Last editedFeb 20232 min read
Becoming a freelancer can be an incredibly freeing and rewarding career path, particularly if you like the idea of being your own boss and working whatever hours suit you and your busy life. But one thing you’ll undoubtedly miss if you’re migrating from a more traditional role is the lack of an accounting department.
Of course, you can hire your own accountant to work the books and chase payments for you, but that is going to seriously eat into your revenue. Most freelancers can comfortably survive as solo entities but there is a gentle learning curve to overcome first when it comes to managing your finances.
How to invoice for freelance work
Payday is an understandably beloved part of the month for most people, but for freelancers there are typically going to be several paydays scattered across the month depending on how many clients you have and when you’ve sent your invoices.
Many freelancers prefer to send all of their invoices at the end of each calendar month to make it easier to keep track. The beauty of freelancing is that you can choose to invoice whenever you choose. You might have one-off clients that you’ll invoice as soon as the work is completed
Freelance payment terms
Freelance payment terms need to be established from the moment your client relationship is forged. All freelancers should have a standard contract that they ask all clients to sign which sets out how they wish to be paid, how often and whether or not an upfront deposit is required for new clients.
This contract should also allow room for editing, as contract types will typically vary from project to project and client to client. For example, you might bill the same amount every month for one client whereas for others the amount will change from invoice to invoice.
You might also want to ask for a retainer fee for certain clients, which guarantees you a set amount every month in exchange for delivering on agreed-upon deliverables.
How to get paid for freelance work
There is no definite way to ensure you get paid on time every time but there are steps you should be taking to give yourself the best possible chance.
The standard timescale for freelance payment is 30 days and this should be made clear on every invoice. This could also include late payment terms, whereby you charge interest on the payment if it still hasn’t been paid after the agreed-upon deadline.
Sending timely statements
You should be sending "payment overdue" statements as soon as the timescale runs its course. Sometimes clients simply need a gentle reminder and thankfully, most invoicing software can send these statements out automatically.
Nobody enjoys chasing up payments but nothing is going to get done about it if you’re not prepared to be proactive. So don’t be afraid to pick up the phone or make yourself an inconvenience. This is your livelihood and you can’t afford to be apologetic or overly cautious.
Using the right tools
There are plenty of accountancy software tools that utilise cloud computing to keep everything organised and give you the service of an accountant without the cost of one. You should also invest in a good online payment solution and offer clients as many payment channels as possible.
GoCardless has been built to make receiving invoice payments easy by automating payment collection, integrating directly with your favoured existing software system or being accessible through our easy-to-use dashboard. Plus, by automating the payments, it even makes life easier for your clients.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin you have to deal with. For freelancers, GoCardless an ideal solution as it lets you collect directly from a client’s bank account and syncs with leading accounting software such as Xero to make the entire process seamless and painless.
One of the biggest drawbacks with freelancing is dealing with late payments and dedicating time to chasing payments. GoCardless users, however, experience 51% fewer late payments and spend 59% less time managing payments. So you can spend more time actually working rather than worrying about getting paid.