Getting paid. 5 winning strategies for painless collecting in Freelance Web Development projects
Bad at collecting
For many freelancers I know, collecting is the least favorite part of the project cycle. There are several reasons for that.
Customers Make It Difficult
From my time as a freelancer, I can recall that customers usually has become much less responsive at the end of the project. Especially when it was time to fulfill their end of a bargain. I often had to send several emails asking them for the final approval of the project and then call them many times asking if they got the income and when I could expect the wire. There's an entire set of tactics used intuitively by customers like:
- I've lost your invoice. Can you send it again, please?
- I'm currently on business trip/holiday. Can you call again next week?
- Just add this small additional feature and I'll pay you right away.
Back then I thought it is specific to the Polish market, but in conversations with web developers from US, Western Europe, and India I learned that it's a global trend on the low-end web development market.
Collecting Requires Interaction
Many of us have chosen to work with the code in order not to work with humans too much. And there are multiple ways to successfully limit interaction during sales or development process as it is usually the client that wants something from a developer. Unfortunately, when it comes to collecting, it works the other way around. It is a freelance web developer who needs to actively reach out to a customer in order to finally get paid. It takes multiple emails or even phone calls to finally get money for the project.
Asking For Money Is Inconvenient
Finally, many people feel uncomfortable asking for money even if they are entitled to get it. In fact, some people don't feel comfortable even speaking of money, not to mention reminding a customer of an overdue invoice. There are even some freelancers who have some internal reservations if their work is worth the money they have agreed on, and thus they feel even less comfortable asking for it.
Smart Collecting Techniques
Here's a set of tips&tricks that helped me stay cash flow positive in both my freelance and agency times.
Prepayments & Partial Payments
Taking 30-50% of money upfront is a common way of improving your stance of cash as your position at the beginning of the project is much stronger than near the end. Additionally, I used to divide projects into stages (such as: accepting website mock-up, accepting website graphics, etc) and charge a chunk of the total price after completing every stage. This way I had to collect no more than 30% of the price at the end of the project.
Organizing The Approval Process
No matter how much money you will collect upfront or during the project, almost always there is an amount due only after the project has been approved by a customer. That’s what make organizing acceptance process crucial. The secret here is to specify the scope of the project in the agreement (You can download a sample description of project’s scope from Perfect Dashboard). Scrum is rarely possible on the low-end market most of us work in. The more specific you are, the smaller space you leave for interpretation and misunderstandings. What is more, I used to limit the time for each round of testing and added a provision that in each following round a customer can only report bugs there weren’t there in the previous round. When I implemented this idea into my business, I had the project acceptance time reduced by more than 50%.
Keeping Control Over Website
It’s all about your position. Once the website is fully operational and it’s on the customer hosting it is not much you can do get your money apart from going to court with often is not an option, especially if you deal with foreign customers. That’s why some freelancers keep administrative access to the website until it’s paid in fully, so they could turn it off just in case. I used to do it the other way round. I turned on website front-end only after I got all the money. This why I was able to avoid further inflaming the situation by turning the website off and still keep some control.
Using Auto Collecting Solutions
If you really don’t feel like collecting money then you could always use a third party service like peopleperhour.com or freelance.com. In such case, the money for your project is being secured by the third party and they can be also helpful in conflict resolution.
Retainer-based recurring billing
The most successful strategy I have implemented throughout my years as freelancer and agency principal was retainer-based recurring billing. Instead of billing per hours, I started to sell management packages with fixed scope for a fixed fee. I was offering a certain amount of hours monthly in a package together with a pledge of keeping website backed up, secures and up-to-date. I was selling it upfront with the new website project, making them understand they will need me after the website is online. It proved to be very effective as it occurred that lots of customers were willing to pay for reassurance that our relationship will not finish with the deployment of a website and they could always call me.
I hope this post will help you makes your ends meet and remember: it doesn’t matter how many contracts you have, or how professional websites you build are if you are unable to collect money for your work. Sign up to Perfect Dashboard to learn more on how to collect more efficiently and build a successful web development business. You’ll get access to free guides, templates of useful documents and even a proposal suggestion tool for each of websites that you have built.