In the past few weeks, I’ve spoken with a few freelancers who would like to work with direct clients but are afraid that they won’t get paid. One commented that she really enjoys working with agencies because of being able to check Payment Practices or a similar resource in order to determine the client’s creditworthiness. Although there is no Payment Practices for direct clients, I think that you can take some steps to ensure that direct clients will pay you, or to at least minimize the risk of nonpayment. I think that it’s useful to apply some or all of these steps depending on who the client is and how paranoid you are!:
- Get full contact information from the client, including their phone number, mailing address and physical address.
- Note whether the client is a member of any associations such as the Better Business Bureau to which you could report the client if they don’t pay you.
- Google the client; see what kind of information about them is floating around the Internet
- Ask for references from other freelancers or suppliers the client works with; ask those people about the client’s payment practices.
- Clearly state your rates, payment terms and acceptable payment methods. Ask the client to issue a purchase order confirming that information and listing the name, e-mail address and phone number of their accounts payable person.
- If you have doubts about the client or you are doing a large project for a first-time client, ask for partial or full payment in advance. I require 100% advance payment from anyone who is not an established business.
- Accept a variety of payment methods. For example, I accept checks in dollars, euros or pounds, wire transfers, ACH transfers and PayPal. This gives clients a few payment options, and I always stick to the arrangement that they pay their banking fees and I pay mine.
Obviously, not all of these ideas apply to all situations, and some people are just more trusting than others. Personally, I like to believe that clients are fundamentally honest but I always ask for a PO and for the accounts payable person’s contact information, and I always require individual clients to pay in full in advance. Also, out of curiosity: agency owners, how do you vet your clients’ creditworthiness?