Running Your Freelancing Business

Today we have a very special article from Julie Elster, founder of Just Tell Julie, a service that helps you turn your overdue invoices & failed payments into customer services opportunities.

Julie spent over 10 years in Corporate America working with accounts receivable and she certainly knows her way around debt collection tactics. Today she is an accounts receivable virtual assistant and helps make getting invoices paid painless for freelancers. Through her Thermonuclear Niceness, Julie quickly turns mildly overdue invoices into customer service opportunities. In this article, Julie teaches us how to get paid!! Sound good? — take it away Julie!

The End of Overdue Invoices: Are you using these two methods?

Owning your own business has some truly amazing benefits. You can make your own hours. You can take on the projects that you want, and turn down the ones you don’t. You can work on your terms, and do it your way.

The downside? Sending an invoice, and hitting the refresh button on your email over and over again waiting for the notification that your client has paid – like your inbox is an awful freelancing slot machine that mostly dispenses spam. Without the other regular recurring revenue, overdue invoices are especially painful for small teams and solopreneurs.

There is a surprisingly easy and simple solution to keep the late and non-payers at bay. It’s so remarkably simple I’m shocked not everyone does it.  

Ready? Here we go:

To avoid late and non-payers every single time, collect payment upfront. Collect payment before work starts. If the client doesn’t want to pay, the work doesn’t begin. It really is as easy as that.

Ok, maybe I’m oversimplifying it just a little bit, but it really can be done. I have worked in accounts receivable for years, and make a living reaching out to clients who haven’t paid their invoices. The #1 thing I tell my clients is to reconsider their process when it comes to collecting payment from clients to prevent the problem before it starts. The majority of clients I work with charge hourly rates. When a client approaches them to work they collect a small deposit upfront. When the work is complete they send an invoice based on the number of hours the project took to complete. Then they wait, hoping the invoice is paid in a timely manner. Does that sound familiar?

There are a lot of horror stories out there about freelancing.

Freelancers are getting screwed over on websites like Upwork, they’re driving their prices lower when competing against others, and they’re investing hours into writing proposals — and only closing around 25% of those they pitch.

I’ve been traveling lately, which means I’ve had plenty of time to think about my own consulting business and the businesses of the freelancers and agencies we’ve featured on our student success stories directory.

I thought: If I could boil down success to a recipe, what would that recipe look like?

1. They have a strategy for getting clients

I maintain a steady stream of clients by speaking at conferences and by having created a course on marketing automation. This lands me high-quality consulting clients who see me as an expert in automation and personalization.

Back when I ran an agency, we regularly ran seminars and other events that expanded our audience and kept our sales team fielding leads full time (when you have 11 people to support, you need significant deal flow.)

But even those who aren’t perceived as industry experts or don’t have the capacity to host weekly business seminars can still create systems for selling.

I used to think of myself as a developer.

I’d go to conferences and code retreats with other developers. I’d buy books detailing new frameworks and languages that I could use to keep myself relevant. And when talking to and pitching clients, I’d rely on my developer-ness to win the project.

But as I grew my agency, I was forced to start looking at the bigger picture. I could not longer compete as just a development agency.

Why did these clients hire us?

What were they really looking for?

This inevitably led me to the conclusion that what our clients really wanted was much more than just development.

Do you ever feel like you are stuck on a constant treadmill of having to constantly find new clients just to keep the lights on and bills paid?

For years I devoted tremendous time, effort, and worry to constantly chasing new clients for my little website agency, and I felt like I was getting nowhere.

I’d win a new client, we’d build a fantastic new website for them, maybe also sell a support package, and, that would be the it for that client relationship.

Then I’d jump right back on the treadmill of writing proposals and closing sales just to keep the current volume of working flowing and food on the table. It was stressful and draining and left me feeling stuck – if I stopped then everything would crumble, but my current path didn’t really create growth.

Like most of us, I had read the usual business books that preached the importance of selling more to existing customers as the path to growth. They talked about “customer lifetime value”, adding new services, selling more frequently, and so on.

But it wasn’t making sense for my business! Yes, I could try to upsell “add-ons” such as extra features or plugins, but that was small potatoes compared to the original project.

Clearly in my line of work winning a new client was worth way more than serving an existing client, right? …right?

A big problem with freelancing is that most work is transactional. What I mean by this is that you get a new client, sell them on working with you, do the work, deliver it, and get paid. It’s nice to get referrals and repeat consulting projects from happy clients, but there’s no guarantee if that will happen. In the quest for recurring, consistent, and “safe” revenue, most freelancers eventually turn to retainer agreements.

My goal with this guide is to not only convince you why the traditional idea of retainers is flawed but to provide you with a formula you can use to sell your current, future, and past clients on hiring you on an ongoing basis.

What is a retainer?

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. Lawyers often work off retainers — you never know when you’re going to need your attorney, so by paying them monthly they have an ongoing commitment to working with you.

When freelancers setup retainer agreements with their clients, the usual structure has them selling future availability at a discount for a fixed monthly fee.