – according to a recent study – there is the unfortunate chance of getting ripped off by a dishonest company. A Rutgers University economist found that freelancers were unable to collect an average $4,600 last year.
For the self-employed, here's some advice to help ensure you never get stiffed:
Screen Clients
See what previous contractors are saying about a company before agreeing to any terms. Check out the freelancer forum at FreelanceSwitch.com and try a Google search for the company's name in the blogosphere at Google.com/blogs. The Freelancers Union also has a new "Client Scorecard," where freelancers leave reviews for companies.
Request a Down-Payment
For big projects, as part of your agreement with a client, request a reasonable down-payment – perhaps 15% or 20% of the project's total fee – that will be applied towards the final payment. This will, at least, offer some security, in case the client bails. It also incentivizes the client to pay you on time.
Have a Contract
"Deadbeat companies are pros at offering verbal contracts with no paper trail," says Sara Horowitz, Founder and Executive Director the Freelancers Union. "So many freelancers kick themselves for doing business on just a handshake." Another free tool from the Freelancers Union is the "Contract Creator," which helps you create and customize your own contract to ensure a client pays on time.
Invoice Promptly
Invoice your client right away via e-mail and/or traditional mail. If it's a short project of just a few weeks in length, invoice promptly at the end of the term. If it's a lengthier project, invoice twice a week in smaller amounts. All invoices should include both parties' names, project date title, date of invoice, your social security or business ID number and a description of the completed work.
Photo source: Carbon NYC on Flickr
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