Be careful about who you work for

Check out all new clients before you start working for them – avoid the pitfalls of working but not getting paid.

What could be better than getting a new client, you think. Maybe someone rang out of the blue, or emailed, or even called. They saw your name, liked a piece of work or yours, or you were recommended by a colleague – they can even tell you their colleague’s name and you are proud of the connection.

You’re chuffed, flattered, grateful. You could do with a bit more work right now, or you were wondering what you’d do when the current project comes to end. Here’s the answer and you haven’t even had to go looking for it.

But wait. It might be great news, but it might be more trouble than it’s worth. If this is a fly-by-night outfit on one on the verge of bankruptcy, you could be about to commit to working for free with no prospect of ever getting paid.

Credit checks?

Big corporates do credit checks and due diligence before accepting clients. For most of us freelance professionals buying credit reports and seeking references is not realistic. But we can - and should - check out customers before we sign up to work for them. If they don’t pay, or go bust on us, we will have lost out.

Google is your friend. A few minutes should find out a little about this potential new customer. What are people saying about them? Are there any complaints? Check forums, chat rooms, any websites criticising them for not paying their bills or trying to cut down agreed fees after accepting similar work?

Personal contacts are even better – do you know anyone who has worked for them? What were they like to work for, did they pay well and did they pay promptly? Are people still happy to work for them? One reason organisations are often looking for new talent is because they have alienated their old favourites who will not longer work for them – if not, warning bells should sound. Check with your union – have they had to help members squeeze money out of them?

Pay close attention to quickly growing companies or companies that have been, or are being, taken over.

Sooner, rather than later

Do all this before agreeing to work for them – afterwards will be too late. A sensible freelance will also monitor existing customers and review them twice a year. You need to spot if a client is getting into difficulties and adapt accordingly, perhaps billing smaller amounts more often so that, if they do stop paying, you’re left being owed less. Better still, cease working for them before they get into difficulties.

Grade your customers by risk levels and set credit limits and terms for each customer. You might normally expect to be paid 30-days after sending the bill but not every customer has to be treated the same. You might offer to bill monthly instead of weekly, for example, but only if you can be paid within a week. That might save both of you the hassle of dealing with lots of invoices.

There may also be times when you have to ask for payment up front – before you start. This might be part payment in advance and the rest when you finish the job, or, if you are worried about the client, you might ask for full payment in advance. You might even ask clients to apply for credit terms – a child entertainer or magician, for example, might do many jobs based on payment with the booking but have a corporate client that provides regular work who pays on invoice after each performance.

It’s a case of horses for courses.

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