The best part about having an independent business is that how you run it is entirely up to you. Do you want clients to put down a deposit to secure your time? Maybe you want to add late fees to help avoid unpaid invoices. 

That “just got paid” feeling when it’s your own business is one of the best. But to ensure that happens, one of the most important elements of running your business is ensuring your contracts have clear payment terms that set your business up for success.

If you’re looking for some guidance around how to structure and set up your contract payment terms, here are a few steps to follow. 

What are Freelance Contract Payment Terms? 

Freelance payment terms are terms and conditions you include in your contract to ensure you get paid how and when you want. Your payment terms should be included in your overall contract and agreed upon by every client before you start working with them. 

How to Create Freelancer Payment Terms That Work for Your Business

Like the rest of your contract terms and conditions, your payment terms are in place to protect you and your business and ensure you get paid fairly and on time. 

Here are a few things to consider when creating your payment terms:

• Payment schedule 

• Payment method

• Late fees 

• Deposits 

Let’s break down what each of these could look like for your freelance business.

Looking for contract terms to add to your freelance contracts? Unlock unlimited access to our pre-written contract terms templates with Wethos. 

Payment schedule

Your payment terms should outline a clear payment schedule. Do you want to invoice at the beginning of the month or the end? How soon do you want to receive payments? Outline exactly what you want from clients in your payment terms. 

For example, you could have net 30 terms which means whether you invoice at the end of the beginning or end of the month, the payment needs to be made within 30 days of receipt. Another payment schedule could be based on milestones. For instance, if you’re a website designer, you could send an invoice at the start of the project, another one halfway through, and a final invoice once the website has been completed. 

If you want to create a seamless experience for both clients and yourself, use Wethos to generate payment schedules within your proposal that automatically sends invoices and accept payments all-in-one place.

Payment method 

Another thing to communicate in your payment terms is how you accept payments from clients. Outline the options they have to pay you whether that’s bank transfer, card payment, check, wire transfer, or something like Apple Pay. Use an integrated invoicing system so you can share your preferred payment methods and handles with your client.

Deposit 

Finally, decide whether or not you want to charge a deposit to secure the project. Getting upfront payments can be a good option for new clients as assurance that they’re committed. Deposits also help maintain a steady cashflow so you can get started on a project sooner. 

Deposits are also a good idea the bigger the project is, especially if you’re building a team to complete it. You want to make sure that each of your team members is paid for their time and expertise, which means you may want to secure a deposit to get them onboarded.  

Late fees

A commonly overlooked element of a freelancer’s payment terms is a late fee. Late fees are put in place to protect your business, help avoid unpaid invoices, and ensure you get paid on time. 

Your late fees can be anywhere from 1-5% interest for each day, week, or month that a payment is delayed. Whatever you decide for your late fee, just make sure that the fees are clearly communicated from the beginning so clients are aware and (hopefully) more motivated to pay on time. 

3 Freelance Payment Terms Best Practices 

Here are a few best practices to keep in mind to ensure you get paid according to the terms you laid out. 

1. Communicate

When setting up your business and securing new projects, you’re probably wondering: “How soon should I communicate my payment terms to clients?” 

Our answer? As soon as possible. 

You can communicate payment terms at the same time that you communicate pricing, which is usually during the prospective phase or proposal phase. While you don’t have to get into every detail (you can save those for the contract), you should give your potential clients an overview of your general payment terms. 

By communicating your terms from the start, you set the tone for what clients can expect when working with you. Utilize pre-written templates to follow-up with clients to state your terms.

2. Make it easy

No one wants to chase invoices for months and months. While your payment terms are set up to protect you from late or unpaid invoices, you should also make it easy for your clients to pay you. This means you should use a payment platform that offers multiple ways to accept payments. Make sure your clients are aware of every payment option they have depending on what’s most convenient to them. 

3. Send reminders 

Although your payment terms should be clearly outlined in your contract and should have been communicated from the start, it’s always a good idea to send a reminder of these terms when you invoice them. Sending reminders is also another way to make it easy for clients to pay you. Like you, they probably have a lot on their plate so a gentle reminder can be helpful for them. 

As you wrap up the project or as the month is coming to a close, send a quick note with your invoice to the client letting them know what the terms are, such as the payment due date and any potential late fees. If you use a tool like Wethos, you have access to advanced invoicing features such as automatic payment reminders. You can also schedule invoices to go out on a certain date each month so the client always knows when to expect it. 

Payment terms for freelancers are specifically designed for the unique needs of a freelance business. When figuring out which terms to include in your contracts, start by considering what your non-negotiables are. Do you need a deposit to get started? Will you charge a late payment fee? If so, how much? Create payment terms that help your business run smoothly.