If you have been freelancing for any length of time, then I am certain you will have come across clients who work to a 30-day invoice period. Over the years that I have been working for myself, I have experienced this type of invoicing and whilst my experiences haven’t been all bad, there have been occasions where clients haven’t paid within the set time frame. Not only is this off-putting for me as a freelancer, but it can often be detrimental to be business!
If you are new to the industry, or perhaps you have simply been lucky so far with your clients, then you may not have come across the 30-day invoice or understand why it can be such a bad thing for those trying to build their own business!
What Is a 30-Day Invoice?
Imagine putting weeks into a specific project, only to find upon submission that you won’t see a bit of the money that Is owed to you for another month. That, in essence, is a 30-day invoice!
More commonly referred to as a Net 30 Invoice, this is a payment method that is incredibly popular in all industries. It is essentially a short-term credit loan from you as the freelancer to the client who is paying you! For the big industry businesses with multiple numbers of clients and a constant turn around of finances, this is a great system! Not only does it give the client longer to pay, but it often means the worker will get repeat business, because who doesn’t love some interest free credit! However, for those who are working for themselves, it can be an absolute disaster, and quite detrimental to your business!
Why Are 30-Day Invoices Bad for Freelancers?
If you are new to the freelancing industry don’t let an invoice period put you off, it is important to know that whilst some clients may let the 30-day period slip, there are other things you can do to gain a little control over the situation. Going for a smaller invoice e.g. 10-days can help prevent long delays between payments! For example, a 7-14 day invoice being overdue and slipping to a 20-day invoice is far better than 30 days leading to 50 without an income!
As any freelancer will agree, it takes a whole load of motivation to become successful when you are working for yourself! The time I have put into perfecting my skills, learning the industry and building up client relationships doesn’t bear thinking about!
But the fact is that I LOVE what I do, and whilst it hasn’t been a walk in the park to get to where I am, I have been dedicated and motivated enough to do it!
Motivation is possibly the most important driver for so many freelancers, whether it is the motivation to become successful, to get clients or to make money. So, imagine that you have used all your motivation and passion on a project, you have skipped social events, had early mornings and late nights, you have really put the hours in, only to find that you won’t reap the rewards for 30 days. Even if you are in a position where finances aren’t the be all and end all, this set back is still likely to have a hit on your motivation.
There is nothing quite like receiving payment for a job you have really thrown yourself into. If you aren’t going to see that reward for another month it can really impact the drive you feel going into a project!
What Can You Do?
Your business is your baby, so you will want to protect it in any way you can, and for me, this means doing away with the 30-day invoice!
Now, the first thing to note is that you can’t be shy with your client – if a 30-day invoice won’t work for you then say so. If the client is reasonable they will allow for a change before the project kicks off. It is important to get these discussions in right at the beginning before any work is done! I would always suggest that freelancers state their invoice terms as part of the opening contract, this way you can be clear on your stance on things like 30-day invoices to avoid any confusion later down the line.
If you have a client who is really set on a 30-day invoice, you can suggest a short credit term; there is no law to say it must be 30 days! Net 10, or Net 15 invoices allow your client to still have that window of time before paying you, but you won’t be waiting a full month to receive your money!
If you are open to trying a 30-day invoice, determine with your client WHEN the invoice will begin. If your client is refusing to back down from the Net 30 terms, then you can still take action to ensure the terms are crystal clear. Some clients have different views on when a 30-day invoice starts, which could leave you waiting even longer than you thought for a payment to come in so it is worth having this discussion!
If your client is long established and trustworthy, a 30-day invoice is less of a problem. I wouldn’t recommend offering the same service to a brand-new client until that trust has been formed and you have received a few regular payments from them.
For me, the 30-day invoice will never work as a freelancer. I don’t think it is fitting for the freelance industry, in the same way, that you couldn’t buy something from a shop and pay a month later! The work we do as freelancers is incredibly time-consuming and it is ultimately done so that we can live and support ourselves! So, waiting a month for an income is just not okay!
I do however understand why the Net 30 invoicing system is so common across other industries, and why for some freelancers it may not seem like such a bad option! Like with anything, I would always recommend that full research is done before making any decisions that involve the future of your business!