{"id":4545,"date":"2019-01-02T12:45:58","date_gmt":"2019-01-02T17:45:58","guid":{"rendered":"https:\/\/cruzpayroll.com\/?p=4545"},"modified":"2019-01-02T12:46:55","modified_gmt":"2019-01-02T17:46:55","slug":"set-payment-terms-youre-freelancer-contractor","status":"publish","type":"post","link":"https:\/\/cruzpayroll.com\/set-payment-terms-youre-freelancer-contractor\/","title":{"rendered":"How to set payment terms if you\u2019re a freelancer or contractor"},"content":{"rendered":"<p>Following up on late or non-paying customers is no freelancer\u2019s favorite task. Which is precisely why you need to set payment terms up front \u2013 and in writing \u2013 before you work with a new client or customer.<\/p>\n<p>By communicating and agreeing on the non-negotiables for doing business with you, you\u2019ll avoid awkward misunderstandings, frustrating disputes, and in most cases, the ugly hassle of debt collection.<\/p>\n<p>These tips will help you pave the way for consistent cash flow by setting clear payment terms.<\/p>\n<h2>Minimum legal requirements<\/h2>\n<p>As a business owner you are only required to include your business name and address on your invoices. But it\u2019s in your best interest to include more information than the law requires.<\/p>\n<p>It\u2019s recommended that every invoice include:<\/p>\n<ul>\n<li>The invoice date<\/li>\n<li>Complete contact info<\/li>\n<li>Your tax ID Number<\/li>\n<li>Payment instructions (i.e. acceptable forms of payment and when payment is due)<\/li>\n<li>An itemization of services<\/li>\n<\/ul>\n<p>If you haven\u2019t shared your payment terms in writing and a client won\u2019t pay, you have little recourse. You won\u2019t be able to charge a late payer interest on their balance owing, let alone engage the services of a debt collection agency.<\/p>\n<p>In addition to including your payment terms in clear and simple language on every invoice, be sure to state your payment terms early on.<\/p>\n<p>Send along your policies in an email, include them in an agreement or contract, and\/or point new clients to the terms and conditions outlined on your website.<\/p>\n<h2>What to include in your payment terms<\/h2>\n<p>It\u2019s up to every entrepreneur to decide when and how much they need to be paid in order to operate a smooth, positive cash flow business.<\/p>\n<p>As a starting point when setting payment terms, think of the troubles you\u2019d like to avoid and how you could prevent them with the right policies.<\/p>\n<p>In addition to when payment is due (i.e. on receipt of invoice, Net10, Net30) you might want to include:<\/p>\n<ul>\n<li>Pre-payment requirements (i.e. a full or partial deposit)<\/li>\n<li>Incentives for early payment (e.g. \u201c2\/10, Net30\u201d means clients get a 2% discount on invoices due in 30 days if paid within 10 days)<\/li>\n<li>Late payment fees (e.g. 2% on the balance, accruing monthly)<\/li>\n<\/ul>\n<p>You might also include a description of the products or services offered, delivery timelines, a reminder of the terms of your agreement, and what will happen if either party doesn\u2019t stick to the policies in place.<\/p>\n<h2>Final thoughts<\/h2>\n<p>For freelancers and contractors, requiring pre-payment in the form of a full or partial deposit can really help avoid the \u201cfeast or famine\u201d cash flow cycle.<\/p>\n<p>It can feel a bit intimidating to ask for payment before you\u2019ve completed the work \u2013 but think of it as a client screening process. After all, it\u2019s only the ones who understand you are offering a valuable service and are willing to pay for it that you want to work with.<\/p>\n<p>As a secondary benefit, when clients invest up front they understand they are working with a professional and act accordingly. And if it turns out you do have a few late paying customers from time to time, those deposits you\u2019ve collected will ensure you have the cash to carry you through.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Following up on late or non-paying customers is no freelancer\u2019s favorite task. Which is precisely why you need to set payment terms up front \u2013 and in writing \u2013 before you work with a new client or customer. By communicating and agreeing on the non-negotiables for doing business with you, you\u2019ll avoid awkward misunderstandings, frustrating &hellip; <a href=\"https:\/\/cruzpayroll.com\/set-payment-terms-youre-freelancer-contractor\/\">Continued<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[1,40],"tags":[],"jetpack_publicize_connections":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to set payment terms if you\u2019re a freelancer or contractor - Cruz Payroll<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to set payment terms if you\u2019re a freelancer or contractor - Cruz Payroll\" \/>\n<meta property=\"og:description\" content=\"Following up on late or non-paying customers is no freelancer\u2019s favorite task. 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