Terms of payment
Will we ever get paid? Due diligence. Payment practices.How long is too long? Who decides the terms of payent? All questions that plague any freelancer, and again, one of the topics that crops up regularly on discussion forums.
I think there may be an issue here that is peculiar to freelancers, and which seems to me to lay at the heart of the issue.
A freelancer's clients are typically incorporated bodies or in any event, organsations, not individuals. Credit terms between companies and similar bodies (B2B, if you will) can be quite long (generally at least 30 days, but 90 days is not unusual in Italy) the efforts of the EU in this regard notwithstanding.
So between corporate entities, lengthly terms of payment are the norm, and in general apply throughout the supply chain, to a lesser or greater degree and everyone involved is in the same boat - clients and suppliers alike are all corporations, playing along with corporate standards and norms and practices.
Hence a freelancer's corporate clients, the freelancer's sources of income, will be expecting to play to corporate rules.
However, as an individual, the majority, if not all, of the freelancers' own suppliers, the freelancer's outgoings, tend to be consumer relationships, with most bills due to be paid within the month and other supplies typically being cash transactions.
The cause of the cash-flow anxiety is therefore easy to see, as freelancers live on the cusp between corporation and consumer. The money that is "earned" in a given month reaches the freelancer's bank account much more slowly than the expenditure for that same month leaves.
To be honest, though, the solution is also easy to see.
Keep a decently-sized float. The precise figures will depend on individual circumstances, but money I am spending at the moment (April) was earned (i.e. the work was done) in February or even January, and I am unlikely to be able spend the money I earned this month until June, or indeed July.
Lest there be misunderstanding, I am no apologist for lengthy credit terms. The EU's efforts to ensure all small businesses in particular are paid with 30 days are to be applauded. I have stopped working with certain clients purely because the terms of payment seemed excessively long. But a lot can change in two months, say. A business that was solvent when producing the purchase order can be unexpectedly sliding down the pan by the time they deign to consider coughing up, if they have decided to wait 60 days before even looking at your invoice. We should all be careful.
However, having entered into a business relationship, I do not expect payment on delivery. That is all.
List of ramblings, musings and what have you