Contract Tips For The Self-Employed

In a post yesterday, I discussed the process of setting an appropriate rate when quoting for a contract job. A few comments noted that setting up payment terms, as well as an agreed rate, is also important.

There are basically three payment models you can use when setting a schedule with prospective clients.

  • Pay on delivery
  • Payment by a schedule
  • Payment based on some other event

Choosing the best option can be negotiated with the client. However, you need to ensure that the agreed payment system fits in with your cashflow and other business requirements.

The simplest model is to get full payment on, or within a fixed period of, delivery. This is great for small jobs. For larger jobs, setting milestones at which part-payments are made is useful. It means that the client only pays as they receive parts of the work and you get a steady stream of income. The final model has payment based on some other event. For example, many freelance writers are paid on publication of their work.

A critical element that is often not properly considered is that it’s not enough to put the payment conditions in front of the client. You must discuss them and ensure that they are understood and agreed.


Comments

    Do not, ever ever, deliver anything without getting paid first to overseas or interstate clients. It's the #1 cause of getting ripped off as a freelancer, even if your client has nothing but good intentions there's very little that you can do to fight them, even if they are in a tightly tied country like the UK or USA - it's hardly ever worth the money to chase it unless it's a $15,000 contract.

    Ideally, I always package my clients into an infrastructure package - that way it's always hosted by me and I am free to enforce all the terms of my contract as I see appropriate, plus once you get a few clients under your belt you end up with a large amount of offsite resourcing that you can use for future clients (so they end up paying for hosting that you have already paid for, extra profit in your pocket) or in my opinion the best option - giving the extra to young entrepreneurs for free to help them get off the ground.

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