• J. Woken

Consequences: Precisely Why We (Freelancers) Write Contracts

Updated: Jan 8

I’ve said it before and I’ll say it again: Contracts are important to your business.

Start With A Contract…

Every job — EVERY. JOB. — needs to start with a carefully detailed agreement between you and your potential client. That is: A contract.

If a contract scares a client away, take it as a warning they aren't serious enough about the job in the first place.

Ideally, you’ll have a basic contract prepped beforehand so you don’t go through the trouble of having to write one from scratch (they take longer to draft than you’d think). From this basic form, you should leave blanks to fill in specific information regarding the particular project at hand. For example, duration/timeline, fees, name of the project, what you’ll do, and what you won’t do as the hired freelancer. It’s critical that expectations for payment and related consequences for failure to pay are included in the verbiage.

I’ve mentioned before two ways you can protect yourself from non-payment: an arbitration clause in the contract itself and refusing to send the completed product to the client until balance due is received in full. However, I have yet to address including accrued interest.

An Interest in Interest

Charging interest on fees unpaid is just a way of incentivizing prompt payment. Don’t get crazy here. This isn’t an opportunity for you to tack on an extra 25% to your bill and make money off of nothing but thumb twiddling.

Be reasonable and keep the interest rate to single digits, enough of a charge to be irritating but not enough to deter a client from wanting to work with you in the first place.

Also, consider the term: Are you adding the interest after a month, two months, three months? For me, I feel a month is more than enough time for a client to either pay up or get back to me either with requests for changes to the final product. So, once the bill hits its one month unpaid mark, I tack on the agreed upon interest and resend the invoice, making sure the client knows that they agreed to this increase at the start of the job (reference or quote the clause of the contract, if possible).

Issue Plenty of Reminders

Nobody likes paying interest, but nobody likes to be surprised with it, even if they agreed to it. Send reminders for payment frequently after the initial billing to give the client plenty of opportunity to pay up. And, prior to tacking on interest, remind the client what will happen — what they agreed would happen — if they continue to ignore your request for payment.

For example, make this note on the invoice reminder just before adding the interest onto the bill: “The balance due will increase to $xyz after mm/dd/yyyy due to interest accrued per our contract (Section A, Line B).”

And if they still refuse to pay? Time to whip out the arbitration clause, and be ready to to take it seriously.

…End With A Contract.

Luckily I only had to add interest onto my invoices once. But I’ve always protected myself with the interest clause up front — just as I have with the arbitration clause and other contract terms — just in case.

Sadly, when unsavory clauses of contracts have to be utilized, that usually means the freelancer-client relationship is ending permanently. It’s like the nasty breakup of the freelance writing world. You ain’t getting back together. Ever.

However, instead of mourning the loss of a client, remind yourself that it’s best to end it with this person anyway. Who wants to work for someone they have to beg payment from? Nah. Not me! No thanks!

There are plenty of jobs out there with clients who are more than happy to pay, and pay promptly, so don’t fret over losing a bad client. #Letthemgo.