One of the biggest struggles that freelancers continue to face is the ever-frustrating late payment for a submitted invoice template. It’s a more prevalent issue than you might think: a shocking 58% of freelancers have come across a situation where they haven’t been paid for their work. What’s more, here at Bonsai we recently found that 29% of freelancers’ invoices are paid late.
With statistics like those, there’s a high chance that you’ve also faced an unpaid invoice or two in your freelancing life. There are several things you can do to help make sure you get paid on time - like learning how to invoice professionally or knowing how to attract better clients in the first place - but one of the most important things you can do as a freelancer is to understand how to set up automatic payments for your business.
You’re reading this article, so chances are you already have a reasonably good idea of the benefits of recurring payments. However, let’s take a look at the top three reasons why learning how to set up automatic payments for your business will make your life as a freelancer so much easier.
Setting up automatic payments for your freelancing business will take some time in the beginning. You will need to figure out which of your clients can be invoiced regularly, set up your invoices so they can be paid easily (more on that later), and touch base with your clients to let them know about your new invoicing method.
In the long run, however, automating your invoicing will save you a lot of time. The hours you spend each month writing invoices, chasing them up and sending receipts to clients can instead be spent doing the work you love. You’ll only have to alter your invoices if there are changes in your payment schedule or amount. (Plus Bonsai’s simple freelance invoicing tool can help you create professional-looking invoices in minutes)
Nothing is worse for a businesses’ cash flow than late payments - except maybe payments that don’t come at all. After all, as a business owner, you have your own invoices and bills to pay, not to mention yourself. A 2017 study found that 79% of small business owners can’t pay themselves when their invoices aren’t paid on time.
Setting up automatic payments for your business will help you decrease those late payments and ensures that money is flowing into your account each payment cycle, so you’ll have a more solid understanding of your cash flow situation.
The freelancer-client relationship can be a tricky one, especially when you throw late payment fees or passive aggressive emails in the mix. Setting up automatic payments can help you avoid those awkward conversations with your clients, so you can both focus on the work at hand instead.
Best of all, your clients will probably welcome the automatic billing. They’re just as busy as you, and setting up an automatic payment means it’s one less bill they have to remember.
Not all contracts are suitable for automatic payments. If you’re a freelancer who typically works with clients on one-off projects (like a web designer who builds a website, gets paid and then moves on to another project), automatic billing won’t work with your business structure.
Consultants, graphic designers and content writers are just some examples of service-based freelancers who operate under retainer contracts. Essentially, if you are charging your client a set fee for your services on a weekly or monthly basis, you’re using a retainer contract method.
Retainer contracts are like a monthly subscription for your business. Double Your Freelancing sums it up well: “The definition of a retainer is, not surprisingly, an agreement where one party (the client) retains the accessibility and use of another party (you, the freelancer) on an ongoing basis.”
Retainer contracts are best for setting up automatic payments as they involve a set fee that occurs on a regular basis - usually once per month, but sometimes weekly or biweekly. Think about your business model. Do you have retainer contracts, or maybe even clients you work with frequently that you could approach about a retainer contract? If the answer is yes, learning how to set up automatic payments for your business is a great next step.
As the #1 Freelance Product Suite, Bonsai is always looking for new ways to improve its products to meet the needs of freelancers everywhere. One of our latest products is our recurring payments tool, allowing freelancers like you to set up your retainer invoice for easy, effortless automatic payments. We've also prepared a guide on how to make an invoice.
We designed our recurring payments tool and its useful features with all of the best practices for recurring payments in mind. Here are some of the things you should consider when setting up automatic payments for your freelancing business.
This tip is a golden rule of invoicing and is one you should remember even if you’re not interested in finding out how to set up automatic payments for your business. One of the simplest things you can do to ensure your invoices get paid on time is to make sure they’re as easy as possible for your clients to pay.
Not everyone likes to pay by bank transfer, and you may not have a PayPal account ready and able to receive client payments. It’s important to set up your invoice so that your clients can pay in a way that works for both them and you. For example, Bonsai’s freelance invoice feature allows you to accept payment by credit card, bank transfer, PayPal and even bitcoin.
Another way to make sure your invoices are easy to pay is to write them in a currency that makes sense to the situation. If you’re a freelancer in Canada sending an invoice to a client in Europe, it might not make sense to send an invoice in US dollars. When establishing your contract, find out what currency your client wants to be billed in and make sure that’s reflected on your invoice.
Chances are you didn’t become a freelancer so you could spend hours writing invoices each month. With Bonsai, you simply have to upload your retainer contract details to the system and we’ll auto-generate a recurring invoice for you. You only have to input the information once (or whenever your agreement changes, like when you increase your rate) and we’ll take care of the rest. Just sit back, relax, and let the payments come to you. We even have a built-in reporting tool that allows you to see just how much you’re earning.
Automating your business’ payments is a win-win. Your clients are happier because they don’t have to remember to pay you when they’re busy in meetings or on holiday, and you get to spend less time on the admin side of your business and more time doing what you love.
If you’re ready to start using automatic payments in your business, Bonsai will make it quick and easy for you. Sign up for a free trial now.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?