Late Milestone Payments? How to Ask for Them and Get Paid
As a freelancer, you get to choose when you work, who you work for, and how much you’ll earn for each project you do. Those are all amazing benefits of being self-employed!
But along with those freedoms comes a task that most freelancers do not enjoy:
Chasing down clients when payments are late.
Late milestone payments are unavoidable, and they can happen for a variety of different reasons.
If you’re dealing with clients that aren’t paying their milestones on time, we’ll show you how to ask for those payments and get the money you deserve.
Note: We’re going to start this article by discussing what milestone payments are and why they’re valuable — just in case readers don’t know. If you want to jump down to our payment collection tips, click here.
What Are Milestone Payments?
If you’ve ever hired a plumber or a general contractor to do a large construction project, there’s a good chance you paid them some money upfront so that they could purchase materials and secure permits before they start the work.
In the construction industry and similar trades, this is common practice. But if you provide marketing, writing, graphic design, or tech-based services, this is not usually an option.
In most freelance agreements, the client pays when you submit the work. But if they agree to pay milestone amounts along the way, it ensures that you’ll earn some amount of money before finishing the job.
Milestone payments are interim payments that allow you to get paid for every completed stage of a project. They’re sort of like progress payments in that when you make 10% progress on a project, you’re paid for 10% of the total negotiated rate.
Why Milestone Payments Are Important
Milestone payments are crucial for independent contractors, especially in the following two scenarios:
- When working with new clients that you haven’t yet established trust with
- When working on a large-scale project with many deliverables
Milestone payments are a way to guarantee that you get paid for your hard work, even if you’ve only completed a small portion of it.
For example, let’s say you establish a $10,000 contract with a client and expect the project to take you five weeks to complete. It would be foolish to do all of that work without receiving a single payment!
It’s much better to break the project down into milestones.
In this scenario, you could create ten $1,000 milestones or five $2,000 milestones as a way to ensure that you’re receiving payment throughout the project. How you break them up is something you’ll need to negotiate with your client.
It’s also important to tie those milestone payments to due dates, especially when working with a new client.
To curb scope creep.
If your client keeps adding to the project or changing the details or direction of the job, the scope can increase, which means you’ll have more work to do. Having milestone payments for a fixed amount of work offers some protection against this.
Milestone payments with due dates are beneficial to the client as well. After all, they create a structure for a project and help to ensure that you’re staying on track.
Milestones can also help you maintain a reasonable cash flow throughout the duration of a project. This is helpful when creating budgets, doing expense allocations, and paying any employees or subcontractors you may have.
For most freelancers, knowing that you’ll be paid X amount every ten days is almost always better than waiting to receive one lump sum at the end of a five-week period.
Milestones are a way to ensure that you receive incremental payments, even if you only finish a small portion of the project. Freelancers work hard and need to protect themselves. Your time is valuable, and you deserve to be paid for the work you do.
How to Protect Your Interests With Milestone Payments
There are several things to consider when setting up milestone payments with a client.
Here are four things to know that can help you create milestone payments that work in your favor:
Agree on the Terms Before You Begin the Work
From payment amounts to due dates, negotiate all of the details and terms of your milestones with your client before any work begins. Include your schedule of milestone payments in your contract along with the total project fee.
You should also include any late fees that apply if they miss payable milestone due dates.
Structure Your Milestone Payments the Right Way
Before setting up a milestone payment system, you and your client should agree on its structure.
You can base milestones upon specific time frames or specific phases of the project. For example, you may decide that you want to be paid for your logged hours every other Friday.
If there are multiple tasks that comprise the total project, you might prefer to set milestones by project phase or individual task.
However you set up your system, be sure that every task or block of hours has a corresponding milestone due date.
Milestone payments should work for both the freelancer and the client, so it’s always best to negotiate a milestone payment structure that you both feel comfortable with.
If your client wants to pay once a month and you prefer weekly payment, negotiating a bi-weekly payment schedule is a great compromise.
Pay Attention to Red Flags
Milestones protect both the freelancer and the client. If a new client is hesitant to set up milestone payments, this is a BIG RED FLAG!
Whenever you come across a client who doesn’t agree to a milestone payment schedule, be cautious. It could be that they don’t have the cash on hand to pay you in stages, or they may not plan on paying you at all.
Unfortunately, as freelancers, we sometimes have to deal with clients that want to take advantage of us and don’t want to pay for the work we do. This is why it’s always essential to have a contract in place before you start working.
Establish a Clear Line of Communication With Your Client
Before you begin a project, especially with a new client, establish a clear line of communication. Be sure to have your client’s contact info, phone number, email, and various ways to get in touch with them in case a problem arises down the road.
It’s also a good idea to have a contact for the business owner, just in case your point of contact leaves the business.
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How to Handle a Missed Milestone Payment
Milestone payments do get missed. Sometimes, it’s intentional, but it’s usually an honest mistake.
If a client misses a milestone payment, there are five ways to handle it:
1. Politely Ask for Payment to Be Released
The first step in addressing a missed milestone payment is to contact your client and politely ask them to release payment.
They might be busy, away on vacation, or out sick and not even realize that they missed a payment. If you submit invoices for payable milestones, there’s also a possibility that they did not receive your invoice.
Reach out with a brief and professional message, such as “This is just a reminder that milestone payment XX was due on XX date,” and attach a copy of your original invoice.
In most cases, this will be enough to get your payment released.
2. Be Reasonable in Your Payment Expectations
It’s important to have reasonable expectations about receiving payments.
A one or two-day delay in payment is not that uncommon, so never attack a client for being a day or two behind (especially if it’s a client with whom you have a good rapport).
Seven to ten days is a reasonable amount of time to let pass before contacting the client for payment. Depending on your relationship, this may be the point where you need to decide if you want to continue working on the project.
3. Don’t Be Afraid to Send a Reminder Message
The more time that passes, the more likely it is that you’ll need to send a follow-up “reminder” email. At this point, you can put the pressure on and inform the client that you’re pausing the work until they release the milestone payment.
If you’ve included milestone payments in your contract, then failure to make milestone payments puts your client in breach of the contract. There’s no reason to hold up your end of the contract if they’re not willing to hold up theirs.
4. Contact the Top Person in Charge
No one wants to work for free. If your polite emails and gentle reminders aren’t helping, your next step is to contact a higher-up.
Reach out to the business owner or manager, explain the situation, and let them know that you’re not getting a response from your contact. Include a copy of the unpaid invoice and a copy of the contract.
5. Last Resort: Seek Legal Action
Your last resort for getting payment is to take legal action and sue the business for the money they owe you.
Keep in mind that paying for legal counsel and filing court documents will cost you. You’ll need to determine for yourself if it’s financially worth it to incur more expenses and spend more time to collect the money a client owes you.
If the principle means more to you than the money, then it’s perfectly reasonable to sue.
Remember: As a Freelancer, You’re in Control
Freelancers are small business owners, and business owners choose their own payment terms, contract prices, and work scope. Freelancers also get to decide who they want to work with and who they don’t.
If a client consistently ignores your payment schedule, refuses to pay altogether, or disappears on you mid-project, ask yourself if it’s in your best interest to work with them again.
Time spent chasing down payments is time not spent on payable tasks, so it may be smarter to cut ties than continue working together.
Because these sites have built-in protections for milestone payment procurement. They also allow you to leave client feedback for other freelancers to see.
If you do come across a troublesome client on a freelancer platform, leaving honest feedback can save other freelancers from encountering the same issue.
As a freelancer, it’s easy to feel like you’re all on your own. Clients want you to do tons of work and pay little. New clients can be hard to come by, so you sometimes feel trapped working with the ones you have, even if they aren’t ideal.
With Gigly, you can take control of your freelance career and enjoy a host of membership benefits, such as health and wellness benefits, financial and legal benefits, and discounts on things like office supplies, rental cars, hotel rooms, and shipping packages.
To learn more about how you can save money and make the gig economy work to your advantage, check out Gigly now.