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How to set up freelance payment terms like a boss

One of the most important elements of running your freelance business is creating payment terms that set your business up for success.

The best part about having an independent business is that how you run it is entirely up to you. Do you want clients to put down a deposit to secure your time? Maybe you want to add late fees to help avoid unpaid invoices. 

At the end of the day, you’re in control of how you want your payment terms to look.

If you’re looking for some guidance around how to structure and set up your payment terms, here are a few steps to follow. 

Creating payment terms that work for your business

Payment terms are in place to protect you and your business and ensure you get paid fairly and on time. 

Here are a few things to consider when creating your payment terms:

  • Payment schedule 
  • Payment platform 
  • Late fees 
  • Deposits 

Let’s break down what each of these could look like for your freelance business.

Payment schedule

Your payment terms should outline a clear payment schedule. Do you want to invoice at the beginning of the month or the end? How soon do you want to receive payments? Outline exactly what you want from clients in your payment terms. 

For example, you could have net 30 terms which means whether you invoice at the end of the beginning or end of the month, the payment needs to be made within 30 days of receipt. Another payment schedule could be based on milestones. For instance, if you’re a website designer, you could send an invoice at the start of the project, another one halfway through, and a final invoice once the website has been completed. 

Payment platform

Another thing to communicate in your payment terms is how you accept payments from clients. Let them know if you use an invoicing platform, so they know to keep an eye out for it when it’s time to pay. 

If you want to create a seamless experience for both clients and yourself, use an all-in-one platform like Wethos that keeps everything from proposals to invoices to bank accounts all in one place. 

Late fees

A commonly overlooked element of a freelancer’s payment terms is a late fee. Late fees are put in place to protect your business, help avoid unpaid invoices, and ensure you get paid on time. 

Your late fees can be anywhere from 1-5% interest for each day, week, or month that a payment  is delayed. Whatever you decide for your late fee, just make sure that the fees are clearly communicated from the beginning so clients are aware and (hopefully) more motivated to pay on time. 

Deposit 

Finally, decide whether or not you want to charge a deposit to secure the project. Deposits can be a good option for new clients as assurance that they’re committed. Deposits are also a good idea the bigger the project is, especially if you’re building a team to complete it. You want to make sure that each of your team members is paid for their time and expertise, which means you may want to secure a deposit to get them onboarded.  

Communicating your payment terms

When setting up your business and securing new projects, you’re probably wondering: “how soon should I communicate my payment terms to clients?” 

Our answer? As soon as possible. 

You can communicate payment terms at the same time that you communicate pricing, which is usually during the prospective phase or proposal phase. While you don’t have to get into every detail (you can save those for the contract), you should give your potential clients an overview of your general payment terms. 

By communicating your terms from the start, you set the tone for what clients can expect when working with you.

Getting paid

Although your payment terms should be clearly outlined in your contract and should have been communicated from the start, it’s always a good idea to send a reminder of these terms when you invoice them. 

As you wrap up the project or as the month is coming to a close, send a quick note with your invoice to the client letting them know what the terms are, such as the payment due date and any potential late fees. You can also include these terms at the bottom of your invoices so that you don’t need to repeat them each time. 

To make the invoicing and payments process even easier, take advantage of a platform like Wethos which lets you schedule invoices and sends reminders when invoices are overdue.


Ready to set up your payment terms?