https://worknotes.co.uk/feed Work Notes 2020-03-27T00:00:00+00:00 https://worknotes.co.uk/freelance-ltd-the-self-employed-who-arent <![CDATA[Freelance Ltd: The self-employed who aren’t]]> Dave Smyth 2020-03-27T00:00:00+00:00 https://worknotes.co.uk/apps-for-running-a-business <![CDATA[Apps for running a business]]> Dave Smyth 2020-01-14T00:00:00+00:00 Accounting

Antivirus

Backups

Banks

Contracts

Email

File Management

Insurance

Mailing Lists

Payment Processing

Productivity

Scheduling

Security

Time Tracking

Website

Notable Omissions

]]>
https://worknotes.co.uk/are-50-50-payments-killing-your-cash-flow <![CDATA[Are 50/50 payments killing your cash flow?]]> Dave Smyth 2019-12-11T00:00:00+00:00 Late payments are killer for freelancer’s businesses. There are laws to encourage prompt payment, but these are inadequate for a number of reasons:

  • They do nothing to address the widespread culture of late payment
  • Freelancers have to have difficult conversations with late-paying clients they may otherwise want or need to retain
  • The late payment of large sums can have a significant impact on the freelancer
  • The fines don’t address the stress associated with late payment

It’s a tricky issue because freelancer’s situations greatly vary. Freelancers who work on a retainer-basis can handle payment with Direct Debits, but what about journalists who aren’t paid until their work is published?

It’s difficult to see how laws or the payment culture are going to change significantly in the short-term, so the onus is on freelancers to protect themselves wherever they can.

There are no one-size-fits-all answers. But, if you usually bill work in two 50% deposits (on commencement and completion), a small tweak to your system could dramatically improve your cash flow and reduce stress levels.

Deposits should benefit both sides

Taking payment in the form of deposits is useful. Deposits reduce the risk of a freelancer working without pay while simultaneously reduce the level of risk for a client.

It’s not uncommon for freelancers to require a deposit to secure their availability for months in advance. Others require a 100% upfront payment for projects below a certain value.

By far the most common deposit structure is 50% upfront and 50% on completion. This works and feels fair but it’s far from perfect.

The problems with 50/50 payment splits are demonstrated in these examples:

The web developer

The freelancer starts working after the deposit is paid. They complete coding the templates, and the site is 95% complete. It’s ready to go live, but the developer is left waiting weeks for the Privacy Policy to be signed-off by the legal department.

The copywriter

After taking a 50% commencement deposit, they submit the first draft. Unlike the developer, their work is easily replicable if the client accepts the draft or only requests minor changes. They can’t hold the work back until the final balance is paid.

These examples demonstrate how a 50/50 deposit structure leaves the freelancer vulnerable. In both situations, the second deposit is at risk of delay or non-payment, even though the work is nearly 100% complete.

In my experience, this behaviour isn’t representative of most clients but it’s common enough to be relatable for many freelancers. The good news is that there’s a simple solution.

Adding a third milestone

Over the past year, I’ve structured deposit payments as follows:

  • 50% upfront
  • 40% after a specific project milestone, or 30-days (whichever is sooner)
  • 10% when the project is complete, before it goes live

The second payment can be scheduled for any point in the project. As a web designer/developer, I write that the second payment is due before development on the live site commences.

The 30-day clause is rarely triggered because of the size of projects I work with, but it has the added benefit of keeping things on track. Your mileage may vary: bigger projects may need more milestones, but you’re probably doing that already.

I’ve used this structure on numerous deposit-based projects. It’s made a significant difference to my cash flow and taken the pressure off completing projects. Waiting an extra week for the final 10% is much more acceptable than waiting on half the total project fee.

Taking 90%

It may seem scary, unjustifiable even, to hold 90% of the project fee when you’ve only completed 50% of the work. However, as the project progresses, that percentage of completed work is only increasing.

It’s important to think of this from the client’s perspective. Lots of industries require upfront payment for each ‘stage’ of work, so this will not be unfamiliar territory.

Another consideration is that the biggest risk to clients is the first 50% deposit. Once that’s paid, and work begins, they’ll be reassured by seeing the fruits of your labour and the experience of working with you.

]]>
https://worknotes.co.uk/retainer-advice <![CDATA[Retainer advice]]> Dave Smyth 2019-08-22T00:00:00+01:00 https://worknotes.co.uk/separating-business-and-personal-money <![CDATA[Separating business and personal money]]> Dave Smyth 2019-06-19T00:00:00+01:00 I’ve been self-employed for nearly six years, but I didn’t set up a business bank account until earlier this year. 

There were plenty of reasons why I didn’t use one:

  • They’re not obligatory
    As a sole trader, it’s legal to run a cash-only basis that doesn’t have a bank account. I’m not advocating this, but I saw a separate bank account as extra admin.
  • Cost
    When I became self-employed, business accounts were expensive and my income fluctuated greatly. There are still plenty of expensive business accounts about, but plenty of newer banks offer free accounts with generous exchange rates. 
  • Complexity
    As I’d only ever used my personal account, I wasn’t sure how to consolidate everything in my accounting software and claim things like working from home expenses.
  • Status quo
    My system had worked for a long time and clients had my existing banking details: I didn’t want to upset the apple cart.
  • Business name
    This might seem trivial, but I hadn’t decided if I’d stick with my business name — using a personal account let me keep things flexible.

Getting serious

Despite my previous inertia, I decided to start looking into business bank accounts. I felt now was the time to set this up for a range of reasons:

  • A business bank account is the first step to creating some separation between my money and the business’ money. 
  • It looks more professional
  • Since setting up bank feeds to my account software, I was more comfortable with how everything could be consolidated
  • Setting up a business bank account is cheaper and easier than ever
  • I’d learned that most personal accounts don’t allow for business use in T&Cs. 

Choosing a provider

There are lots of business bank accounts on the market, many of which are free to set up. To whittle down the options, I created a set of criteria. 

I wanted an account that:

  • Is an actual bank!*
  • Is free or very cheap
  • Have an app that notified of payments received
  • Integrate with my accounting software
  • Offer phone and email support

* NB: Many newer banks aren’t actually banks, so don’t offer the FSCS protection if the bank was to go under.

The results

After opening the account, I emailed my clients to let them know about the change of emails. Then began the unenviable task of changing the payment details for the apps, services and subscriptions I use in my business.

This turns out to be a good opportunity to cull some services I was no longer using. Emailing my clients also offered the perfect chance to introduce GoCardless for recurring payments.

Since opening this account, I’ve noticed a few benefits. As my business’ money is now separate, it’s easier to keep track of finances, save money for business projects I might want to invest in and get an idea of the cash flow at a glance.

It’s also much quicker to submit my tax returns. There’s still the occasional personal expense, but now I can quickly run through income and expenses from a single account.

Despite the time changing payment details and direct debits, opening a separate business bank account has been a worthwhile exercise. In the grand scheme of thing, a business bank account offers small benefits, but it’s absolutely worth it.  

]]>
https://worknotes.co.uk/community <![CDATA[Independent Work]]> Dave Smyth 2019-05-14T00:00:00+01:00 https://worknotes.co.uk/advertising-your-rates <![CDATA[Advertising your rates]]> Dave Smyth 2019-05-10T00:00:00+01:00 I relaunched my website recently. The site was only 18 months old, but my strategy had changed, so it felt like the right time to do it.

A common discussion amongst freelancers is: should I display rates on my website?

I hadn’t displayed rates on my site since the first iteration years ago. I had reservations about doing so.

Your budget is only £XX?! lol bye

Freelancers display rates on their site to bat away ‘low value’ or ‘lowball’ clients. I have a problem with this attitude, not least the growing trend of  freelancers internet-shaming potential clients.

If freelancers in the same sector can’t agree on a ‘going rate’, it’s a little much to expect clients to have an understanding of how much things should cost. Unsurprisingly, the freelancers complaining about ‘low ball’ clients often don’t display rates on their sites. 

Not only is client shaming unfair, it damages the freelancing industry as a whole: how many agencies have ever published client correspondence in that way?

And let’s not forget: clients with small budgets today might have bigger budgets in the future. But don’t let that get in the way of a temporarily viral tweet…

I digress...

More genuine concerns

There are genuine reasons not to advertise rates on a site, though. For instance, displaying a rate will make it difficult to increase rates periodically, or charge different rates to different clients (a perfectly legitimate thing to do).

If you’re packaging services together, that can take a lot of work and planning. The effort needed can be hard to justify, especially if each package needs tweaking to fit the brief. 

It took a long time to plan and decide on my WordPress maintenance packages. Packages may not be appropriate for what you do or you may have a problem with the productisation of valuable services.

Then there’s the issue of price-anchoring: this was the main sticking point for me. Website costs wildly depend on a wide range of factors and, quite rightly, clients often don’t have the technical know-how to judge the complexity of a project.

Assuming clients are able to effectively judge the scope of a project can unintentionally lead to them anchoring to a low price point. Moving them upwards from there can then be a hard sell — “we’re only talking about adding a little shop!”

On top of this, there’s the idea that usually the best starting point is the client’s budget and this isn’t because you’re trying to ruthlessly extract every penny from them. Unless they have a blank cheque, the budget can be used to scope the project, allowing you to make the most budget-appropriate recommends given the available cash. 

A need-to-know basis

Omitting rates from a website means potential clients have literally no idea how much you charge. This will lead to some clients not getting in touch.

I used to have that mindset, too: if a freelancer’s site didn’t give any indication of their rate, I’d move along.

Not displaying rates puts another barrier between you and a potential client. Not only do they have to make the effort to get in touch, but they’re also exposing themselves to the possibility of having to (awkwardly) excuse themselves if their budget isn’t the right fit.

Well, if they don’t have the right budget, they’re not my client anyway!

That may well be true. But there could be clients not getting in touch because they assume you charge much more than you do.

What’s more, every enquiry you receive through your website will be totally unqualified (from a cost point of view at least)

Beating about the bush

I was aware of all of this but didn’t display rates on my website for five years. This was ok with me because I had a couple of clever little hacks.

Hack #1: Hint at ballpark figures in the contact forms

This is a classic. A not-so-subtle required dropdown field with labelled “What’s your project’s budget?” with a minimum price of £X,XXX.

That should give potential clients an idea of the range, right?

It might, but this assumes they even get to your contact page and look at it. Quite the assumption.

Hack #2: During the first contact, drop a minimum project cost

“Projects start at £X,XXX — if that sounds ok, let’s discuss it in more detail.”

Again, this assumes that the client makes the effort to get in touch. I would bet that many don’t.

As it happens, I still deploy both of these tactics, but they’re a reinforcement of the rates shown on my site, double-checking that a client is a good fit. 

To display or not to display

I wasn’t sure whether to display my rates on my new website and, just before launching, decided to pop it on. That’s the beauty of the web: you can experiment with things like this and it doesn’t cost you a penny.

But how do you give an indication of your rates in a way that:

  1. Isn’t presented as a package or fixed-cost
  2. Doesn’t lock you in
  3. Demonstrates the range of costs to a client

?

Tough one. It’s something I thought long and hard about.

On Andy Clarke’s Unfinished Business podcast, he talks about his method of working. He books work in a minimum block of one week and focuses on a single project at a time.

This working method appealed to me because it solves the issue of dividing attention between too many projects. It’s cash-positive, too.

But it’s not problem-free. I knew I’d need to leave time for maintenance tasks and smaller design projects that wouldn’t be appropriate for this structure.

My solution was to adopt a weekly booking system but limit project time to 20 hours per week. The rest of the time could be dedicated to smaller client projects, side projects or admin.

As for trying not to anchor clients to low price points, I’ve given some broad examples of how much different projects are likely to cost. For instance, a small business site might take 2–4 weeks.

This sets the expectation that despite projects falling into the same category and/or appearing to have similar requirements, the specific needs of a project can have a considerable impact on the cost. This gives me flexibility in quoting as clients aren’t anchored to a fixed price.

I still ask clients about their cost expectations so we can maximise the use of their budget.

The results

In the first week of the new launch I received five qualified enquiries through my site. 

Without prompt, they all mentioned that my rate was ok or had been pre-approved. That could be interpreted as a sign to increase rates, but it was a revelation: showing the rates meant clients could more confidently get in touch.

Of course, a just-launched site is bound to draw more attention than a post-launch site, but I’ve noticed two things:

  1. I receive more enquiries through the site than I did before
  2. The enquiries are more likely to be qualified, at least in terms of the budget
  3. After publishing articles, I receive more enquiries through social media

The first of these is likely down to the redesign and positioning, but displaying a rate has a role to play, too. 

We’re not talking about large numbers of enquiries. The previous site generated a few enquiries across the year. To receive one or two relatively qualified leads a month is a significant uptick, particularly given that I might be booking work a month or two in advance.

If you don’t display rates on your site, it’s something to consider. If you can find a way to give an indication of what you charge without fixing yourself to specific price points, there’s nothing to lose.

]]>
https://worknotes.co.uk/are-you-sure-you-want-to-go-freelance <![CDATA[Are you sure you want to go freelance?]]> Dave Smyth 2019-04-18T00:00:00+01:00 I love being self-employed, but it’s a career and lifestyle choice I’ve made. It works for me, but it wouldn’t work for everyone.

Recently, lots of courses have appeared that encourage people to quit their full-time jobs and go it alone. These courses portray freelancing as a panacea to all sorts of employment issues.

Hate the 9–5? Go freelance.

Want more flexible hours? Go freelance.

Hate your boss? Go freelance.

Want a job that will fit around your family life? Go freelance.

Bonus points if you can voice these like Peter Serafinowicz.

I believe that people should do work that’s fulfilling and it’s absolutely possible to retrain into a new career that works for you. I believe that because I did it.

I know that many courses are created because freelancing has worked for the course founder. They want to spread the word, pass on their craft and help others to follow in their footsteps.

This is a good thing, but I also believe course founders have a responsibility to contextualise their portrayal of freelance life. 

Changing lanes

Finding sustainable work as a freelancer takes a while. This is true when their employed work easily translates to self-employment, and even truer if it doesn’t.

Though I didn’t move to be a freelance web designer from an employed position, it still took me 3–4 years before I could safely cut ties with my teaching work.

As I’ve written before, Mark Boulton’s chapter on moving to self-employment is well worth reading for anyone considering going freelance. It’s from a book on web design, but the principles are the same whatever career you’re moving to or from.

Self-employment has a lot of moving parts. First, you have to source clients: even if you already have one or two lined up, how is the pipeline going to fill up after that?

Second, how competitive is your field? Is it an expanding market or has it reached saturation?

Then you have to consider things like:

  • Pricing your work
  • Contracts
  • How you will advertise your services
  • Admin
  • Saving for quiet months
  • Self-development

Some of these tasks are simple, but others take a long time to figure out.

It took me three years to get everything in place. Despite the wealth of information available online, it’s still difficult to work all of these things out.

Courses provide skills, templates, workflows and all manner of genuinely useful advice. But the idea that students can walk out of a course into some sort of ready-made and reliable freelance career is optimistic at best.

Get real

Freelancing is tough. Even if you have all of your processes sorted out, there’ll be ups and downs…especially at the beginning.

I think courses have a responsibility to caveat their marketing with some of the realities of self-employment. Freelancing is all-too-often dressed up as some sort of magic pill to solve work issues.

Freelancers share the responsibility not to oversell the benefits of working for yourself, too. When we’re spreading the good word about self-employment, it’s easy to ‘forget’ the months when overdrafts have been maxed out or you’ve been worried sick about the impact of a late payment, especially when the times are good.

There are all sorts of ‘gotchas’ that won’t be obvious to people switching from full-time employment. For instance:

Employee benefits

Say goodbye to sick pay and holiday pay: these need to be factored into the freelancer’s rate.

That’s not all, freelancers aren’t properly compensated for jury service and self-employed dads don’t receive any paternity leave at all. 

Freelance mums are subject to strict and discriminatory Maternity Allowance rules that mean they either need to return to work very early or risk losing their business.

Then there are the employer-matched pension contributions. There’s some relief from the government but only around 14% of freelancers save for one.

Insurance

Business equipment (laptops, phones, etc) need insuring. But did you know your home contents insurance probably doesn’t cover that if it’s being used for business?

Then there’s Public Liability Insurance, needed if you work in-person with clients, and Professional Indemnity Insurance (which is expensive when working with clients in the US).

Tax and other fun things

Everyone’s favourite subject. Yes, tax may be relatively straightforward for sole traders, but there are plenty of things to consider here, too.

For a start, there are payments on account. This catches a great number of freelancers out in their first year, though it shouldn’t (if it does, it means you’re way behind on your tax saving).

Then there are things like EU Digital VAT laws which apply to selling online courses and other digital stuff. A complicated rule at best and not something to be taken lightly. 

And then there’s GDPR… 

The grass is always greener

I don’t want to discourage anyone from going freelance. Self-employment is a great option for lots of people, but it needs careful consideration.

If you’re in any doubt about how tough it is, bear in mind that the average earnings for the self-employed in the UK is around £17,000.

Freelancing can be an extremely rewarding choice, especially if you end up with a better work-life balance than you had before. But it takes time for freelancing to become a primary source of income.

It’s also worth remembering that freelancing is only a choice. An employed position can be just as rewarding if you’re working for and with the right people. 

If you’ve made the switch to freelancing recently, or are considering it, get involved in some online freelance communities. Take a look at Independent Work, Freelance Heroes, Being Freelance and Doing It For The Kids (for freelancers with children).

I put these off for too long, but joining them was one of the best decisions I made in my freelance career.

]]>
https://worknotes.co.uk/the-self-employed-pension-problem <![CDATA[The self–employed pension problem]]> Dave Smyth 2019-01-02T12:46:00+00:00 At the end of 2018, the government announced a series of trials encouraging freelancers to save into a pension. With only 14% of self-employed people saving for a pension between 2016–2017 this campaign isn’t a bad idea, but will it work?

I didn’t start a pension until a couple of years ago because:

  1. I didn’t feel I had the money to save
  2. I found the options confusing

Money, money, money

Freelancers in the UK earn £16,000 on average. This figure accounts for both full and part-time self-employment.

HMRC figures suggest the mean annual self-employment income is somewhere around £16,000 but, as Michael O’Connor showed, when you remove the small number of £100,000 plus earners, the mean incomes of the rest are very low.

Flip Chart Fairy Tales: Tax and the self-employed

When I saw this figure, my first thought was that part-time self-employment and micro businesses might be reducing the average figure. Freelance Heroes recently ran a survey across their membership, and the most common earnings bracket was £0–£20,000.

Assuming that most members of that group are full-time rather than part-time, this would back up the government’s findings.

If freelancers are earning £16,000 on average, it makes sense that many don’t feel like they have the cash to set aside for a pension. 

Considering that many freelancers will be renters as opposed to homeowners, it would be no surprise if some prefer to save for a house deposit rather than a pension.

The government’s Lifetime ISA (LISA) is flexible enough to handle saving for both. However, there aren’t a huge number of providers which could be a barrier to entry.

Who, what and how much?

For freelancers who can save some of their earnings for a pension, the next step is to decide:

  1. The type of pension
  2. Which provider to choose
  3. How much to save

Unless you work in finance or know someone who does, you need a financial advisor to give you some independent advice. This isn’t an option for cash-strapped freelancers, so this typically marks the beginning of an epic Google-fest trying to separate the SIPPs from SSASs and stakeholder pensions from master trust pensions.

I wouldn’t be surprised if most freelancers give up at this point and earmark a pension for another time.

Once you’ve decided which pension is right for you, the next step is choose who to save with. Aside from rates, this is a good time to consider whether the providers offer ethical pension options, if that’s important to you.

Once that’s over, you’ll need to work out how much you can put aside. MoneySavingExpert.com recommends the following:

Take the age you start your pension and halve it. Put this % of your pre-tax salary aside each year until you retire.

Or check out this FreeAgent blog on pension prep for freelancers that breaks down what you might need to account for and how to reach those goals.

My pension started with tiny contributions and these have increased over a couple of years. I save this money into the same account I use for tax

Is there a better system?

Raising pension awareness and incentives is a good place to start. But I’m not sure this will remove the barriers-to-entry for many freelancers.

A better pension system would be to create an opt-out government scheme that freelancers are auto-enrolled into. Contributions could be collected at the same time as a tax return, in the same way that National Insurance Contributions and Student Loans are repaid now.

Like anything government-run, this would be an imperfect solution. Not least because compound interest would be reduced due to annual contributions.

However, it would put the onus on individuals to opt-out and freelancers could easily adjust their tax savings to factor in a contribution towards a pension. An option to freely/cheaply move the pension to an independent provider would make it more attractive to those who want to set up a hassle-free pension, even if it’s not the best offer on the market.

I hope the government’s scheme increases pension adoption amongst the self-employed. Yet, I’m doubtful we’ll see a seismic shift until something radical is introduced.

]]>
https://worknotes.co.uk/why-freelancers-should-issue-late-fees <![CDATA[Why freelancers should issue late fees]]> Dave Smyth 2018-12-21T00:00:00+00:00 No matter what the agreed payment terms, most freelancers experience late payments at some point. As I write this, I’m owed an invoice of £75 — from eight months ago.

I can live with a small invoice being delayed, but what if it’s a larger sum? A friend of mine was recently stung by a client who, having agreed seven-day payment terms, asked for a 5% discount in exchange for immediate payment (which my friend declined).

The invoice was subsequently paid 30 days late.

For some, late payment is a non-issue. As a web designer, I’m able to take upfront deposits and only release the completed work when full payment is received. 

What’s the solution?

I’ve been thinking about how freelancers can improve the situation and I’ve concluded there are two options:

  1. Take full payment upfront
  2. Apply strict late payment fees

I know plenty of freelancers who successfully operate a full payment upfront system. They offer it on smaller jobs or retainers, but it’s not always possible.

This leaves us with the second option: apply strict late payment fees.

Where do you stand?

In the various threads I’ve seen about late payments, I’ve been struck by the number of freelancers who aren’t aware of the default late payment fees. Whether you stipulate terms on your contract or not, you’re due late payment fees the moment your invoice is overdue. 

The fee is made up of two parts:

  1. Interest on the amount owed
  2. A debt recovery fee that is relative to the invoiced amount.

How to apply them

Fortunately, the Government has produced some clear guidelines on late fees.

Payments are deemed ‘late’ the day after the agreed payment terms. If these are not set, then it’s 30 days after you issue the invoice or you deliver the goods/service—whichever is later.

At the time of writing, the ‘statutory interest’ rate, applied whether or not this is specified in your contract, is 8% plus the Bank of England base rate for business-to-business transactions. 

Note that you can stipulate different terms in your contract. For instance, my contract states a rate of 5% per month or part month. This adds up a little quicker than the statutory rate, which often amounts to pennies.

The final part is the debt recovery fee. This is between £40–£100 depending on the amount owed.

If you’re not sure what the amount will be for a payment you’re owed, check out dontpaylate.uk.

This is important: make sure that you send a separate invoice for the late payment. If you adjust the original invoice, this could cause issues if it goes to court, so send a separate invoice with the late fees.

Why don’t we use them?

Late fees are costly for business, and we don’t want to offend clients.

That said, late payment fees are the only way freelancers can make clients understand that late payments are not acceptable.

Clients who genuinely value your work will be apologetic about missing the agreed deadline. They’re also likely to be understanding of the additional fee (it is the law, after all).

If you receive a different/negative response, it’s an indication of a client that doesn’t respect you or your work. In this case, it’s certainly worth enforcing the fee.

Don’t forget: you can always waive a late payment fee if there’s a genuine reason for the delay. 

]]>
https://worknotes.co.uk/how-i-save-for-tax <![CDATA[How I save for tax]]> Dave Smyth 2018-12-21T00:00:00+00:00 As a freelancer, there are a few approaches to saving for the beloved tax bill:

  1. Save 30% of each invoice in a separate account
  2. Watch your account and try not to spend it all
  3. Hope for the best

When I started freelancing, I was paranoid about under-saving for tax. I didn’t trust myself to be strict enough about saving a third of each invoice. 

I developed another system for managing tax savings. I use it to this day.

Regular saving

At the beginning of each financial year, I work out what I think I’m going to earn. I round this up a bit to give me some wriggle room.

I put this figure into the MoneySavingExpert.com tax calculator and divide the total by 52 (the number of weeks in the year). 

I’ve then setup a standing order that transfers this figure to a specific tax saving account every week.

This might seem convoluted, but it’s always worked for me. A nice feature of the calculator is that it includes student loan contributions, so you won’t be caught out by that, either.

This is a good time to point out that this isn’t financial advice. It relies on the MoneySavingExpert.com calculator being accurate, and you entering the correct sums/checking the right boxes.

It’s always worth double-checking these figures to make sure you’re saving enough – I’m not responsible if you don’t!

Why not just save on every invoice?

I can see the attraction of saving on every invoice. It’s transparent, straightforward and easy to keep track of. But it wasn’t working for me.

There are several things I like about this weekly method:

Painless saving

Because the figure is divided across the year, there are no big numbers suddenly disappearing into your tax account.

Set and forget, or change

If you notice any trends in your income, it can be something that you set at the beginning of the year and forget about.

You’re in control

Because it’s a standing order, you’re in complete control. If your circumstances change, you can increase/reduce the payments as you need.

Over-saving

This method has led to me consistently over-save. Despite knowing that I’ve overestimated my tax bill, I’m used to seeing a regular figure disappear from my account and have adjusted my spending accordingly.

When I first noticed this, it was pretty tempting to give myself a Christmas bonus. But I decided to setup a pension instead.

This started at a very low level, but I’ve increased it significantly over the past few years. The standing order I have setup now includes saving for my tax bill and a pension, so that I don’t need to worry about either of them.

If you find you’ve still over-saved, which I often have, this separate account can act as an emergency pot. But be careful! Only use this if you’re desperate and limit yourself to the surplus funds.

Things to watch out for

The main downside of this approach is that your calculations and estimations must be reasonably accurate.

If you’re in your first year or two of freelancing, you may need to adjust the figures a few times in the year, particularly if your income suddenly goes up. 

You have to commit to weekly savings. If you start skipping weeks, you could find that you’ve not saved enough.

This can feel difficult in lean periods, but I view the standing order as an unavoidable weekly bill or cost of running the business. If the work dries up for a significant period, there’s a strong chance you’ll have over-saved and can use some of that cash if you need to.

Other things to bear in mind:

  1. This doesn’t take into account any PAYE earnings. Even if you’re paying tax on that, you’ll need to factor in the initial ‘tax-fee’ amount of that.
  2. If you’re in your first or second year of freelancing, don’t forget about payments on account. If you start this from day one, you’ll already be covered, but you’ll need to consider this if you start saving late.

Which is right for you?

Despite those considerations, I still choose this method of saving. It requires more initial planning and some occasional management to check things are on-track but, for me, the benefits are worth it.

I rarely think about my tax bill now and I’m never worried about having enough cash to cover it. I also love that it helped me to start a pension and that’s something I probably wouldn’t have found the money for if I hadn’t started saving in this way.

You might prefer the simplicity of saving a third of each invoice, but if you find this problematic or want to try an alternative approach, I’d recommend giving this one a go.

]]>
https://worknotes.co.uk/five-years-of-freelancing-20-practical-tips <![CDATA[Five years of freelancing: 20 practical tips]]> Dave Smyth 2018-12-05T13:03:00+00:00 This week marks my five-year freelance anniversary. Technically I was already ‘freelance’ before I became freelance, but that was in an entirely different field. It’s been five years since I became a freelance web designer.

The time has flown, and I’ve learnt a great deal over the years. I made lots of mistakes in the beginning, but these have helped me to refine many aspects of my freelance life over the years.

To mark this milestone, here are 20 pieces of practical advice I wish I’d taken (more) heed of when I started out.

1) Don’t be afraid to talk about money

It’s easy to feel awkward about the topic of money and how much you want to be paid for your work, but you have to be upfront about it. If you put it off, you risk investing a lot of time discussing jobs that aren’t the right fit.

2) Use a contract

I put this off for way too long. I think I was nervous about using it for the first time or felt unsure about what to include. Both of those were excuses which left me vulnerable to all sorts of situations.

3) Take a deposit

If you work in project cycles, rather than a retainer, make sure you take a deposit at the beginning of a job. Without that, you risk doing a whole lot of work without being paid.

4) Reach out to other freelancers, use groups

I was so late to the game on this front. Speak to other freelancers, use social media groups (like Freelance Heroes or DIFTK), join Slack channels. As a freelancer, you may not have colleagues to discuss business things with, so it’s important to be part of some sort of community. It’s amazing how positive, supportive and useful these groups can be.

5) Charge enough

Every article that’s ever been written on “how to be a freelancer” talks about recognising your value and charging enough. Almost none of them state the benefit this provides to your clients: if you charge enough, you’re more likely to stay in business. If your clients enjoy and want to continue working with you, they’ll appreciate this.

6) Make use of the flexible schedule/time

It’s easy to sit in front of the computer all day, every day. Don’t do this. Make the most of your ability to work when it suits – it’s one of the biggest perks of working for yourself.

7) Learn when to say ‘no’

If you work for someone else, there could be lots of projects you’re not enthusiastic about or don’t believe in. There’s a strong likelihood you’ll also have to work with clients that aren’t a good fit, too. As a one-person business, you’re in the enviable position of being able to reject a project if it’s not right for whatever reason. Use this! Oh, and remember: a principle isn’t a principle until it costs you money.

8) Start a pension

Like everyone, I left this longer than I would have liked to. Do a bit of research and ask around. FreeAgent cover what you’ll likely need to survive in their excellent blog.

9) Don’t be afraid of the word ‘business’

Transitioning straight from the life of a jazz musician, ‘business’ was always a bit of dirty word. I now see that term in a completely new light. Business doesn’t have to be about sharp suits or drab meetings. The projects you take on will either be good business and bad business. If you want to stay in business, it’s important to know which is which.

10) Using accounting software (and pick carefully)

This was the first thing I bought when I went became freelance. The app I use now, FreeAgent (Spoiler Alert: use this link for a lifetime 10% off – I’ll receive the same), I avoided initially as I thought the setup was too complicated. I went with another Canada-based company and that turned out to be a mistake.

They had an excellent app, but when I switched to FreeAgent earlier this year, I realised what I’d been missing out on by not using a UK-based company. Small things like tax forecasting and the ability to submit returns for you are really worthwhile.

11) Use apps to make your life easier

Aside from the accounting app, I didn’t explore other workflow tools until much later. Universally useful apps include Trello, TextExpander, Evernote and Grammarly.

12) Get insured

Oh boy, insurance will help you sleep well at night. Check out With Jack for a friendly and freelance-focused insurer. They also have a great series of videos talking about what they offer and how their insurance helps freelancers. How about that – enthusiasm for insurance!

13) Make time for self-development

When you’re stacked up with work, it can be hard to find time to develop new skills. Even if you’re doing this on the job, there may be times when you want to spend some time on an area you’re looking to develop that’s unrelated to your current work. I recently started taking half a day a week to do this. It doesn’t always happen, but it’s a great feeling when it does.

14) Don’t be too hard on yourself

Mistakes happen, projects don’t always run as smoothly as we might wish and other things might happen along the way. Learn from these experiences, but don’t lambaste yourself unnecessarily. If you need to reassure yourself, look back at your work and processes to see how everything has developed over the time you’ve been freelancing.

15) Save for tax time

I was quite lucky not to be stung here, but I know many freelancers that end up with a much bigger bill than they expect in the first year. Your accounting software or accountant might help. Otherwise, use the MoneySavingExpert.com tax calculator to work out roughly what you might be paying. I try to put in my figures in May so that I know what I’ll be paying, and don’t forget those payments on account, especially in the first year.

16) Listen to podcasts

I’d heard of podcasts and didn’t really get what the fuss was about. I happened to listen to one and I was instantly hooked. I’ve learnt a lot from listening to these and picked up several pieces of handy advice. They may not be your thing, but give them a shot if you haven’t already.

17) There’s no shame in having availability

Busy-ness is not a badge of honour. It’s great to be busy, but there’s nothing wrong with sharing that you have time for some additional work. It’s not uncommon for potential clients to think that a freelancer may be too busy to take on their project, so don’t hide your availability if things are looking a little lean.

18) Get out

Some freelancers create a fake commute by walking around the block to bookend their day, others work in a coworking space or coffee shop. I work from home and have never enjoyed a commute (fake or otherwise), but I play a lot of tennis. Find what works for you.

19) Invest in your workspace

This isn’t always easy when starting out, but it’s essential to have a space that you can feel productive in and a setup that’s ergonomic. Laptops can be killer for your neck, and even a desktop or external monitor can be too low, so experiment. Also, make sure you get a decent chair – Hermann Miller’s are fantastic and can often be picked up second hand for a more reasonable price.

20) Enjoy it

I love my job. There are the occasional irritations here or there, but on balance I really enjoy what I do on a day-to-day basis. No job is paid well enough to put up with a lifetime of unsatisfying work, so make sure to allow yourself the time to enjoy what you do.

]]>
https://worknotes.co.uk/protecting-your-freelance-work <![CDATA[Protecting your freelance work]]> Dave Smyth 2018-12-05T12:58:00+00:00 I was recently contacted by an agency I’ve worked with on numerous projects. Their client disappeared mid-project and had been in touch to ask about some tweaks on their new site.

Confused, the agency checked out the client’s site. The client had outsourced the completion of the work elsewhere, ripping off the design we had created. Not only this, but the client didn’t want to pay for the work as they hadn’t used it.

Without getting into the rights or wrongs of the client’s behaviour, it surprised me that the agency’s contract didn’t include clauses that protected them. The contract I use, based on Andy Clarke’s Contract Killer, has a couple of sections that would have strengthened their position.

Let’s look at the two clauses that could have prevented this happening.

The ‘Kill Fee’

“If, after project commencement, you stop communicating with me for a period of 180 days, the project can be cancelled, in writing by me, and ownership of all copyrights shall be retained by me. In this scenario, I reserve the right to charge a cancellation fee for the work completed, with the fee based on the stage of project completion. The fee will not exceed 110% of the total project cost.”

This affectionately-labelled cancellation clause protects you from a client disappearing mid-project and puts the onus on them to remain in regular communication.

It has helped me on a couple of occasions, including some situations I hadn’t anticipated. One particular project stalled after kick-off and the client went silent for nine months. My schedule was then too busy to accommodate the project’s completion and this clause ensured I was paid for the work completed.

Intellectual Property

“I’ll own any intellectual property rights I’ve developed prior to, or developed separately from this project and not paid for by you. I’ll own the unique combination of these elements that constitute a complete design and I’ll license its use to you, exclusively and in perpetuity for this project only, unless I agree otherwise.”

This would have prevented the agency’s predicament and is a must-have for any creative work.

The clause states that:

  1. The client doesn’t own (and can’t use) the design until it’s paid for
  2. The design can’t be replicated to create new sites with the same design

In our scenario only the first sentence is relevant, but the second is a valuable consideration for anyone working in design.

Strengthening your position

Without these clauses, the client-supplier relationship is too heavily weighted in the client’s favour. At any point, the client can disappear, ask their nephew who builds websites to ‘finish’ your work or replicate your design across their company’s network.

Understandably, my colleague was upset by the way their client had treated them, not least as they would not break even on the work completed.

Their contract has now been amended to include these clauses. If yours doesn’t include them, I’d suggest you do the same.

]]>
https://worknotes.co.uk/an-email-is-not-a-contract <![CDATA[An email is not a contract]]> Dave Smyth 2018-12-05T00:00:00+00:00 The first rule of being a freelancer is: always use a contract. That’s what every guide to being freelance tells you at least.

I wanted to find out if and how freelancers use them: do they get their clients to sign their contracts or is it the other way around? To find out, I set up a poll on Twitter and an identical version in the Freelance Heroes Facebook group.

Facebook poll shows 58% of freelancers get clients to sign their contract.
  1. Client signs my contract (58%)
  2. I sign my client’s contract (10%)
  3. I include my terms in my client’s contract (3%)
  4. My client and I sign each other’s contracts (2%)
  5. I don’t use a contract (27%)

Total respondents: 182

Twitter poll shows 61% of freelancers get clients to sign their contract.
  1. Client signs my contract (61%)
  2. I sign my client’s contract (13%)
  3. My client and I sign each other’s contracts (13%)
  4. I don’t use a contract (13%)

Total respondents: 119

The majority of respondents in both polls use a contract, which is good news, but there is still a significant minority that do not.

Why do I care?

The question asked respondents who don’t use a contract to say why. I wanted to understand what the concerns about contract usage were and what blocks freelancers from using them.

I’ve been freelancing for a while now. It pains me to read about freelancers who have been exploited by unscrupulous clients. Fortunately, the number of clients that fall under that label is small, but they are out there!

Most of the freelance horror stories I’ve read would have been prevented, or resolved more easily, by having a solid contract in place. In the spirit of helping the freelance community, I thought it might be useful to summarise some of the reasons freelancers said they don’t use contracts and explain how a contract might help them.

It’s all covered in the emails

If you had to choose between using an email trail and a verbal agreement, you would choose the former, but it’s no replacement for a contract.

Aside from setting out the scope of work, the most significant aspects of a contract are:

  1. Outlining the responsibilities of everyone who’s involved in the project
  2. Explaining the procedures and what will happen should anything go wrong

If your email trail includes an agreement that covers all of the above, it’s not dissimilar from a contract. However, if your emails don’t include these clauses, you’re missing some of the key protections that a contract will provide.

It’s not worth the time to prepare one

On small jobs, it may not be worth the time to prepare a contract, but it comes down to how much risk you’re willing to take.

My contract preparation takes no longer than an hour in most cases and can be as little as 15–30 minutes if I don’t need to alter clauses.

The question to ask yourself is: how much time and work are you willing to lose? For a job taking an hour or two, a contract might not be worth it. But what about half a day or more?

I don’t want to put a potential client off

I have never had a client refuse to sign my contract. If they object, it’s an indication that they aren’t serious about the project and I would walk away from it.

Think about it from the client’s perspective. By the time you reach the point of signing a contract, the client has chosen to work with you after a considerable time investment. If your contract is reasonable, they have no reason not to sign.

It’s worth bearing in mind that a contract should offer protection and reassurance to the client as well. Using a contract also makes your offering more professional and shows you’re serious about what you do.

If you feel that clients may be intimidated, make sure you use a contract written in plain English. Andy Clarke’s open-source Contract Killer is a brilliant example of this.

I trust the people I’m working with / I’m such a pro nothing ever goes wrong!

These reasons fundamentally misunderstand what contracts are about. No–one enters a contract expecting things to go wrong, but very occasionally they do.

At this point, trust isn’t going to help you, but a contract will.

I’ve worked with the company before

This reason is related to the trust issue above, but there’s another potential factor: people move jobs.

The situation you want to avoid is this:

  1. Someone you know at a company asks you to do some work
  2. At some point, after you start work, your contact moves job
  3. You submit an invoice and discover they no longer work there. Their replacement or manager won’t honour the original agreement

By stating that the signatory has the authority to agree on behalf of the company they represent, a contract can prevent this ever occurring.

I’m worried about missing something out

I didn’t start using a contract straight away because I was concerned about omitting a crucial element.

It’s better to have something in place that doesn’t cover every scenario, than not to have anything in place at all. Your contract will evolve as you gain more experience, so just put something together and start using it.

If you’re unsure where to start, either look for templates or ask to see other freelancer’s contracts. Groups like Freelance Heroes and professional bodies like IPSE or the FSB are great resources for getting started.

Want your professional indemnity insurer to help?

Hopefully, you won’t need to use your contract to resolve a conflict. If things go wrong and you need to involve your professional indemnity insurer for any reason, a contract can be beneficial.

Ashley Baxter, the founder of specialist freelance insurer With Jack, summed this up perfectly:

“Let’s say a client makes an accusation against you. Perhaps they're unhappy with the quality of work you've completed, or maybe they’re accusing you of not delivering the work that was negotiated in the scope or to an agreed timescale. 

The first thing you need to do is get your insurer involved so they can provide legal advice and prevent the situation from escalating (don’t worry, the cost of the legal experts is included in your policy). The insurer is in a better position to help you if you can provide them with the contract that exists between you and your client. 

The contract will clearly outline the duties that are to be of expected of both you and your client. This will strengthen your case when those duties come into question. Having a contract won’t stop a client from making a claim against you, but you’ll have a better chance of a positive outcome if you’ve got one in place.”

International clients

Contracts are a no–brainer for freelancers who are working with clients around the world.

Aside from your usual terms, it’s essential that the contract states that it is a legal document under the jurisdiction of your country. This will make it must easier to begin legal proceedings should you need to.

Clarity for your clients

Aside from the obvious advantages of using a contract, another benefit is that it provides clarity for your client on all sorts of potential pain points. Apart from payment terms and late fees, it can also cover a bit about your work process, meaning your client will know what to expect.

Your contract provides the perfect opportunity to set client expectations. It can be awkward to reset expectations mid–project if they haven’t been explicitly stated up front, so use your contract to reduce the number of difficult conversations you need to have.

Summing up

A contract won’t prevent poor client behaviour, but it will help to protect you should anything go wrong.

I use one for every project I take on and, because my contract talks about my process as well as the legal stuff, they’ve become an integral part of my workflow.

]]>
https://worknotes.co.uk/how-upwork-worked-for-me <![CDATA[How Upwork worked for me]]> Dave Smyth 2018-12-05T00:00:00+00:00 Freelancing marketplaces like Upwork are perceived as places where cheap clients go to get subpar work completed at minimal rates: pay peanuts, get monkeys as they say.

It’s easy to see why this perception exists: clients requesting complex sites for $500 and below minimum wage hourly rates are common.

But it’s not all bad.

As someone who started their freelance web design career on Upwork, I thought I’d tell the story of how it worked for me and why I think Upwork deserves a place in the industry.

Humble beginnings

In 2013 I began a career transition that would take nearly four years to complete. Despite 15 years of experience building websites, I had no freelance experience.

After some Googling, I found Guru and Elance, Upwork’s predecessor, and I created profiles on each. Many applications later, I got my first job on Elance: move a site between servers for $30. Not exactly big bucks, but I was pleased to get my first gig.

The feedback I received from this helped me to pick up more jobs, and things snowballed over the years. I gradually increased my rates inline with my experience and the profile I was building.

A race to the bottom?

A common complaint about platforms like Upwork is that they encourage a race to the bottom. Freelancers are pitted against a global market, including countries where $5/hr might be a decent wage. When I started working on these sites, I was living in London and knew that $5/hr, or even $10/hr, wouldn’t be sustainable.

Image shows an Upwork client whose average paid hourly rate is $1.40 – an average based on 134 billed hours.

Try not to spend it all at once.

I started looking around Upwork and noticed a strange paradox. Most freelancers were supposedly highly qualified, but they had poor feedback and often their portfolios weren’t up to scratch.

It struck me that the key to breaking away from low paying jobs was simple: differentiate yourself by offering a quality service at a premium rate.

I’m not talking about ripping clients off. My starting rate was $25–30/hr. That’s a low rate, but fair given my experience and location. That rate didn’t last long and more than tripled in four years.

Nailing Upwork

When I was starting out, I read articles on how to make Upwork work. I came across a great piece of advice: at the end of the project ask the client to leave a five-star review. If they’re hesitant, ask them what they would need for them to do so.

Most clients are reasonable people who want a job doing well at an agreeable price. Almost all of my clients have left five-star reviews during my time on Upwork.

Five-star reviews led me to be ranked as Top Rated with a Job Success score of 100%. These might seem like useless badges, but on Upwork they’re one of the key factors clients consider when shortlisting candidates.

Now I’m in a position where I don’t need to apply for jobs as clients invite me to them. I receive 2/3 job invitations per day. On the rare occasions I apply for a job now, I’m likely to get it.

My portfolio is diverse and features clients from everywhere. Many of these have provided me with regular work at a respectable rate. This would not have been possible without Upwork.

Bad experiences

This might seem like it’s all been gravy, but the road hasn’t been entirely smooth. There have been uncomfortably long periods when I didn’t get a job for months.

I’ve also had bad client experiences. Usually, this has been down to me ignoring red flags – something I can spot from a mile away now.

One or two clients have taken the biscuit with scope creep and revisions. More recently, during a job interview, a client kept asking me irrelevant personal questions: I didn’t follow that up.

Out of the 100+ clients that have employed me, that’s not bad. You’d be hard-pushed to not have similar experiences with clients found through traditional methods.

Making the most of Upwork

Here are some tips that will help you to get more from Upwork.

1) Ignore lowball jobs

It’s easy to get wound up by job postings where the employer’s average hourly rate is $0.34, or clients asking for Google for $500. Forget them. Focus on serious clients who respect the time a project needs and the value you can bring.

2) Exceed the bid

Bid what you want to be paid, despite the stated budget. If a client’s budget is $2000, but you think the job is worth $2500, bid that amount. I’ve won clients by explaining my process and the value I bring.

3) Make sure clients leave feedback

At the end of the project, make sure your client closes the job so that they’re forced to leave feedback. Remind them to leave five stars!

4) Protect your ratings

If a client gives you any red flags, avoid them. It’s not worth the potential damage to your ratings. Make sure you only take on projects that you know you can deliver. This isn’t always possible if the client fails to reveal something critical but do your research before accepting a job.

5) Look at the client’s employment history

See what other freelancers have said about the client. A lack of feedback on jobs is a good indicator of a poor client. Check the client’s average hourly pay, and the feedback they’ve left for previous freelancers.

6) Communication is key

Like any client-supplier relationship, good communication is crucial. Be quick to respond to interview messages and keep your client in the loop throughout the project.

7) Don’t spend a day on each job application

I recently saw a YouTube video where the author was complaining about the hours they had spent carefully researching and applying to a job not to hear anything back. Don’t do this. Send clients a short message that shows you understand their problem. That will get their attention over a 1500-word proposal.

8) Use a TransferWise account

Upwork provide several payout options, including PayPal, wire transfer and direct to a local bank account. PayPal seems like the obvious choice as it’s quick to set up, but I recently switched to TransferWise and couldn’t be happier. You’ll need to wait a day longer to receive payment, but the exchange rate is awesome.

If you use this link you’ll get your international first transfer (of up £500) free. If enough people sign up, I’ll receive a commission, so use it if you feel this post has been valuable.

9) Check your professional indemnity insurance

If you're working with clients abroad, you will need to make sure your professional indemnity insurance covers the countries your clients are from. For instance, most professional indemnity insurance won't cover the USA unless explicitly stated due to the litigation culture.

Get familiar with the platform

Googling Upwork quickly turns up plenty of horror stories. Clients going AWOL, jobs going wrong, clients being a nightmare, not being paid etc.

You can avoid these situations by sticking to the processes and guidelines that are in place. The systems are there to protect freelancers and if a client isn’t prepared to work with them, that should be a huge red flag.

If a client has a bad history, it’s worth avoiding them. Occasionally the comments might show it’s not the client’s fault, but be cautious.

Is there a place for Upwork?

I felt weird about relying on Upwork for a large per cent of my income. Because of the stigma, or my perception of it, I also thought that the work I was completing was illegitimate.

Nothing could be further from the truth. The work I’ve done on that platform has been of huge benefit to the clients I’ve worked for.

I think freelance marketplaces like Upwork are useful for clients and freelancers.

Clients can hire freelancers with verified feedback, safe in the knowledge there is a dispute resolution process should anything go wrong.

Freelancers receive the same benefits and can use the escrow services to help make sure they will be paid.

Ultimately, it’s another potential revenue source, so shouldn’t be written off.

]]>
https://worknotes.co.uk/freelancing-with-international-clients <![CDATA[Freelancing with international clients]]> Dave Smyth 2018-12-05T00:00:00+00:00 Since I started freelancing in 2013, I’ve worked with hundreds of clients. Most of which are overseas, and include clients from Austria, Australia, Andorra, Canada, France, Germany, Holland, India, Isle of Man, Norway, Japan, Spain, Switzerland, United Arab Emirates, Uganda and the USA.

Most of my initial freelance work came through Upwork, which is why such a high percentage of my clients aren’t based in the UK. I now work with a mix of international clients both on and off the platform.

Freelancers can be nervous about working with clients abroad. There are more factors to consider, but for the most part it’s similar to working with a local client.

Here are some ‘gotchas’ to watch out for and tips to help your international projects go smoothly.

Use a contract

A contract is essential when working with clients overseas. Your contract should state that it is a legal document under the jurisdiction of your local laws. This will make it easier to begin legal proceedings should you need to.

Quote in your local currency

Where possible, quote for the work in your local currency and ensure your contract clarifies that the client is responsible for any international transfer fees or conversions.

If a client cannot pay you in your local currency, raise the rate to cover any potential fluctuation in the exchange rate.

Check your insurance

By default, your professional indemnity insurance may not cover the country your client is from. This is almost guaranteed if your client is in the United States — possibly the most litigious country.

Drop your insurer a line and see what’s what. Not insured? Check out With Jack.

Use TransferWise

When you get your first international client, open a TransferWise account. Their exchange rate will be better than both PayPal and your bank’s, which is handy if you need to convert your payment.

A TransferWise account allows your client to pay you like you’re a local. In seconds, you can set up a ‘local’ account that gives you native bank credentials that your clients can use.

If you use this link you’ll get your international first transfer (of up £500) free. If enough people sign up, I’ll receive a commission, so use it if you feel this post has been valuable.

Take a deposit

A deposit is essential for any project, but it’s critical when dealing with clients overseas. If a client isn’t willing to part with a reasonable deposit, warning bells should be ringing.

Prioritise work around timezones

As soon as you have more than one international client, you’ll need to factor the time zone differences into your workflow.

I use mornings to work on projects where the client is ahead of my timezone and afternoons for projects where the client is behind. This maximises the crossover periods in our working hours.

Be mindful of cultural differences

Depending on where your client is based, you may find that their working week and hours are not the same as yours. Clarify this before you get started.

Make sure there’s a time overlap

A great rule of thumb is to make sure that there are at least three hours of workday overlap between you and your client.

If this isn’t the case, it will require both you and your client to be on top form communication-wise. Without this, the project is likely to drag on.

Check the tax situation

Depending on where you’re working, you may need to sign a tax exemption form or similar. The client should pay any fees associated with this.

Should the worst happen...

On Unfinished Business, Andy Clarke discusses how he dealt with an overseas client that defaulted on a payment.

The situation reached the point where he needed to use a debt collection firm. He used a debt collection firm that was based in the client’s city. Lo-and-behold, the payment was quickly arranged.

Hopefully, you won’t end up in this position, but that could be a useful tip to make unscrupulous clients realise you’re serious about getting paid.

Summing up

This advice is mostly common sense, but it’s worth tightening your standard practices when working with clients overseas.

Not only will it help to make sure your project goes smoothly, but you’ll be in a better position should anything go wrong.

]]>
https://worknotes.co.uk/following-up-on-payment-terms <![CDATA[Following up on payment terms]]> Dave Smyth 2018-12-05T00:00:00+00:00 When I published my post on payment terms last week, I wasn’t expecting it to kick up such a storm. The topic seemed to particularly resonate with the copywriter community, where large numbers of freelancers are bound to extended payment terms with clients of all sizes.

In response, many of the tweets discussed issues of late payment and non-payment by clients, and reading these was a pretty sobering experience. It certainly made me feel incredibly fortunate to work in a sector where a significant proportion of my work revolves around deposits and milestones — all taking place before files are handed over to a client.

My original post was written to explain to clients why my terms are seven days. As I wrote last week, these tend to be small businesses where there isn’t usually a finance department. If there is, it’s often one person, and there’s usually room for manoeuvre.

It became apparent from the various Twitter threads that many freelancers are dealing with larger companies where there is no hope of such a short turnaround time. To make matters worse, many demand long payment terms and then fail to pay on time.

What can be done?

Aside from the stories of long-lost payments and clients taking the proverbial, there were several pieces of useful advice. The topic of handling payments for freelancers has been covered at great length, but it’s worth restating some of these, particularly for newcomers to the freelance game.

1) Use a contract

On Andy Clarke’s Unfinished Business podcast, he frequently, and somewhat jokingly, states that anyone who doesn’t use a contract is a “moron”. It’s hard to disagree with this sentiment.

That podcast is recommended listening if you’re interested in this topic. It’s aimed at web designers and developers, but the principles are absolutely transferable. Start at the beginning, you won’t regret it.

This is where you can state your payment terms and confirm what you’re agreeing to do in exchange for the agreed fee/estimate. If your client has different payment terms, it’s the perfect chance to iron this out upfront.

Without a contract, you have almost zero security. This might be ok for a job that would only take a couple of hours, but how much work are you willing to risk losing, or performing for free?

2) Take deposits

Your ability to determine and take a deposit will depend greatly on the type of job. For regular or retainer-based work this will be less easy than anything that’s project-based.

If it is possible, make sure you take a deposit upfront and the final balance before the work is handed over. I recently broke this rule for the first time in a long time, for a client I’d worked with before. I took the commencement deposit but released the site before receiving the final balance. That final payment took four weeks to come in…and it was a rush job! Never again.

3) Use invoicing software

I’ve long been a fan of invoicing software, and it’s not just because it means I don’t have to reach for a calculator at tax time. Not only do these apps make invoicing a breeze (seriously, a 30-second job), but most allow you to set up automated invoice reminders for clients when invoices are overdue.

One of the hidden benefits of using automated follow-ups is this: you’ll no longer need to spend a long time agonising over the wording of a reminder every time a client is late paying. I used to spend ages writing and rewriting these, worrying about how they would be interpreted, but no more.

What’s more, some will tell you when clients have viewed the invoice, so you can tell if the client “didn’t receive it”. I know the FreshBooks have this feature and FreeAgent have just introduced a feature that will tell you if the email bounces (not quite the same, but a start). If you want to be sure, you can always send that invoice manually as a PDF attachment.

I recently moved to FreeAgent from another popular app and couldn’t be happier. If you sign up using this link or enter the code 497jwa9b at checkout, we’ll both receive a 10% discount on our plans forever. Yes, forever.

3) Invoice as soon as the work is complete

In 2013, FreeAgent published a blog that revealed customers of theirs that invoiced shortly after work was complete were frequently paid within just five days.

They think this is down to ‘recency bias’, where clients give more importance to the invoice because they’ve recently seen the results of the work you’ve done. Worth bearing in mind.

4) Find out when your client will pay their invoices

Some clients process all of their payments on the same day each month (i.e. the 3rd Friday or whatever). In your initial discussions, find out if this is the case. If so, ask them when they pay and when you would need to submit your invoice by for each payment run. This may result in you being able to shorten your terms by invoicing much closer to the payment date.

5) If you’re working with clients overseas, use a TransferWise account

There may well be other similar services available, but I’ve had an excellent experience with TransferWise. I used to use PayPal for convenience, but the switch has been absolutely worth it.

TransferWise works by setting up a local ‘account’ in each country/currency you work. That means that when clients pay you, they pay to a local bank account in their local currency. You can then convert/transfer the money whenever it suits you, at TransferWise’s excellent exchange rate (basically what you see on Google).

Each of these local accounts takes about one minute and I’ve not had a client refuse to use this. Happy days.

If you use this link you’ll get your international first transfer (of up £500) free. If enough people sign up, I’ll receive a commission, so use it if you feel this post has been valuable.

6) Setup a ‘finance’ email address

Some participants in the discussion last week mentioned they had success in getting clients to pay more quickly when they used an ‘accounts@’ or ‘finance@’ email address. I’ve not used this, so can’t vouch for how effective it is, but it could be worth a shot.

7) Charge late fees

Whether you specify them in your contract or not, you are due late fees if your client fails to pay you on time. Make your client aware of them and bill them if you’re owed.

8) Make sure you’re charging enough

If your client is dictating particularly extended payment terms (60+ days), it might be worth considering charging that time at a premium rate. This can be justified both to cover the inconvenience of waiting so long, and also to compensate you for the additional risk you are taking on. What happens if they go bust during the period you’re waiting for payment?

Rather than offering this retrospectively upon finding out a client has long payment terms, this could be a factor in the standard rates you offer. For instance, your rate might be £A for clients that pay within 30 days, £B for 60 days and £C for 90 days. In effect, the quicker clients pay you, the cheaper you are.

9) If you’re being made to wait, invoice often

I mentioned this in the original post, but it’s worth reiterating. If your client’s finance department is going to make you wait for 30, 60, 90 or even 120 days for payment, invoice them for your work on a weekly basis. This means that you only have to wait for that initial payment once, before starting to receive a weekly income for your work.

10) Cover the costs of client ‘admin’ fees

To my utter disbelief, today I saw tweets from freelancers whose clients charge them an ‘admin fee’ to ‘process’ their payment. That’s right, the freelancers were being charged to invoice the client for the work they had done.

In this case, make sure you add the cost of this to your invoice or charge enough that this doesn’t matter.

The usefulness of these tips will vary greatly depending on your situation. I think the overriding point is to make sure to talk about the terms before a contract begins. At the very least, the conversation will give you the opportunity to discuss an alternative approach if the default terms are too long.

Handling late payment

Late payment and long payment terms are separate issues but often intertwined. The combination of these can be particularly devastating for freelancers.

A few years ago, the aforementioned Andy Clarke shared a blog that contains the most effective email he’d ever sent to a client that was late paying. It’s a refreshingly open and honest approach that is worth a read.

If you find yourself in a position where clients are unreasonably withholding payment, check out Paul Maloney’s brand new overdue.work site. Launched last week, it’s a curated list of resources to help freelancers get overdue payments. Hopefully you won’t need this, but it’s good to know it’s there.

]]>
https://worknotes.co.uk/on-payment-terms <![CDATA[On payment terms]]> Dave Smyth 2018-12-04T00:00:00+00:00 As a freelancer or small business, maintaining a positive cashflow is crucial if you want to stay in business. Late payments are a business killer and long payment terms are nearly as bad.

I work with individuals, small businesses and startups. One of the things I like most about working with clients that fall into these groups is that I’m usually working closely with the business owner. It’s fantastic to feel the buzz of excitement from the stakeholders, especially when the project goes live.

From a business point of view, one of the benefits is that my clients don’t tend to have large finance departments and all the bureaucracy that comes with them. As a result, and because it’s easy to quickly pay invoices these days, my payment terms are seven days from receipt.

Occasionally, a new client will ask me to extend these terms as they haven’t come across them before. I’ve written this post to explain how I settled on seven days and why they’re shorter than the traditional business terms.

Where it all began

Back in September 2009, Simon Campbell of Erskine Design wrote an insightful post detailing the history of 30-day payment terms. The blog may be confined to the web archive, but it makes for fascinating reading if you’ve ever wondered how net-30/60/90 payment terms came about:

The article details the agonising process of the invoice being passed from department to department. When the cheque is eventually raised it has to be signed then countersigned, before being finally posted back to the supplier. At each stage, it’s likely to have waited in an in-tray for at least a day or two.

Credit: Simon Campbell/Erskine Design. Thanks to Andy Clarke for highlighting this on Unfinished Business.

It makes a compelling case for the necessity of 30-day terms when payments were based on invoices and cheques sent through the post and manually passed through multiple departments.

Fast-forward to 2018 and it’s hard to justify these archaic payment terms with the number of near-instant payment options available. Payment on receipt may not always be possible, but seven days seems reasonable.

The long wait

When freelancers accept long payment terms, they become credit providers to their clients, hoping that at the end of the 30/60/90-day period the client will still be in good standing to settle the debt.

This is not intended to be flippant. If giants like Carillion can fall (with their 120-day payment terms), freelancers have to be careful in offering credit to clients of all sizes.

Alternative payment terms

In the design industry, it’s common to require a commencement deposit before work begins and release of the final balance before files are handed over. This is widely considered to be fair for all parties and, in my experience, generally results in prompt payment.

For other types of work where this may be impractical, my contract specifies seven-day payment terms. I’d encourage other freelancers and small businesses to do the same, whatever industry they’re in.

Where there’s no avoiding long payment terms, perhaps due to a juggernaut of a finance department, I will tend to bill on a weekly basis. This means I only wait for that payment period once before starting to receive a weekly income.

A win-win

For clients, offering or accepting shorter payment terms has a couple of immediate benefits. Firstly, the freelancers that you want to work with are more likely to want to work with you. For some freelancers, 30+ day payment terms are simply unaffordable and for others they’re a red flag.

Secondly, if the freelancer isn’t worried about cashflow, they’re likely to produce better work. Long payment terms and late payments can have a significant impact on a freelancer’s cashflow and, ultimately, their stress levels. Shorter terms mean the freelancer is less likely to be worrying about money, and can spend more time focussing on your project.

Finally, and perhaps most importantly, shorter payment terms also help to ensure a freelancer will be around in future. Perhaps for an update to the current work or a new project. What’s not to like?

Update: After the debate that surrounded this post, I’ve written a follow-up that covers some more methods freelancers can use to manage and prevent late or non-payment.

]]>
https://worknotes.co.uk/the-trouble-with-ndas <![CDATA[The trouble with NDAs]]> Dave Smyth 2018-12-02T00:00:00+00:00 Let’s face it: Non–Disclosure Agreements (NDAs) are a pain in the backside for freelancers. Not only are NDAs undecipherable, they prevent you from displaying your work and limit your ability to take on related projects.

Not just a piece of paper

A while ago, a freelance friend was discussing an NDA they’d been made to sign. It was described to them as a ‘formality’ and, when they’d asked about displaying their work, they were told that ‘would be ok’.

The NDA included a clause stating the opposite. If displaying the work is fine, then why not take that clause out?

NDAs are not a ‘formality’. As with any contract, you have to assume that the person issuing it is serious about the implications of breaking it.

Describing an NDA as a ‘formality’ suggests to me that the issuer doesn’t understand what they’re asking you to sign. That worries me and it should worry you, too.

The ‘secret sauce’

I’ve experienced this attitude before. In the tech industry, it’s common for a potential client to think that their idea is so life-changing, they need an NDA just to talk about it.

A few days before I sat down to write this, I received a request for proposal that read:

I have two ventures at the moment, both cannot be disclosed at the moment due to legal reasons. However, once an NDA is signed, all details can be presented.

One bitten, twice shy

My first experience of this kind of up front NDA was about five years ago. A client I’d been working for was partnering up with another firm to add some functionality to the site.

My client wouldn’t tell me what the functionality was, and neither would the firm unless I signed an NDA. I was uncomfortable about it and made that clear, but ultimately caved as I was new to the game.

An initial Skype meeting with the firm revealed that the functionality was…a learning management system. What was discussed could have been talked about without an NDA.

By the end of the call I’d already decided I no longer wanted to work on the project. I swiftly moved on, but it will come as no surprise that the client took three months to settle the final invoice.

That was the last NDA I signed.

When NDAs are OK

I don’t have a problem with the concept of an NDA. If I was hiring someone to do some work with me, I might even ask them to sign one.

The trouble with most NDAs is this: they’re full of complicated legal jargon, have unreasonable terms and are far too general.

For me to sign an NDA, it has to:

  • Protect my reputation should something go wrong
  • Be beneficial to both sides
  • Be limited to a reasonable period (spoiler alert: five years is too long)
  • Be specific about what it covers
  • Be written in plain English
  • Allow me to talk about the project after it goes live

If a client’s NDA doesn’t meet the criteria, I won’t sign it.

Why you shouldn’t ask a freelancer to sign a generic NDA

The main issue freelancers face with NDAs is that it prevents them from talking about their work.

If the freelancer is paid handsomely for the privilege of not discussing their work, then fine, but often it’s completely unreasonable.

If you value and respect the freelancers you employ, why make it difficult for them to get work? Empty portfolios are a big problem for freelancers who have worked for clients that use punitive NDAs.

It’s not just about money, either. Freelancers choose their career path because they enjoy their work and are proud of what they produce. If they produce something special, perhaps even award-winning, it’s a shame if they can’t talk about their achievements or use it as a case study.

And there's another issue: NDAs limit a freelancers ability to work on similar projects with other clients. It's easy to breach the terms of the NDA without realising. This is an additional liability which hurts freelancers.

I would urge clients who use NDAs to consider what they’re asking freelancers to sign. Don’t just download a template and blindly enforce it.

If you need inspiration, Andy Clarke has produced a brilliant plain-English NDA that can be tweaked for your needs.

]]>