So I have started to dabble in freelancing lately and have just landed my first decent size client for packaging development. I have created contracts negotiated cost and all that good stuff, but I thought I would ask all of you freelancers out there what your preferred method of payment is. With this I mean do you prefer Paypal, Business Check, Money Order, etc… I know this may be a dumb question, but I just want to make sure I do not get screwed. I have had to deal with bounced checks as such in the past and would rather not deal with it again.
All of them are kind of a Catch 22…
I personally use paypal for projects unless its a reliable company (Check) or one I plan on working with for a while (Bank Wire Transfers)
Paypal has its ups and downs… Great for instant payment, can withdraw with a Paypal debit card at any ATM or you can transfer to your bank account ( 2-3 days) and it allows you to track all your transactions. The down side are the fee’s and the clients ability to “demand” a refund by filing a complaint even after its all said and done… Ive had experience with this and it sucks, I even got a complaint filed from a client I had used saying I had not paid when I used the client 4 months prior and everything was settle… ended up dropping it because he made the mistake by billing the wrong person.
Western Union has a lot of fee’s and can end up being a counterfeit transaction… Most of the time Ive had clients not wanting to use Western Union because of the fees.
Business Checks I have only received from one company, It took 4 weeks to get my final payment rather than 3-5 days as promised…This became a bit nerve ragging but in the end it paid through…
My choice is still Paypal or Transfer, get a premium business account so you can withdraw more than $500 a month just keep in mind the fees, try and incorporate them into your price next time if you do go this route…So far out of the past 5 years using Paypal I have only had one issue…Ive heard of a lot on the internet but so far so good with me…
Heres a link to a Paypal Fee Calculator: http://www.rolbe.com/paypal.htm
Business Cheque or Wire transfer only.
Yeah so far for me Wire Transfer has been best for my more consistent work, reliable and safest way probably…
85% of the time I use PayPal, and generally I prefer it due to one thing specifically - ease of use for the client
the other 15% being…
a personal check (if the client is local, which is rare)
a check from the business (if you deeply trust them)
wireless bank transfer (my preferred choice, but some clients are weary/don’t know how/etc)
however, as of this past week, I discovered a major flaw in PayPal.
I asked a client to pay 50% up front for the Phase 1 deliverables before I began.
they sent a ‘check’ via PayPal, so I have to wait until it clears and I will be receiving that 50% up front payment the day after I provide the Phase 1 deliverables.
obviously I will wait one extra day to present the deliverables after the check has cleared.
but that was enough to make me want to switch over to bank transfers only.
the test begins now, we’ll see how many clients are willing to actually make a bank transfer. but I haven’t requested it before, so it may go really well.
oh and by the way, welcome to the freelance world!
Cheques all the way for me… if it’s a new client 50% up front, remainder on delivery of work. If it’s an existing client I have 15 day terms on my invoice but everyone, big companies & small companies completely ignore that, most are 30 days. I learn to budget a month in advance. My best client pays me whenever he feels like it or whenever I ask for it, he has always paid though so I can’t complain.
Over the years I have been dinged 3 times and everytime I kind of always knew I would, it’s a strange spiderman type tingle I get. I always listen to that now and has served me well, since I have been solely on my own (a year and a half) nothing has slipped through.
Good luck with the job, hope it works well for you.
I’ve always taken checks, but then again I always work with clients that I know, trust, and have a relationship with. I’ve only had one payment take “too long” (6 months) for a small project, it was a small place and claimed it got lost in the shuffle. Other than that, other clients sometimes will pay completely upfront, or as soon as I hand over work. Some corporate have their standard net 30 but if you’re cool with them, they can speed it up if there’s an emergency. Get to know your people and you’ll know what to expect.
I’ve always just done business checks. I bill at the end of each phase. If it is a new client, I’ll ask for 50% up front. I give them 30 days. I’ve never been burned, but it is also a bit of a different thing for me.
I should have noted the wire transfers were more for international clients (about 80% of my work). For local, business cheque is fine. I’ve never been burned, though sometimes payments have taken longer than I expected. I do 50% upfront and other payments by deliverable phases will all payments due on presentation of invoice.
I only take business checks.
Cold HARD cash is my preferred payment type. Generally, business don’t want to pay in cash…
I hate collecting. As you get more clients, you will come to loathe collecting.
Can’t go wrong with Wire transfer and Visa is also acceptable, provided you have a merchant account or use paypal’s merchant services. Be sure to account for the CC fee when you bill… or from my POV, 1.5% in fees is reasonable to cover the convenience (instant money) of using a CC.
I usually take checks.
Sometimes I would check with the bank first to make sure the funds are available in their account before I actually deposit it. If the client feels fishy and happens to be with the same bank, I don’t deposit it and get cash at the bank right away so there’s no chance of a bounce because it takes time to get the check processed before you discover it’s a bad check.
Paypal is good way for credit card payments for smaller amounts but when you are talking $20K+ deposits it’s a lot of Paypal fees to account for if you have a merchant account. I would do Paypal for things under $3K.
I used to get burned a lot and seen a lot of tricks over the years. Be very careful of people who are asking for super hot rush jobs. Often this is a ploy to make you skip proper steps like contracts and deposits. Send them the stuff without doing the proper procedures and safeguards and spend the next few frustrating months trying to get paid.
One time I literally had to tackle a guy who tried to run off with my model with a check that had the wrong amount scribbled in.
Now I take 50% deposit to start work. I never hand over any final CAD files until I am paid in full. I also make it a point to put in the contract that they do not own any intellectual property created in the project until payment is made in full. Period. If going by phase, I ask for prepayment to start each phase otherwise work stops and I never extend myself only to risk trying to collect later.
Good luck, there are a lot of cons and sharks in the water so look out for yourself and don’t waiver from your safeguards and proper procedures. Anyone asking you to break or bend some rules is likely looking to con you out of your just due.
that’s what I’ve always done in the past, but frankly nobody has ever offered to pay me via paypal and I probably would accept it.
One other little tip which you probably are already doing - create a separate bank account for your freelance venture and maybe even a line of credit/cc. Doesn’t have to be a “business account”, but use it ONLY for business, for expenditures and deposits. It can save a lot of trouble at the end of the year when you’re trying to sort out taxable income and business expenses. It’s just easier.
Thanks guys. There is a lot of great info here. I think I will be going the Business Check or the PayPal route. I do not have a Paypal account at the moment, but that can always be set-up.
The only other question I have is how do all of you make sure you are quoting enough hours? I am know asking for your business plan, but do you quote what you estimate will be the proper hours and then if you go over because of revisions and what not that is paid separate. I do have a clause in my terms and conditions about revisions being bill separately. Is that the common practice?
Edit I know these are novice questions, but I am trying to get my feet wet and do this right. Thanks for all the great responses!!
I actually don’t bill by hours.
Now that I’ve got a solid understanding of freelance projects, how long they’ll take, etc, I bill by client, by project, by phase.
for a simple project where a client needs a basic redesign (using this because… well, it’s a simple example)
research (add it what is required, trend, color, etc, etc, etc)
anywhere from 10-100 initial 2d sketch concepts
refining it down to X number of concepts to move forward
present and discuss
get ready for Phase 2
I charge X amount for Phase 1 (based upon the amount of hours I already know the concepts/research/presentation/emailing back and forth will take - for example, if 20 concepts are required, it will be much less than if 100 concepts are required. 10 car designs will cost more than 10 backpack designs though.)
so for example Phase 2 may just be the “refinement stage” that I had written in the proposal, Phase 2 being production.
lets say the client decides everything is wrong wrong wrong after Phase 2 deliverables. rather than getting ready for production in Phase 3. we add in a Phase 2.1 (then I quote them for this phase).
this Phased system ensures a method of checks and balances essentially, the client keeps paying if they like the project and the flow. they don’t pay all at once. and if they decide to not pay you for the Phase, you’ve only lost 50% of that Phase’s payment (as I require 50% up front for each phase, which makes for a nice payment overlap in between phases – 50% balance of phase 1, with 50% up front for phase 2).
its a slow road with a lot of learning, you’re smart, you’ll figure it out with experience
if you want to chat on the phone/wave/etc, let me know, I wouldn’t mind letting you know what I know so far
if youre going to pick up with work… take a look at teamworkpm.net I use it with a company I work for and its awesome…
Thanks Taylor. We are working in phases, I guess I am just questioning my timing and how long thing will take me given that I work full time and trying to do this on the side. I have done small freelance stuff here and there, but this is my first big one. Like you mentioned I can figure it out and it is a learning process. I may take you up on that offer of the phone call though. Shoot me a PM with how to get in touch with you.
Some base their quote on hours they expect it will take them, but that info will stay internal. The client gets the phase price. Now how long it takes you to actually do it is based on you. Get it done quickly with no problems, more money for you, take on more clients and rake it in! Take too long and have to redo things that you messed up, etc…, less money/hr for you.
That is exactly how I do it Skinny. I find sometimes I come out ahead, sometimes I come out behind, but it averages out. I like to think of it as the client is paying for me to do good design, not the hours of me sitting in a seat.