6 Ways to Get Paid as a Freelancer or Consultant
The Best Forms of Payment for Freelancers
The gig economy has been booming—and it appears that freelancing is still on the rise. According to the Freelancers Union, nearly 57 million Americans did freelance work in 2019, and that number has been increasing.
If you plan on freelancing at some point in your career or you’re already doing it, one of the first things you’ll need to figure out is how to accept payments from clients.
As with anything else, some options are better than others.
6 Forms of Payment for Freelancers
Accepting checks is one of the easiest ways to receive payment as a freelancer. The biggest advantage is that you pay no fees for depositing a check into your bank account. That alone could make checks one of the best forms of payment for many. The downsides to accepting checks include delays: waiting for the check to arrive in the mail and waiting for the check to clear in your bank account. If you need the funds available as soon as possible, electronic payment options might be preferable—but you can’t beat the price of checks.
Concerned about customers bouncing checks? See how to avoid taking bad checks: Rules for Accepting Payment by Check
PayPal is a common form of payment for freelancers. It’s free to open an account, and clients can pay you electronically as soon as you complete your work. The money appears instantly in your PayPal account, and you can then easily transfer funds to your bank account. Transfers to your bank can take time unless you pay additional fees, but you can also use a PayPal debit card for instant spending from your PayPal balance.
The big downside? Fees. For PayPal payments you receive, expect to give up a 2.9%transaction fee, based on the amount you receive, plus $0.30.
While a small percentage seems like a trivial amount, it can mean losing thousands of dollars per year or more if you accept the majority of your payments through PayPal or other methods with similar fees.
Freelancers can accept credit cards as a form of payment, and customers may prefer paying with plastic. These payments are often processed through PayPal or another online payment system.
You can also purchase your own credit card processing equipment to accept payments from clients. You’ll need wireless credit card terminals and credit card processing software or a merchant account. Several vendors have hardware that works with your mobile device, so you don’t necessarily need the bulky terminals you see at checkout counters. Keep in mind that most freelancers who accept credit cards use apps or other service providers to get paid. For example, you can take credit cards using your PayPal, Google Wallet, Wave, Square, or QuickBooks account—eliminating the need to purchase costly equipment.
- See inexpensive ways to get started: 4 Affordable Mobile Processing Solutions.
Electronic Funds Transfer
A quick, easy, and inexpensive way to get paid is through an electronic funds transfer (EFT). Payments move directly from one bank account to another without any apps or credit card processing companies involved. The funds may take two to four business days to move from one bank to the other. But once the money arrives, you do not need to worry about transferring it again like you would with PayPal.
One challenge of EFTs is that your bank—or your client’s bank—needs to accommodate those transfer requests. That’s sometimes difficult (or costly) when you’re moving funds from one bank to another. Because of this, clients that hire freelancers often prefer to use checks or online apps to pay their freelancers. However, a client with a robust payroll provider may be able to set up payments easily.
In addition to helping you track income and expenses, your accounting software might facilitate your payment collection process. What’s more, the revenue is automatically updated and linked to the client when the same service handles billing and accounting. Programs like QuickBooks or FreshBooks can create invoices and make payment simple for your clients. They may even send reminders and let you know if clients have viewed your invoice or not. If you’re already using an accounting program, find out if it will also send invoices and handle payments. You may need to pay an additional fee, as well as transaction fees.
Similar to PayPal, Square Cash is an online option for freelancers to accept payments. But instead of moving money from your online account to your bank account, the money goes into your checking account. Like an EFT, the funds take several business days to arrive in your account. Fees may be slightly less than what PayPal charges at 2.6 to 2.9% of payments received, plus a per-transaction charge. For personal use, sending money from one person to another is free of charge. Clients don’t need a Square Cash account or app—they can pay online at www.Cash.me.
Tips for Getting Paid
Make it Easy
Never begin working on a job until you have read and signed a freelancing contract. To prevent delays in payments, make it as simple as possible for clients to pay you. Provide multiple options so that they can use the one they’re most comfortable with. For example, on invoices, include a “Pay Now” button, offer credit card payments, and include instructions for paying by check.
Don’t wait too long to invoice for the work you’ve completed. It’s crucial to keep earning revenue, and invoicing can seem like a distraction, but it’s also important to collect the revenue that you earn. If you wait too long, clients may need additional reminders, and they may get the impression that you’re in no rush to get paid.
Monthly invoicing is one common way to go for a freelancer, and a good way to organize your invoicing and payments.
Sending an invoice doesn’t guarantee payment. Set up a system to ensure that you’re actually getting paid, and reach out—politely—to clients who are slow to pay. They may be busy, but it’s also possible that they’re reluctant to pay. Whether they’re just dragging their feet, or they have a problem with your service (or billing process), communicate to prevent things from getting out of hand. Again, some billing services handle this task for you. You may be able to select options with your service, such as “send reminder after 30 days” if an invoice goes unpaid.
Note: Justin Pritchard updated this article.
Freelancers Union. "Freelancers Union." Accessed Aug. 21, 2020.
PayPal. "Make Payments." Accessed Aug. 21, 2020.
PayPal. "Merchant Services." Accessed Aug. 21, 2020.
PayPal. "Credit Card Fees, Send Money Fees & Other Charges." Accessed Aug. 21, 2020.
Square. "Next-Business-Day Transfer Schedule." Accessed Aug. 21, 2020.
Square. "Learn About Square's Fees." Accessed Aug. 21, 2020.