Q&A: "What if a company hires you and doesn't pay up??"

This transcript was generated from the episode audio and may contain minor errors.

[Music]

This is a frustrating experience we're gonna hear about today. Kind of a nightmare scenario in the world of freelancing to work on something important and not get paid for it. And of course, I mean in a situation where you are expecting to get paid. What if a company hires you and doesn't pay up? So today's caller, a freelancer friend of theirs had a negative experience working for a company, getting stiffed on the bill.

So our caller wants to make sure it doesn't happen to him. What can he do? What can anyone do really to be proactive about invoicing and collecting payment? Let's see if I can help him out. And I'll also say right up front that while it's important to pay attention to these things, I don't think you should let this concern hold you back from getting started.

Like a lot of people are always like, what could go wrong? Oh, I might, you know, perform a service and not get paid. Well, it's more likely that you will perform a service and get paid. So it's also good to ask, you know, what could go well? How could this situation be amazing?

Nevertheless, I do understand negative experiences occur. So what should we do about this situation? Or how can our caller and anybody else be proactive to avoid it coming up in the first place? That's what we'll talk about today on the podcast. Thanks for tuning in.

Detailed question in my answer coming right up. [Music]

Hi, Chris, this is Justin from Nashville. I just started listening to the show recently after finding it on Spotify. A friend of mine did some work for a company and didn't get paid. In retrospect, it seems like they took advantage of her, but she didn't have a clear contract and only had a verbal authorization from one person who's no longer at the company.

I want to start offering design services to startups and naturally I like to avoid the situation. I also don't want to spend a lot of time chasing down invoices. However, is there any way to protect myself and keep things simple for everyone involved? [Music]

Well, definitely a frustrating situation for your friend. As a small business owner, I try to always pay my vendors.

Once in a while I will get behind on something and it does help to have reminders. Like I will say, I prioritize paying vendors who are really proactive. I actually respect that more and I don't want to get an invoice that's really overdue. Like if the work was done a couple months ago but they just got around to billing me for it, I would rather like just be proactive in my payment just because it's better to couple the payment with the work. So with that in mind, I think one of the best things you can do as a freelancer is to make sure you have a system for this process.

A written contract ideally, even something very basic, it can be in an email, but even just a clear authorization from somebody at a company or whoever you're doing the work for. And then be fast and proactive with invoicing. As I said, like that just is better for everybody. It is human nature to leave it until later. So you have to fight human nature.

All of these services like QuickBooks, FreshBooks, WaveApps, other different bookkeeping and invoicing services that we featured from time to time, they all make it simple. They know this is a pain point. So these systems will usually send reminders on your behalf to clients who haven't completed payment. Make sure you have that set up in your settings. And then also like for most freelance work, like you can get a deposit typically 50% and you don't start work at least formally until you have it.

So then whenever you deliver the project or it's otherwise complete, you can invoice for the balance. Now worst case scenario, you still have to follow up on that second 50%, but at least you've been paid something. As I said, it's not a fun situation, but I think a couple of things you can do that'll make it just easier for you and you can focus on doing the work that you love and not worrying about these things, that'll just make your life better. Listeners, let me know if you have any questions, any struggles, anything that's going on in your life, any side hustle world, any stories, reports, et cetera. We will continue to feature them throughout the year.

We've got updates from other listeners as they launch and grow their projects and so much more. Of course, Side Hustle School is completely free seven days a week, wherever you get your podcasts. My name's Chris Guillebeau, this is Side Hustle School. [Music]

From The Onward Project.