Payment Processor for Freelancers: 12 Tips to Avoid Common Mistakes 

As a freelancer, your payment processor is more than just a means of getting paid; it’s a vital part of your business infrastructure. 

It ensures your hard-earned money reaches you promptly and securely so you can keep the lights on and continue doing what you love.

While the importance of choosing the right payment processor might seem evident, many freelancers overlook this step, considering it a secondary concern. 

Unfortunately, this oversight can lead to many problems – lost payments, exorbitant fees, security issues, etc.

In this article, we’ll delve deep into the significance of payment processors for freelancers and discuss some tips to avoid common mistakes when managing payments. 

 

 

Key Takeaways

• A clear and comprehensive contract is crucial in defining the scope of work, payment terms, and setting expectations with your client.
• Asking for a deposit reduces risk and compensates you for your initial work.
• Regular and professional invoicing and diligent follow-ups help ensure timely payments.
• Providing detailed task descriptions and transparency about your work process can help justify your rates.
• Always discuss potential extra costs upfront to prevent disputes and maintain client trust.
•  If a project is over budget, discuss it with the client and get their agreement before continuing.
• Don’t hesitate to pause work or even end your services for clients who consistently fail to pay on time.
• Consider implementing incentives for prompt payment and penalties for late payment to encourage on-time payments.
• An escrow service can provide added security, ensuring you get paid after completing the approved project.

 

An Overview of Common Mistakes Freelancers Make While Choosing a Payment Processor

 

As you embark on your freelance journey, it’s easy to fall into certain traps, especially when selecting a payment processor. 

Awareness is the first step toward prevention, so let’s briefly discuss some of the most common mistakes freelancers make. 

 

Overlooking Transaction Fees

When caught up in the thrill of landing a new project, it’s easy to dismiss the tiny percentage payment processors take from each transaction. 

But small percentages can add up to significant amounts over time. Some freelancers overlook their impact, resulting in an unpleasant surprise when their earnings are less than expected.

 

Ignoring International Transactions

With freelancing, you can work with clients from all over the world. It’s one of the perks of the gig, but it also comes with challenges. 

One common mistake freelancers make is not considering the international capabilities of their payment processors. 

Not all processors handle international transactions smoothly; some might charge extra fees. 

 

Neglecting Security Measures

In this digital age, the importance of secure transactions cannot be overstated. 

Unfortunately, some freelancers overlook the security measures implemented by payment processors. 

Choosing a platform with weak or non-existent security can lead to fraudulent transactions, financial losses, and a damaged reputation.

 

Failing to Consider Client Preferences

Your clients are crucial to your freelancing business. While you should choose a payment processor that suits your needs, it’s also essential to consider your client’s preferences and needs.

Some clients prefer traditional bank transfers, while others are comfortable with digital wallets. 

Failing to consider these preferences can lead to delayed payments and disgruntled clients.

 

Lack of Customer Support

Imagine running into a payment issue and not having any support to turn to for quick resolution. Frustrating, right? 

Some freelancers underestimate the value of reliable customer service when choosing a payment processor.

Quickly resolving payment issues is crucial to maintaining smooth business operations and ensuring client satisfaction.

 

Not Considering Scalability

As a freelancer, your goal is to grow your business over time. This growth might mean taking on more clients, expanding your services, or building a team. 

Some freelancers make the mistake of not considering a payment processor’s scalability. As your business grows, you need a processor that can comfortably handle the increased volume of transactions.

These are just a few common mistakes freelancers make when choosing a payment processor. 

While they may seem daunting, the good news is that they can be easily avoided with the right knowledge and strategy.

 

 

Why Freelancers Use Online Payment Apps to Accept Payment

 

Remember when payment was time-consuming, often involving paper checks and long waiting times? 

Thankfully, those days are long gone. 

Today, we’re fortunate enough to have various online payment apps. And for freelancers, these tools aren’t just a convenience – they’re a lifeline.

So, why exactly do we freelancers find online payment apps so indispensable? Let’s dig into it:

 

Swift and Secure Transactions

For one, online payment apps offer speed. Gone are the days of waiting for a check to clear. With just a few taps, you can send an invoice and receive payments instantly, regardless of your client’s location. 

These apps also prioritize security, using encryption and other high-tech safeguards to secure your transactions and financial information.

 

Flexibility and Convenience

Another reason why freelancers love online payment apps is the flexibility they offer. 

Most of these platforms are designed to handle multiple currencies, making them perfect for freelancers who have international clients.

Moreover, these apps offer convenience. They often come with user-friendly interfaces, easy invoice creation, and the ability to track payments – a perfect feature for the busy freelancer. And because they’re online, you can access them anytime, from any device, whether at home or not.

 

Increased Professionalism

A well-designed digital invoice sent promptly after project completion is a great demonstration of professionalism. It shows you mean business and that you value your time and expertise. A clear and attractive invoice can also avoid confusion and misreadings that lead to delays in payment.

 

Improved Cash Flow

When you get paid faster, your cash flow improves. And when your cash flow improves, you can focus more on doing what you love instead of chasing payments. 

Maintaining a steady cash flow is crucial as a freelancer, as it helps manage operational costs and prepare for unexpected expenses.

 

Automation Capabilities

Online payment apps often have automation features that can greatly advantage freelancers. 

Imagine setting up recurring payments for long-term clients or automating invoice reminders for those who are forgetful. 

This reduces administrative work, allowing you to spend more time doing what you do best.

 

Wide Acceptance

As online payments have become more popular, so has the acceptance of these platforms. 

More and more businesses and individuals are comfortable with online transactions, which means they’re more likely to hire freelancers who can accommodate this payment method. 

 

Enhances Client Experience

Lastly, the use of online payment apps can also enhance the client’s experience. They make it easy for clients to pay in a manner that’s convenient for them, be it through their credit card, bank account, or digital wallets. 

Plus, they also often offer payment reminders, which can help keep your payment schedule on track without you having to prompt clients yourself.

 

 

Factors to Consider When Choosing a Payment Processor

Selecting the ideal payment processor for your freelance business requires careful consideration. 

To help you make an informed decision, let’s delve deeper into the key factors you should assess when choosing a payment processor.

 

Payment Processing Time

Waiting for payments can be stressful and can disrupt your cash flow. Different payment processors have different processing times.

Some transfers fund instantly, while others take a few business days. 

Before settling on a processor, do some digging into their processing speeds to ensure they align with your needs.

 

Fees and Pricing Models

Each payment processor has its pricing model. Some may charge a flat fee per transaction, while others take a percentage of the transaction amount. 

Some may even have monthly fees. Take time to understand the pricing structure and how it would affect your bottom line based on your expected transaction volume and size. 

 

Country Availability

Geographical boundaries don’t confine freelancing. However, not all payment processors operate worldwide. 

The availability of the processor in both your country and your client’s country is a factor you need to consider. 

While researching, check the list of countries the processor supports.

 

Currencies Supported

Linked closely with country availability is currency support. If you have clients from around the globe, you’ll likely deal with multiple currencies. 

Ensure that the payment processor supports all the currencies that you need. 

Some processors may offer a seamless currency conversion process, which can be a boon when dealing with international clients.

 

Payment Methods

Not all clients prefer the same payment methods. While some are comfortable with direct bank transfers, others might prefer paying through credit cards or digital wallets. 

A versatile payment processor that supports various payment methods can accommodate more clients and provide a smoother transaction experience.

 

Transfer Limits

Some payment processors impose limits on how much money you can transfer at a time or within a certain period. 

If you work on a large project or have high-value clients, these limits could become an obstacle. 

Be sure to check if a potential processor has any such restrictions and if so, whether these align with your business model.

 

Notable Features

Lastly, examine the unique features that each payment processor offers:

• Security: Given the sensitive nature of financial transactions, a good payment processor should have robust security measures. Look for features like encryption, two-factor authentication, and fraud detection.
• Integration: If you use other tools for your freelancing business, like accounting software or project management tools, it can be beneficial if your payment processor integrates seamlessly with them.
• User Interface: A clean, intuitive user interface can make your life a lot easier. It can streamline your invoicing process, make tracking payments easy, and offer a better user experience.

 

 

12 Tips to Avoid Common Mistakes When Managing Payments

 

Here, we’ll discuss various measures you, as a freelancer, should take to avoid common pitfalls when managing payments. 

Each of these tips is designed to prevent mistakes, improve your client relationships, and enhance your business’ overall financial health.

 

1. Have a Clear Contract

Having a clear and comprehensive contract is crucial when starting any freelance project. It lays the foundation for a successful working relationship and helps prevent payment-related disputes.

To ensure that your contract is effective in managing payments and avoiding disputes, consider the following:

Be Detailed and Specific

Clearly define the scope of work, project milestones, deadlines, and other relevant details. The more specific and detailed your contract is, the better it will serve as a reference point throughout the project.

Include Payment Terms

Outline the payment structure, including the total project cost, payment milestones, and due dates. Specify whether you require a deposit upfront or prefer payment upon completion of specific project phases.

Specify Late Payment Penalties

To encourage timely payments, consider including a clause in your contract that outlines the consequences of late payments, such as late fees or interest charges. This helps incentivize clients to adhere to the agreed-upon payment schedule.

Define Project Changes and Revisions

It’s common for project scopes to evolve or require revisions along the way. Include a provision in your contract that outlines how changes will be handled, including any potential adjustments to the payment terms.

Seek Legal Advice

If you need clarification on the legal aspects of creating a contract, consider consulting with a lawyer familiar with freelancing contracts. They can guide and help ensure your contract complies with relevant laws and regulations.

The contract is a mutually agreed-upon document that protects both parties involved. Be transparent and open to negotiation, and ensure that you and your client clearly understand the terms and conditions outlined in the contract.

 

2. Require a Deposit

Requiring a deposit before starting work is a smart practice that safeguards your time and effort. 

To effectively implement the deposit requirement:

Determine the Deposit Amount

Assess the nature of the project, its duration, and the associated costs to determine an appropriate deposit amount. 

Typically, a deposit ranges between 20% to 50% of the total project cost. Ensure that the deposit amount adequately reflects the value of your time and resources.

Include Deposit Details in the Contract

Clearly outline the deposit requirement in your contract. Specify the deposit amount, the due date, and the preferred payment method. 

This ensures that both parties know the deposit expectations from the outset.

Communicate the Deposit Policy

Discuss the deposit requirement with your clients during initial project discussions. Clearly explain the purpose and benefits of the deposit and address any questions or concerns they may have. 

Open and transparent communication helps foster understanding and agreement.

Track Deposit Payments

Maintain a record of all deposit payments received from clients. This helps you stay organized and ensures a clear overview of the project’s financial status. 

Consider using accounting software or project management tools to streamline this process.

Balance Due and Final Payment

Clearly communicate when the balance of the payment is due and how it will be handled. Specify whether it will be due upon project completion, in stages, or based on specific milestones. 

This clarity helps manage expectations and ensures a smooth transition from the deposit to the final payment.

The deposit requirement should be fair and reasonable for you and your clients. It demonstrates professionalism, protects your interests, and helps establish a solid foundation for your working relationship.

 

3. Send Out Invoices & Then Follow Up

Invoices serve as formal requests for payment and provide a record of your services. However, it doesn’t stop at sending the invoice—you also need to follow up to ensure prompt payment.

Some key considerations include:

Professional Invoicing

Create professional-looking invoices with your business name, contact information, project details, payment terms, and payment due date. 

Utilize online invoicing tools or templates for ease and consistency.

Timely Invoicing

Send out invoices promptly upon completing project milestones or agreed-upon billing intervals. This helps ensure clients receive invoices promptly and know their payment obligations.

Payment Reminders

Follow up with clients on overdue invoices through polite and friendly reminders. Clearly state the outstanding amount, the due date, and any late fees or penalties specified in the contract.

Automation

Consider using invoicing software or apps that automate the process, allowing you to schedule reminders and track payments more efficiently.

Invoicing is not a one-time task but an ongoing process requiring regular attention. 

By sending out professional invoices and following up diligently, you increase the chances of receiving timely payments and maintaining healthy cash flow as a freelancer.

 

4. Break Down Tasks & Give Detailed Descriptions

Being transparent about your work process builds trust and can help when billing. 

Provide clients with detailed descriptions of tasks, the time spent, and how these contribute to the project. 

Don’t hesitate to:

Break Down the Project

Divide the project into smaller tasks or milestones, specifying what will be delivered at each stage. This ensures transparency and helps the client understand the progress and value of each phase.

Give Detailed Descriptions

Provide detailed descriptions of the tasks involved, outlining the specific deliverables, expected outcomes, and associated deadlines or requirements. Clear communication reduces the likelihood of misunderstandings and subsequent payment issues.

Provide Regular Updates

Keep the client informed about your progress by providing regular updates, especially for long-term projects. This helps maintain transparency and strengthens client trust.

Establish an Approval Process

Establish a mechanism for client approval at different stages of the project. It can be through email confirmation or a dedicated project management tool.

This approach clarifies to the client what they are paying for and can also justify your rate.

 

5. Be Upfront About Costs to Eliminate Surprises

No one likes unexpected costs. Be clear and upfront about all potential charges, including additional fees or expenses that might arise. 

Consider the following:

Detailed Cost Breakdown

Clearly outline the costs associated with the project, including any additional expenses such as materials, third-party services, or travel expenses. Break down the costs for each deliverable or milestone in your contract or project proposal.

Discuss Potential Extra Charges

If additional charges are possible due to scope changes or unforeseen circumstances, communicate this to the client upfront. Explain how such changes will be handled and the impact on the project timeline and budget.

Open Communication

Encourage open communication with the client regarding any financial concerns or changes that may arise during the project. Regularly discuss the project’s financial status to ensure everyone is on the same page.

By being transparent about costs and fostering open communication, you build trust and prevent unexpected financial surprises that could strain the client relationship.

 

6. If You’re Going Over Budget, Get the Client’s OK and Discuss Before Proceeding

Projects can sometimes expand beyond initial expectations. If you’re over budget, discuss it with your client before proceeding. Explain the situation, why extra costs are incurred, and then get their agreement before you continue.

Let’s break down the steps:

Identify the Issue

If you anticipate a project exceeding the agreed-upon budget, identify the reasons and determine the potential impact on the timeline and deliverables.

Client Communication

Initiate a conversation with the client promptly, explaining the situation and the factors contributing to the budget deviation. Be transparent and provide possible solutions or alternatives to address the issue.

Client Agreement

Obtain the client’s consent before proceeding with additional work or expenses beyond the original scope. This ensures that both parties are aware of the changes and agree to any adjustments in terms of cost or timeline.

By involving the client in the decision-making process and obtaining their approval, you can avoid surprises regarding budget overruns.

 

7. Don’t Hesitate to Pause Work if the Client Hasn’t Paid

You have every right to pause work if a client has yet to pay a due invoice, particularly if your contract stipulates this consequence. Your work is valuable, and you deserve to be paid for it.

Payment Terms Reminder

Send a friendly reminder to the client about the overdue payment, emphasizing the agreed-upon payment terms and the consequences of non-payment as outlined in your contract.

Pause Work

 If the client continues to delay payment, consider pausing work until the outstanding payment is resolved. Communicate your intention to halt progress until the financial obligations are met.

Payment Options

Offer alternative payment arrangements if necessary, such as setting up a payment plan or requesting a different payment method to facilitate resolution.

 

8. If You Give a Discount, Make Sure the Client Knows About It

Ensuring the client is fully aware of any discounts provided minimizes the potential for misunderstandings or payment discrepancies.

Clearly Communicate

Clearly state the discounted rate or percentage in your contract or project proposal. Highlight the regular price and the discounted price to avoid confusion.

Document in Writing

Confirm the agreed-upon discount in writing, either through an email or by updating the contract with the revised pricing. This serves as evidence and reference in case of any disputes.

Keep Record

Maintain a record of all discount-related communications and agreements for future reference and clarity.

Mind you, this gesture shows goodwill and reminds clients of the value you’re providing at a reduced cost.

 

9. Consider Giving a Discount for Prompt Payment

 Offering a prompt payment discount can benefit both parties. These benefits include:

Positive Reinforcement

A discount for prompt payment serves as a positive reinforcement for clients to settle their invoices quickly and efficiently.

Cash Flow Optimization

Prompt payments improve your cash flow, enabling you to cover operational costs, invest in growth, and maintain financial stability.

Stronger Client Relationships

Offering a discount demonstrates your willingness to reward clients who value and respect your work. It cultivates a positive relationship and encourages repeat business.

When considering a prompt payment discount, determine a reasonable percentage or fixed amount that aligns with your business needs and ensures a mutually beneficial arrangement.

 

10. Consider Charging Interest for Late Payment

Late payments can be detrimental to your freelancing business. 

To discourage late payments and compensate for any financial impact, charging interest on overdue invoices can be an effective strategy:

Include Late Payment Clause

Incorporate a late payment clause in your contract that outlines the interest rate or penalties for late payments. Clearly communicate this clause to clients.

Communicate the Policy

Ensure clients know the consequences of late payments by mentioning the interest charges in your invoice reminders and payment terms.

Enforce the Policy

If a client fails to make timely payments, strictly enforce the late payment policy by adding interest charges to their outstanding balance.

Implementing a late payment policy with interest charges encourages clients to prioritize prompt payment, reducing the likelihood of payment delays and improving their financial stability.

 

11. Don’t Be Shy About Firing Non-Paying Clients

While it’s important to maintain client relationships, a client who repeatedly fails to pay on time might not be worth the stress and financial instability. 

Communication and Warnings

Engage in open and honest communication with non-paying clients. Clearly express your concerns and expectations regarding their payment obligations.

Set a Deadline

Provide a final deadline for payment, emphasizing the consequences of non-payment, such as discontinuing work or pursuing legal action.

Professionalism

Maintain professionalism throughout the process, ensuring that all communication is documented and respectful.

Firing non-paying clients may be challenging, but it’s essential for the long-term health of your business. Focus on building relationships with clients who value your work and respect your payment terms.

 

12. Consider Using an Escrow Service

Consider using an escrow service to mitigate payment-related risks and establish trust with new clients. 

Here’s how it works:

Third-Party Mediation

An escrow service acts as a neutral third party that holds funds from the client until specific project milestones or satisfactory work delivery are achieved.

Protection for Both Parties

 By utilizing an escrow service, freelancers gain assurance that they will receive payment upon meeting the agreed-upon project requirements. On the other hand, clients have peace of mind knowing their funds are protected until the desired outcome is delivered.

Escrow Fees

Keep in mind that escrow services usually charge a fee, which should be factored into your pricing and negotiation with the client.

An escrow service can provide an added layer of security and peace of mind for freelancers and clients, particularly in situations involving larger projects or new business relationships.

 

Best Payment Method for Freelancers

 

As a freelancer, you’re likely familiar with the various payment methods available to you. 

There’s an array of options from traditional bank transfers to digital wallets. 

But let’s face it; not all payment methods are created equal, especially when it comes to freelancing. That’s where GETTRX comes into play.

Related Article: Best Payment Processor for Nonprofits

 

Why Choose GETTRX?

 

GETTRX combines the best payment methods into one streamlined, easy-to-use platform that offers freelancers speed, affordability, and security. 

But don’t just take our word for it; let’s delve into what makes our platform the best payment method for freelancers.

1. Low Transaction Fees

As a freelancer, every penny counts. High transaction fees can take a significant chunk out of your earnings, and we offer one of the lowest transaction fees in the market. That means more money in your pocket at the end of each project.

2. Top-Notch Security

We understand the importance of secure transactions and use cutting-edge encryption technology to protect your financial information. 

You can rest easy knowing that your earnings are protected.

3. Excellent Customer Support

Ever run into a payment issue and had to wait days for a response? With GETTRX, those days are over. 

Our customer support team is available round the clock, ready to assist you with any issues. 

That means less time spent troubleshooting and more time doing what you do best.

4. Scalability

As your freelance business grows, so do your payment processing needs. GETTRX is built to scale alongside your business. 

Whether you’re just starting or managing a growing team, we offer features that evolve with your needs.

5. User-Friendly Interface

We offer a clean, intuitive interface that makes managing payments simple and stress-free. 

Why settle for less when you can have the best? Make the switch to GETTRX today and experience the difference firsthand. 

Say goodbye to common payment pitfalls and hello to smooth, seamless transactions. 

You’ve got the skills and the clients—let GETTRX take care of the payments.

 

Final Thoughts

The financial aspect of freelancing can be tricky, but with the right knowledge and tools, you can ensure a smooth and efficient payment process. 

Remember, your work is valuable and should be treated as such. Be bold in standing firm on your payment terms, and choose a payment processor that caters to your specific needs. 

By avoiding common mistakes, implementing the tips we’ve shared, and choosing GETTRX, you can focus more on your craft and less on chasing payments.

 

Frequently Asked Questions

1. How often should I invoice my clients?

Invoicing frequency can depend on the project and agreement with your client. Typically, freelancers invoice either monthly or at the end of a project. For larger projects, you might invoice in stages or milestones.

2. Is it OK to use multiple payment processors?

Yes, it’s acceptable and can even be beneficial to use multiple payment processors. This flexibility can cater to diverse client preferences and provide a backup if one service is experiencing issues.

3. What can I do if a client disputes an invoice?

Review the terms outlined in your contract if a client disputes an invoice. Try to understand their concerns, provide evidence of completed work, and attempt to reach an agreement. If disputes continue, consider seeking legal advice.

4. Should I charge clients for the payment processor fees?

Some freelancers choose to incorporate payment processor fees into their rates. While you can pass these fees to your clients, be transparent. Some clients prefer to pay through a method that doesn’t incur extra charges.

5. How can I ensure my invoices are professional?

Professional invoices should be clear, well-organized, and include all essential details: your contact info, a breakdown of services, total due, and payment deadline. Consider using invoicing software to create sleek, professional invoices.

6. How can I protect myself against currency fluctuation in international payments?

Consider using a payment processor that offers a fixed exchange rate for international payments. Additionally, you could adjust your rates to account for potential currency fluctuations. Always discuss these considerations with your client upfront to avoid misunderstandings.