September 3, 2010

How freelancers can avoid getting stiffed, part one

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Gigaom ran an interesting post this week previewing soon-to-be-announced survey findings by freelance job bidding site Elance.

[Photo by stuartpilbrow]

According to the Elance survey, more people are opting to work as independent professionals rather than finding themselves working as free agents by default.

Although Elance has a vested interest in painting freelancing as an employment Mecca, its findings -- that 70 percent of survey respondents say they're happier working solo than they were at as an employee and 60 percent say they're committed to freelancing for the long haul -- don't surprise me. An overwhelming majority of the freelancers I've met and interviewed since the late nineties have said the same.

But as a Crain's New York Business article reminded this week, there are of course big downsides to running your own employment show: chief among them, clients who are either obnoxiously late with payments or altogether delinquent.

As Crain's noted: "A first-ever study by a Rutgers University economist shows that 42 percent of the nearly 900,000 independent workers in New York state reported having trouble collecting payment for their labors last year, totaling an estimated $4.7 billion in lost wages."

Also: "...more than 35 percent of freelancers in the state were paid late last year, with the average payment past due totaling nearly $12,000. And nearly 14 percent were not paid at all, losing out on an average of almost $8,000. (Some independent workers reported experiencing both.)"

If you're new to freelancing, let me make your life a little easier. Herewith, some of the best ways to help weed out would-be deadbeats from your client list:

Sniff out clients ahead of time. That is, before you shake hands with them. If you don't know what your local media outlet, Better Business Bureau, and fellow freelancers have to say about a potential client, find out.

Get it in writing. Of course a contract isn't a guarantee that you'll get paid. But it makes your case that much stronger should have you have to call a collection agency, an attorney, or the public shame cavalry. (More on these tactics in my next blog post.)

Do a trial run. When you go on a blind date, you don't invite the other party to a sleepover at your apartment, sight unseen. You meet them for 45 minutes in a public venue that affords you an easy out should your new companion suddenly sprout antennae. Same with new clients. If you can't find anyone to vouch for them, start with a couple of smaller assignments. That way, if they wind up being difficult to wrestle money from, you haven't invested as much time.

Get paid in milestones. For large, multiweek jobs, don't wait until the end of the project to collect your fee. Request to be paid in installments, on specific dates (or at specific milestones) outlined in your contract. Many clients won't bat an eye at this request; some will even anticipate being asked to cut you a check for 25, 30, or 50 percent of your fee at the start of the project. Note to Pollyannas: If a client can't afford the first installment of your fee, they probably won't be able to cough up the second, third, or fourth either.

Befriend the accounting department. When signing a new client, get the name and contact information of the person in accounting who will process your invoices. It may come in handy later on. Don't go into a project with only the contact information of only one person at the company. If they suddenly leave their position, you could find yourself in a world of financial hurt.

Trust your gut. As any seasoned freelancer will tell you, if a project sounds fishy or too good to be true, it probably is. If a prospective client is sending up red flags, take the hint and run!

Michelle Goodman is the author of "My So-Called Freelance Life" and "The Anti 9-to-5 Guide." E-mail Michelle at mgoodman@nwjobs.com

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2 Comments

dannel on September 12, 2010 11:05 AM | Reply

Also recognize that as a "freelancer" you are a vendor of services just like any other product or service supplier. You are the last in line in a bankruptcy. Keep a close eye on the financial health of your clients.

R.Roy on September 14, 2010 5:45 PM | Reply

Good article. Working with freelance pitch sites to find reputable clients, tho, is to step into the world of the ill prepared. Case is point: this company, Calabrix, had a horrible time finding clients that had any sense of what they really needed, despite their reasonable attempt to filter out the bottom-feeders. Read all about it here:

http://blog.calabrix.com/?p=50

Best of luck!

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