A contractor’s guide to payments

6 min read

Most people think that being an independent contractor means getting to work wherever you want, whenever you want, wearing whatever you want.

While there is some truth to those assumptions, being an independent contractor isn’t all sunshine and roses.

There are a lot of challenges that come with being an independent contractor (aka freelancer/ gig worker/ moonlighter/ on-demand worker). At the top of the list of challenges are payment-related issues.

Because there’s nothing worse than working your butt off and not getting paid fairly or on time.

For contractors, it’s imperative to know the ins and outs of payments. There’s a lot to know, but we’ve got your back and are here to help with a few tips to ensure you receive your well-earned payments.

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Know your clients

Sounds super simple, right? Except, here’s the thing: there’s a huge rush that comes with getting asked to take on a big project. And that rush can occasionally lead contractors to hastily agree to the work before finding out more about the client.

So before agreeing to work with any client, do a little research first. A quick online search can shed a lot of insight into a company’s credibility. Be sure to check out their social media channels to see what sort of reputation they have and how they interact with others. 

Learn to talk about money

Talking about money doesn’t come naturally for most people. But with some practice, it can get easier to have franks discussions about money with your clients.

Keep in mind that payments are a part of business. Talking about money with a client isn’t the same as talking about money with your friends or family (which is always super awkward). In business, people expect to spend money to receive services. 

Money isn’t taboo in business, so learn to talk about it openly and with clarity. Remember to use clear, concise, and direct language when discussing money. As a contractor, your livelihood depends on having frank conversations about getting paid. 

Get it in writing 

We can’t stress this one enough, so we’re going to say it one more time: get it in writing!

What’s “it”? Everything about how and what you’ll be working on for a client. Essentially, you want them to put their request for your services in writing, which should define the scope of work, deadlines, disclaimers, and cancellation terms.

Make sure that payment terms are discussed from the outset as well. These terms detail how and when you expect to be paid by the client. Be upfront with a client and explicitly outline the payment terms and conditions for your services. 

Then have all of the details included in a contract that both you and your client sign. 

Estimate vs. quote

Think ‘estimate’ and ‘quote’ are interchangeable words? Guess again.

Quotes and estimates have different purposes when it comes to pricing. An estimate is a rough idea of pricing and could change. This is often provided to a client who’s doing some initial planning for a project and wants to get a ballpark idea of costs. However, a quote is a fixed price that’s legally binding. 

It’s important to never label an estimate as a quote. Instead, when you give an estimate, advise the client that you can provide a formal quote if they’d like to move forward. 

Since a quote is based on the original scope of work, if additional requirements emerge during a project be sure to provide a new quote for those tasks. It won’t serve anyone any good to wait until invoicing to sort out those extra charges. 

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Deposit and payment ‘milestones’

If you’re working with a new client or one that has been behind schedule with payments in the past, there’s nothing wrong with requesting a deposit before you begin work. Asking for a deposit is a common practice among independent contractors, so don’t feel awkward requesting one.

Obtaining a deposit can also help things run more smoothly throughout a project. Once a client pays a deposit, they’re financially invested in the work you’re doing for them and are more likely to be actively engaged with you during the project. 

For those large-scale and long-term projects, it’s also beneficial to negotiate to receive payments at predetermined milestones for the duration of the work. This will ensure you have adequate cash flow while the majority of your time is tied up with one project. Just be sure to clearly define the milestones or dates for invoicing in the payment terms early on. 

Invoice promptly

No one likes receiving an invoice months after a project has wrapped up. Businesses want to finalize accounts as soon as possible, so waiting ages to send an invoice could lead to confusion and delay your payment.

Not to mention that prompt invoicing – be it at the end of the project or pre-determined intervals – reflects your professionalism. Sending an invoice in December for work that was done in August gives the impression that your business approach is too casual.

For recurring invoices, set a schedule and stick with it. If your client knows ahead of time when an invoice will be coming through, it helps them plan for it and reduces the chances of a payment being delayed.

Remember, prompt invoicing = prompt payments. 

Take things online

Manually creating invoices can be tedious. Especially if math isn’t your forte and figuring out Excel formulas is the bane of your existence.

Thankfully, online payment providers, like Veem, can create a professional invoice for you in no time. Online payments are hands down the simplest way to get paid as an independent contractor – it’s convenient for you and your clients. Fintech tools like Veem’s custom Pay Link allow contractors to direct their clients exactly where they need to go with a single click.

On top of being convenient to use, online payments are a whole lot faster than other payment methods. That means no more running to the mailbox every day to see if your check has finally arrived.

Best of all, with Veem, after you’ve sent an invoice, you can keep tabs on its progress with real-time tracking. 

Veem allows businesses around the world to send, receive, and request payments. Cover all your bases.

Sign up now

Tracking down payments

Sometimes, even the clients you get along with the best can be late with a payment. But even if you’ve enjoyed some laughs and inside jokes together, never lose sight of the fact that that’s money you’re owed for services you provided. 

When you’re tracking down a late payment, it’s crucial to never apologize for doing so. Would a hydro company apologize for sending an overdue payment notice? Definitely not. And neither should you.

Just as important as not apologizing, is avoiding getting angry. Even if you have a legitimate reason for being fed up, expressing that in an email with ‘Where’s my money, Karen?’ is unprofessional and isn’t likely to improve your chances of getting paid any sooner. 

The solution? Eliminate the emotion connected with tracking down payments by automating reminders. That’s another bonus of using an online payment provider like Veem. In addition to keeping track of your invoices, Veem also takes care of sending out payment reminders. Automating payment reminders goes a long way to helping alleviate stress and mitigate conflict, while letting you get on with other work. 

Charging interest 

There’s a common apprehension among freelancers when it comes to issuing late fees. A lot of freelancers get concerned about burning bridges by charging interest. But issuing a fee for an overdue payment can also help motivate a client that’s slow to process invoices. 

To avoid any uncertainty about charging interest, have the terms for late payments included in the contract. That way, the client will know well in advance what’s at stake with late payments.

When it comes to payments, independent contractors are often at the mercy of their clients. But a little due diligence can go a long way to ensuring a smooth payment process and a positive working relationship.



* This blog provides general information and discussion about global business payments and related subjects. The content provided in this blog ("Content”), should not be construed as and is not intended to constitute financial, legal or tax advice. You should seek the advice of professionals prior to acting upon any information contained in the Content. All Content is provided strictly “as is” and we make no warranty or representation of any kind regarding the Content.