The draw of being self-employed has prompted more workers to join the gig economy. In last year's study by freelancing platform Upwork, it was estimated that 57 million Americans freelance and many are committing to freelancing as a long-term career choice. However, not all is sunshine and rainbows in the gig economy these days. With the pandemic ravaging economies, many businesses that used to hire freelancers are going belly up. The recently unemployed have also resorted to freelancing to make ends meet. These have led to an increase in competition among gig economy workers.
Potential employers are indeed going through a lot. Aside from the pressure of business continuity amidst lockdowns and limited operations, companies must heed new regulations and laws that were passed in response to the pandemic. Many workers are also looking to avail of some form of fair labor protection during these difficult times, so companies have to be careful classifying workers to determine which terms apply to each worker under their employ. The area of contractor payments and contractor classification is notoriously complex but there are now several start-ups such as Papaya Global aiming to bring solutions to this area.
Given such an erratic environment, freelancers and contractors should take care when taking on projects. Some employers might be biting off more than they can chew which can ultimately affect how they treat their workers. What is worse than not getting any jobs is doing a job and not getting paid at all. Nonpayment of clients has long been a problem among freelancers and considering the financial crunch, it's more likely to persist during this crisis. Here are five steps you can take to ensure that you get paid for every work you take on.
Times may be tough, but you should still be quite careful when picking clients to do business with these days. You wouldn't want to be stuck with a client that doesn't have the means to pay. Some industries and niches are hard-hit, and you'd have to examine why they'd be outsourcing work in the first place. Beware of clients who have recently gone through massive layoffs, who can't describe the work upfront, and who offer low-ball and below standard rates. You'd be better off holding off and waiting for better clients to come along.
Even with an established client base, you should still take time to evaluate their current circumstances. Some might try to leverage your existing relationship to get you to work at a discount. While it's possible to try to develop contacts and nurture relationships, you have to weigh such against your capacity to provide concessions. If you don't have the financial wiggle room to do these things, then don't.
A contract is your best protection when working freelance. Make sure that you go through the scope of work, timelines, and exact deliverables and acceptance criteria with your client and put these in the contract. Scope creep is a common problem with any project. You don't want to be stuck on a project for too long just because the client wants to continuously expand the scope of work.
Your contract should indicate the price, payment scheme, and method. Some freelancers require deposits or some form of upfront payment to deal with flaky clients. If you're working for an offshore client, be sure to indicate the payment channel such as PayPal or Payoneer and the currency in which you'd be receiving payment as well. Some companies use payroll platforms that offer flexible ways in how you can receive pay. Inquire if you would be included in such a system. You can even put in protection clauses in your contract such as penalties or interest on nonpayment and that the client will shoulder legal and administrative fees should you decide to sue to collect.
One of the many excuses clients use against paying freelancers is how they're dissatisfied with the work. Don't give your clients the opportunity to use that as a reason against not paying you. Put in quality work and deliver based on your agreements. Thankfully, you have a clear contract that indicates specifically what conditions have to be met to consider your end fulfilled. Constant communication and documentation help too. Be sure that someone from the company acknowledges and signs off on your work whether it's a daily report or receipt of the actual deliverables.
Once these things are settled, you can then send an invoice to your client. Do it promptly once you've delivered. Make sure the invoice includes all pertinent details such as the payee name, account and method, the deliverables, the period or project phase the invoice covers, and tax details if required. Some payment services have a free invoicing feature which also often have automated alerts. Use these to remind your client about what is due. Don't hesitate following up on overdue invoices.
The pandemic has hit everyone hard, and you may try exercising some patience when your client asks you for some leeway in sending your payment. However, you should know your limits. It doesn't help if your payments are both delayed and haggled down too. If the amount is negligible enough, you may opt to just let it go especially if the effort needed to claim would just derail you from work with clients already lined up. Charging a deposit could offset the impact of eventual nonpayment.
But if you truly need to get what's due, know that various states and territories now have laws to protect freelancers. You can enlist the services of a lawyer or collection service to send a collection letter on your behalf. Or, depending where you're based, you can file a nonpayment claim with the proper government agency. New York City freelancers can refer to the Freelance Isn't Free Act for guidelines on how to file claims.
These actions are obviously for extreme cases, but at least know that there are options for you to get paid. With a bit of due diligence and savvy on your part, you'd be able to land projects with employers that would give you what's due for the services that you've rendered. Everyone deserves harmonious business relationships where all parties benefit as we all go through these trying times.