NEW YORK -- For many freelancers and owners of small businesses, signing up clients and completing projects is just one part of the work. Trying to get paid can be almost as time-consuming.
Sandy Sloane needed 11 months of persistence before one client paid in full for her publicity and event-planning work. The client was having cash flow problems but said he was paying other vendors. He put off paying Sloane -- although their $4,000 contract stipulated he would pay within 30 days.
"I had to threaten legal action before he started making payments, since repeated invoices and late fees did nothing," Sloane says.
Getting paid can be a problem for a business of any size. But delays can cause particular difficulties for freelancers such as writers and graphic designers or small-business owners such as building contractors and technology consultants who don't have a steady cash flow. Slow payers can make it hard for freelancers to keep up with their own bills. And it's not just the money -- it's the frustration of multiple invoices, emails and phone calls.
"I spent way too much time writing to him and sending repeated invoices, at least one per month," said Sloane, who's based in Rochester, N.Y. She has since changed her policy: She gets half the invoiced amount upfront, 25 percent on an agreed-upon date and the rest within 30 days of the project being done.
Since the latest recession began, many companies looking to cut costs and gain flexibility have used freelancers rather than regular employees for short- or long-term work. And some companies, including ride-hailing services such as Uber and Lyft, are based on using independent contractors.
Some freelancers are paid regularly, including Uber and Lyft drivers. Their weekly pay is based on their fare totals, according to the companies' websites. And the ride services keep track of fares, so drivers don't need to send the company invoices.
But most freelancers need to invoice customers and wait. Small-business customers can be short of cash themselves or make other bills the priority. Big corporations stipulate the payment policy when they hire freelancers or contract with a small-business owner, and can take several months to pay.
Freelancers often don't think about the intricacies of getting paid when they're starting out. It's often not until something goes wrong that they realize they need a formal policy.
Photographer and videographer Tom Hoebbel began including payment terms in his contracts after being burned several times. He requires payment within 30 days and warns clients they face a 1.5 percent fee if they're late. Hoebbel, who lives in Brooktondale, N.Y., has to be tough -- he told one of his favorite clients, a local arts organization, that he won't work with it anymore.
"They told me, 'We don't have the money,'" Hoebbel says. "It's understandable for a nonprofit arts company, but I need the checks to come in so I can stay in business, too."
Slow payers or nonpayers can wreak havoc with Hoebbel's finances: "I rely on payments from clients to pay my vendors and hopefully a bit of a salary for myself. ... In lean months, this can be a real problem," he says.
When Jaimyn Chang began requiring clients to give him a credit card number last year, it changed his business dramatically. Chang works in search engine optimization, which helps individuals and businesses get a high ranking in internet searches and thus be found quickly. But Chang, whose Boomin Agency is located in Raleigh, N.C., found that customers that didn't understand the need for search engine optimization weren't likely to pay.
"Those who are tight on cash and have limited knowledge about the services they're asking me to provide are usually the ones who find ways to not pay," Chang says.
Clients now must provide a credit card number before Chang does any work. "It weeded out a lot of clients that were trying to scam me from the get-go," he says.
SundayMonday Business on 11/05/2017