(Especially When An Economic Downturn Is Pending)

Note: Before I get rebuked for suggesting an economic downturn is present before one appears on the horizon, please note that approximately every 7 years or so the US economy goes through a recession. The last downturn began in 2000, so we are due to experience a new one soon and the current drop in the housing market suggests that this could be a harbinger of things to come.

invoiceYou’ve put the final touches on your work, ending four grueling days of writing, editing, and re-writing a series of articles on a topic which required an extensive amount of time researching your subject matter. One third of the invoice was paid before you got started with the remaining two thirds due upon completing the project. You send off the finished work and include a copy of your invoice, expecting to be paid within one or two business days.

Where’s The Beef?

Three days later you realize that you still haven’t been paid so you contact the company only to learn that they have received your invoice but it must go through the usual accounting cycle before a check is issued. This means that you just missed the mid-month issuance of checks and will have to wait until the first day of the following month before a check is cut.

Grumbling, you begin to understand one thing: because you didn’t have everything spelled out in writing you’re left waiting for payment, perhaps weeks longer than expected.

On the other hand, if your rent is due or some other bill is payable, you can bet that no one will wait for you: they want their payment now or you may suffer the consequences in the form of a hit against your credit record.

Better To Be Forewarned Than Unpaid

I’m writing this article to serve notice to my fellow freelancers that working with a written contract is the best way to protect yourself in the event that you experience some sort of work disagreement or nonpayment of funds. Recent experience has revealed that some of the informal agreements I had in the past should be changed: instead of verbal agreements or some sort of email exchange, all parties concerned would likely benefit from using contracts.

For example, one client was anxious for me to write a press release for him on July 30th followed up one week later with a refreshed executive biography. I explained my payment terms over the phone and I followed that up with a written letter outlining my price breakdown. What I didn’t do was to submit a written contract as I thought our verbal and written exchange was good enough. Well, the excuses for nonpayment I have heard over the past several weeks have been ridiculous. From, “I can’t pay you with my credit card because I would have to seek reimbursement from our bookkeeper,” to, “I’m out of town until next Wednesday and I’ll sign your check upon my return.” Needless to say that the deadline has passed by without a check being sent.

Late Payments = Money Trouble

In many cases of nonpayment there is an underlying problem evident — the client is experiencing money problems. When a company is experiencing money trouble, delaying payment to vendors is a typical response. As a freelancer, you are considered to be a vendor no matter how cozy your relationship with a company representative may be.

Unless you have everything in writing, payments can be delayed or the terms of the contract changed. Protect yourself by spelling out in writing the terms and conditions of your business relationship. Without a formal agreement you could be left holding the bag.