Friendly advice for first time freelancers

Regardless of whether you are an existing client of Snowdon Consulting Group, a full-time employee thinking about working freelance or an existing freelance worker just reading these web pages, the following may be of interest;

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Think about a 90 day invoice payment term:

Many of you learned your respective skills during years of being employed with a large company. You have become accustomed to monthly salaries with no input regarding timing or security of payment. Being freelance is the same as being self-employed, you have much more control over your work contracts and you exist as a business entity raising invoices periodically for work done. Those invoices may have 7, 14, 21, 30, 60 or even 90 days for payment depending on the agent / end-client contract negotiated.

Contracts are terminated for an insolvent party:

In choosing an agent or client, thought should also be given to their financial stability as well as their service levels and prices. Agencies usually receive your contract rate plus a mark-up of usually between 10% and 25%, but pay the freelance consultants monthly. Therefore the mark-up is to cover the timing difference between their obligation to pay you, the consultant, and when their invoice is paid by the end-client. In this instance the agent is shielding you from the financial fluctuations of the contracted arrangement with the end client. You are paying for that shielding with a reduced rate from the agency although the agency provides many more services included overall e.g. CV circulation and assistance with interviews etc.

Plan B is to have savings to cover the unforeseen:

When considering a contract offered by an agency or end client direct, you must feel confident that your work, when invoiced, will actually get paid. You could have a fantastic rate and work for say 3 months, submitting monthly invoices payable after 90 days, only to find that the agency has gone bankrupt and you are just one in a long list of non-preferential creditors. 3 months work down the drain. There are hundreds of other reasons why invoices could be delayed for payment or never get paid, all of which leave you out of pocket either temporarily or permanently. None of you would implement a business system for a client without some sort of redundancy planning so why think any other way for your own personal finances! As high income professionals, you freelance Consultants are amongst the most highly educated clients that any business could have.