How to Ensure You Get Paid as a VBO
Keep cash flowing in with these helpful tips.
You became a virtual business owner to create the life that you wanted.
But the path to your VBO lifestyle can be thwarted if you don't get paid on time. If you’ve got slow-paying clients who are hindering your cash flow, keep reading.
Your time is valuable.
You don’t want to waste it chasing down payments. Take this advice to ensure that you get paid on time every time.
Set expectations from the start.
Before you engage in any work for your client, you need to layout your payment terms upfront. Make sure that you explain to your client exactly how and when you expect to be paid, so that there’s no confusion when it comes to payday. Give your client everything you need to get paid: 1099s, account information, etc.
Let them know when and how often you’ll send out invoices, and communicate the time window in which you expect those invoices to be paid.
Establishing your payment expectations at the start of the working relationship will help you avoid issues down the road.
Use a contract.
A lot of freelancers don’t realize the importance of having a legally binding contract with their clients. You’re a VBO, a business owner, so treat yourself like one and protect yourself!
Recount the expectations you established with your client in writing and be specific about what happens a client defaults on payment.
Having a contract in place provides you with a legal recourse, so you can take a case to court if need be.
Get a deposit upfront.
For large and lengthy jobs, especially those that require you to hire other VBOs, it’s a good idea to ask for an upfront deposit.
That way you’ll have money flowing in before you start working.
Don’t feel bad about asking for pay first, it’s not an uncommon practice among freelancers. The amount you should ask for will depend on your industry, the project and your rates.
Don’t wait to send invoices.
Part of the responsibility is on you to make sure you get paid. If you fail to send your invoices out on time, you can’t expect clients to pay you on time.
Set up a schedule for invoicing, communicate that to your client, and commit to it. Whether you bill weekly, biweekly, monthly, or upon completion is up to you.
Just make sure that you’re always consistent.
There are plenty of software options available that can automate your invoicing process for you. Investing in invoicing software could be a good option for VBOs who struggle to keep up with their billing.
Be open to alternative payment methods.
Like employees, freelancers generally accept payments in the two primary ways: paper checks and direct deposit.
The downside to accepting checks is that you have to wait for them in the mail. And you have to wait for your client to put that check in the mail.
Direct deposit is more preferable, so try to go that route when you can. Direct deposit won’t always be an option with every client, but you can offer alternative payment methods to get around waiting for a snail mail check. PayPal and other like-services are a fast, secure method for receiving payments.
You can also offer to accept credit cards, but the convenience comes at a cost. You will have to pay about three percent on transactions, so keep that in mind.
If a client defaults on a payment, don’t be afraid to advocate for yourself.
Communicate about unpaid invoices as soon as your aware, and stop working for that client until you’ve been paid. Do not turn in any further documents until they catch up on their payments.
Set expectations from the start
Get everything in writing, make sure you invoice on time, and be open to other payment methods to avoid waiting on a check.
Take these steps, and you won’t have to chase down payments.