Contracts for Creative Freelancers: Payment Terms | Katie Lane | Skillshare

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Contracts for Creative Freelancers: Payment Terms

teacher avatar Katie Lane, Attorney & Negotiation Coach

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

    • 1.



    • 2.

      What are payment terms?


    • 3.

      Good Payment Terms


    • 4.

      Getting Paid for Services


    • 5.

      Getting Paid Royalties


    • 6.

      Bad Payment Terms


    • 7.

      Ugly Payment Terms


    • 8.

      If You're Already Stuck with Bad Terms


    • 9.

      Final Thoughts


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About This Class

Do you know what payment terms to use in your contracts to make sure you get paid on time?

To make sure you get paid for that extra work the client keeps adding?

Or how to make sure a cancelled project doesn't leave you empty handed?

In this class, the third in the Contracts for Creative Freelancers series, I'll explain how to make sure the terms in your contracts will help you get paid with minimal fuss.

Knowing what good payment terms are is great, but you also need to know how to spot, and avoid, bad ones. You'll learn how to identify bad terms (including the really ugly ones) and what changes you can make to improve them. 

Don't let contracts intimidate you! Learn what you can do to protect yourself and get paid fairly for your work.

Other Contracts for Creative Freelancers classes:

How to Fix Bad Contract Terms

Should you do 'Work for Hire'?

Credits for all images and music used in this class are contained in a PDF in the Class Project section. The PDF contains links to each image and the music track used. 

Meet Your Teacher

Teacher Profile Image

Katie Lane

Attorney & Negotiation Coach


Hey, I'm Katie! I teach creative professionals how to protect their rights and get paid fairly for their work.

I'm an attorney who works with people who do creative work for a living: comics creators, game designers, illustrators, marketing professionals, musicians, and authors, just to name a few. I also work as a negotiation coach, helping people who are intimidated by conflict tackle negotiations with confidence and calm. 

But long before any of that, I was an actor, and I was always frustrated by the fact that it was hard to find truly helpful legal and business advice. So much of what I found was generic business advice half-heartedly translated for artists. Instead of waiting for someone else to create legal and business g... See full profile

Level: Beginner

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1. Introduction: Welcome to the third lesson in the contracts for creative freelancers series. Today we're going to talk about payment terms, the good ones, the bad ones, and the really, really ugly ones. My name is Katie Lane and I'm an attorney and negotiation coach. I work with creative professionals and I have read hundreds of contracts for creative services. I've learned a thing or two about what makes them work well and what can result in calamity. In this lesson, I want to share with you what can make a contract terms about payment good, and what mistakes and oversights can result in a very bad, no-good situation. I want you to get paid well and on time, obviously, but I also want you to know what to do and how to negotiate if your clients propose a bad or an ugly payment term. We'll be talking about that as well. In this class, I'll be focusing on getting paid for services. I'll also talk a little bit about getting paid royalties. I am not going to be talking about getting paid for things like when you sell your work on Etsy or when you sign a whole sale contract with a retailer. The reason being is that in those situations, generally, it's more straightforward, either because the platform that you're using has clear guidance on what to do if payment becomes a problem or because the contract more closely follows something called the Uniform Commercial Code. I am not going to be talking about specific laws, but all of my experience is within the United States. I can't guarantee that the things I'm going to be talking about will be relevant for you if you're outside of the United States. Since most of this class is about how to write contract terms and how to understand the ones that you're reading. I think my advice will work for you no matter where you are. But I just want to be up front about what my experience is and what you can expect me to be talking about. Another important point is that I am a lawyer, but I am not your lawyer because this is an online class. None of this is legal advice. It's legal education, and it's meant to empower you with the information that you need to make the best decision for you and your career. But it is not advice of what you should be doing specifically in your legal situation. To help guide you through this class, I'll be using videos of me talking to you like this, slides that have details and specific information, and photos that are related to the topics that we're discussing. If you click over to the class project, you'll find a PDF that has all of the contract language I'll be using as examples throughout the class. It can be hard to read contract language regardless, but particularly when it's on slides. I'd really encourage you to go and download the PDF and use it to follow along when we get to those videos where we're discussing specific contract language. That's all the administrative business. Let's talk about getting paid. 2. What are payment terms?: Payment terms are the terms in a contract that explained how much will be paid for your services and when that payment is due. It sounds pretty straightforward. Yes, and how much you'll be paid and when can be pretty straightforward, but if you stop there when you're reviewing a contract, you'll miss out on the chance to address other aspects of being paid. For instance, what happens if payment is a late? What happens if the scope of the project changes? What happens if the project is canceled? In each of those instances, you want to know how it will impact you are getting paid. Your contractor should address each of these possibilities so that both you and your client know what to expect if they happen. The contract doesn't need to have step-by-step instructions, but it should provide you with enough information that you understand what the triggering event could be. For instance, what happens if you don't get paid on time? What the consequence is going to be if that trigger occurs? In this case, it might be that you stop working on the project until payment is made, and then what the ultimate consequences going to be or the reaction is going to be if the problem isn't resolved. In this instance, I would recommend that the contracts specifically say you can push out the timeline and the delay in the timeline isn't your fault because it's about your client not paying you. One of the biggest improvements that you can make to just about any contract is to ensure that the payment terms encourage your clients to pay you quickly. This may seem obvious, but you'd be surprised to find out how many contracts actually encourage clients to delay paying their contractors and encouraged them to be cautious. For instance, a payment term that's tied to a specific date encourages quick payment because the client wants the product to keep moving forward, and in order for that to happen, they need to pay you on time. But payment upon acceptance where the client has to review what you've given them and say, yes, this is exactly what I commissioned, actually encourages your client to be really cautious and delay paying you on time because they want to make sure what you've given them is exactly what they want. You can give your clients the opportunity to review your work and make sure it's exactly what they wanted without delaying when you'll get paid, and in this class, I'm going to show you exactly how to do that. Here are the areas of a contract where you're most likely to find terms that impact how and when there'll be paid. Payment or compensation, termination, Statement Of Work or SOW, delivery schedule or timeline and Contingent Compensation. You see that if you only pay attention to the terms that are in the section titled compensation, you'll miss out on all of these other sections that can have terms that impact how and when you'll be paid, and if you only pay attention to how the numbers add up when you're reviewing a contract, not what's triggering payment and what can delay that payment, then later on you're going to spend a lot of time and energy convincing your client to pay you, and that's not a good use of your time. In the next video, we're going to talk about exactly what makes a payment term good. 3. Good Payment Terms: Good payment terms are terms that support your project. They help you get your work done on time and with minimum hassle and that means they might change from project to project. For example, if you're doing a project that will take a couple of months and where you'll be creating several versions of the final deliverable, milestones can make a lot of sense. They instill confidence in your client and can help you even out your cash flow. But if you're doing a quick project that you'll turn around in a week, start to finish, breaking the payment up into several different payments doesn't make sense. It'll be a hassle for you and your client and it will require so much administrative [inaudible] that it'll take time away from getting the work done. Before you can determine what type of terms are going to work best for you, you need to understand how payment terms can work in a contract. Payment terms should have three basic parts: an obligation, a trigger, and a consequence. The obligation explains who is required to pay and what they're required to pay. Payment terms should always be explained with a focus on who has the obligation to pay rather than on who has the right to be paid. For example, contractors fee for the project is $1,500, it doesn't tell us who has to pay that fee. It only tells us how much the fee is. Without information about who is obligated to pay it and when, it's difficult to enforce payment with this kind of term. In contracts, obligations use the verb Shao. In our example, we could make the obligation clear by changing the language to say, contractors fee for the project is $1,500, the fee. Client shall pay the fee on the following schedule. Now we know how much you're going to be owed for your work and who is obligated to pay it. We've defined what you're owed using parentheses at the end of the phrase that defines your fee. It explains that your fee is a proper noun with a capital F so that anytime Fee with a capital F shows up in the contract, it means $1,500 and it makes it a lot easier to refer to over and over again without having to say the contractors fee which is $1,500. We've also indicated that the client's obligation to pay you will follow a particular schedule. Which means there are defined triggers for payment, the second element of a good payment term. A trigger is the event that turns a potential obligation into an active obligation. For instance, if you hire me to review a contract for you, I'll tell you that the fee is $500 and you will have a potential obligation to pay me $500. That obligation isn't active, it isn't triggered until I've reviewed the contract. In my opinion, people give far too little attention to what the triggers are in their payment terms. To oversimplify it just a little bit, a good trigger is one where they get what they want when they pay you and the bad trigger, it's when they get what they want before they have to pay you. For example, if you have to finish the entire project, turnover the final files and wait to get approval before you're paid, that's a bad trigger. But, Katie I hear you asking, "I want the client to be pleased with my work, I want to make sure that they approve it" and to that I say, of course, but you can do that without tying up your payment. For example, if you were doing an iterative project you could build in several opportunities for the client to review the work and provide feedback. That way, by the time you're giving them the final files, you're both very certain that the client is getting what they want. If you do use approval as a payment trigger in your contracts, it's sometimes called acceptance. You want to make sure that your contract very clearly explains what the objective criteria is for approval. You never want your client's obligation to pay you to be triggered by subjective standards. You have no control over their subjective opinion of something and because you have no control over it, it limits your ability to control when and how you'll be paid. In our example from earlier, the trigger language may look like this, contractors fee for the project is $1,500 the Fee, client shall pay the Fee on the following schedule: Six hundred dollars paid within five business days of client signing this agreement. This payment is a non-refundable deposit. Nine hundred dollars paid within five business days of contractor delivering the print ready files to client. Signing the agreement is the first trigger and delivering the files is the second. The last but absolutely not least element to a payment term is the consequence. What happens if the payment doesn't happen when it should? Freelancers commonly use late fees as a consequence and while I understand why they do, I don't think it's the most effective consequences for you to use. Think about it. If your client owes you a $1,000 what's more motivating? Knowing that if they're late, they're going to have to pay you $20 a month until they catch up or knowing that if they don't pay you on time, the project is going to stop. Can be delayed and eventually run the original deadline, which will be their responsibility, not yours. When you're crafting consequences for your payment terms, think about what your clients are most interested in. What did they care about? What matters to them. Is that the project getting done on time? Is it getting your rights to the work? Use what they care about to craft an infective consequence if they don't pay you. The idea is not that these consequences are going to happen all the time. The idea is that the consequence is so significant that they want to avoid it and in order to avoid the consequence, they pay you on time. I think the two most effective consequences are either stopping your work or delaying when you transfer intellectual property rights. Now the delay in transferring rights isn't always available, particularly if you're doing work for hire. If that's your situation, I would really encourage you to watch the second lesson in contracts for creative freelancers all about should I do work for hire? There may be a consequence in your project that is even more powerful than stopping work or delaying or late transfer. If you're having trouble thinking about what might work well for you, think about what your clients asked for the most. What are the anxious about? What did they bug you about most often as the project is moving forward. Use that to help you figure out what your consequences should be. If you're doing creative work for a client that isn't in the creative industry, they may have cultural expectations about how payment should work. Those expectations will come from their industry and the work that they're used to doing and paying for. Just because it's what they want, it doesn't necessarily mean it's best for the work that you're doing with them. You may need to help them understand why your terms are different from the terms that they're used to and why your terms actually helps support getting the work done for them. Help them understand that you've been really thoughtful about figuring out the best terms that will support getting their project done on time and on budget. 4. Getting Paid for Services: When you're getting paid for services, the types of payment terms you use may change from project to project. But the elements of what makes a payment term good, don't change. You want to make sure that your contract clearly lays out the payment obligation, the trigger for that obligation, and a consequence if the obligation isn't met. You also want to make sure that the terms encourage good behavior in your clients and discourage bad behavior. Bad behavior like demanding more than what they've paid for, wasting your time or delaying paying you at all. Whenever you're doing an iterative project, one where you'll do a portion of the work, give it to the client to review, and then incorporate the revisions in the next step. Be sure the contract clearly explains your process. You want the contract to be explicit about how revisions will happen, what types of revisions are appropriate at different points in the process, and what revisions, if any, are included in your fee. It's important to remember that your client is likely unfamiliar with how you work. Don't assume that they will understand how an illustration gets made or how software is built. Explain what you'll be doing and what type of feedback you're going to need from them at each step in your process. Let's use illustration as an example. In the class project section, you'll find a PDF with the contract language we'll be discussing. Gloria is doing a custom mural for her local pet store. Gloria will create an illustration of the mural and choose a color palette. Once the client has signed off on both, she'll paint the mural over the course of two evenings when the store is closed. Making changes to the illustration after Gloria started painting is much more difficult than it is when she asks her client to review and approve her original sketch. In the contract, Gloria can explain this by saying, "Contractor will provide client with a pencil drawing of the chosen illustration for review. Client agrees to review the drawing and provide contractor with revision requests and feedback within five days of receiving the drawing." At this point in the process, appropriate revisions include: changes to the layout of the illustration and the design of the characters, including expressions and gestures. Changes to these elements cannot be made once the illustration is approved for painting. This helps Gloria's client understand what's happening at this step, what their responsibility is to her, and what types of revisions are reasonable. Once Gloria has explained all of the steps of her process, she might have the contract say; contractors fee includes the cost of one round of revisions for each of the described stages. If client requests additional revisions, such as requesting more than one round of revisions at a particular stage or requesting changes that require revising elements from a previous stage the work will be billed at a rate of a $120/hour rounded to the nearest half hour. Client will not be charged for revisions that are required because of contractors oversight and client understands that some revisions may not be possible due to time and space constraints. This makes it clear what revisions are included and which ones are excluded. It also helps the client feel confident that additional revisions don't mean doing something they asked for, but that Gloria forgot about. Your work, may require you to explain things a little bit differently. But hopefully this gives you an idea of how to discuss revisions with your clients. To recap, explain what the process is. Tell the client what's appropriate in each stage and what you'll need them to do. Be explicit about what's included and explain how you'll charge for extra work. On a related subject your clients may request work from you that's beyond the original scope of the project. This isn't necessarily a bad thing as long as they understand that they have to pay you for it. In Gloria's case, this might be painting some of the characters from her mural on the restroom doors. If you design websites or software, it could be adding functionality or a module that previously the client said no to. To address this in your contract, after you've explained the work that you will do, add a sentence that says, you are able to provide a quote for additional work at their request. This helps to establish the expectation that additional services cost additional money. If they asked for something that's out of scope, it's important that you don't just do it. Instead, let them know that their request is out of scope, put together an estimate for what it will cost you to do that work and have them sign off on it before you start. Of course, if you don't want to do additional work, don't add language like this into your contract. Instead, when a client asks you for work, that's out of scope, politely explain that that's not work that you can provide and then point them towards resources that may help them. In both of these situations, the one where you are willing to do more work and one where you're not, you're actually being helpful to the client by establishing and enforcing these boundaries. It helps them know what to expect and it helps them use your time wisely. If you do extra work just because they asked for it and you don't explain to them what's happened, they will come to expect that as part of the process and that will be difficult for you later on down the road if you work with them again or another contractor, if they work with somebody for similar services in the future. If you provide tech services like building websites or applications, your clients may expect additional support services after the project is over. If you provide these services, detail what they are and what they cost in your contract. Even if you're not charging for the support explaining what's available after the work is done helps your client set reasonable expectations. If you don't provide support services once the project is complete, say so. You may assume the client understands that the services aren't included if they aren't listed but in my experience, you're better off addressing it directly. 5. Getting Paid Royalties: If you licensed one of your illustrations to be used on a coffee mug or a pattern designed to be used on fabric or sold a book to a publisher, it's likely you'll be paid a royalty instead of a onetime fee. Royalties are payments that are calculated based on a percentage of what the other party makes from selling your work. The three biggest things that you need to pay attention to in a contract if you're going to be paid a royalty are making sure that you understand what the royalty is a percentage of. Making sure that the contract clearly explains how the royalty is going to be calculated, and having the right to check their math. Royalties can be a percentage of just about any amount of money related to selling the work. It's most common for the royalty to be based on either the gross or net amount of money the other party makes from selling your work. Generically, the total amount of money made from selling something is called gross and the amount that's left over after costs have been recouped is called net. Pay attention to how the contract defines these terms as that's the definition that will apply in your situation. I have seen more than one contract that defines gross as the amount of money left over after certain costs are deducted. Royalties can also be based on a retail price of the work and this is very common in traditional publishing, but less common in independent publishing or creator owned works. It's similar to getting a royalty on gross, but different in that the royalty is calculated based on per item sold rather than the total amount of money that comes in. These types of contracts tend not to pay royalties on returned or deeply discounted items. Much the same way that a royalty on net won't apply to money that they didn't make. Different industries are going to have different standards about how they handle royalties. I really encourage you to do some research before you sign a contract like this. Talk to your peers and if you don't have peers that have handled a contract similarly to the one that you're looking at, go to the public library, ask your research librarian for help. They can be incredibly helpful for finding information like this. It's also important to understand that the percentage in your contract is likely going to be higher if you are given a percentage of net. This doesn't necessarily mean that you're going to be making more money though. The reason that there's usually a higher percentage offered on net based royalties is because by the time they get to the point where they have to pay you royalties, they've been able to recoup a number of their costs so that they know they can afford to share a larger portion of the pie with you. When they're giving you a royalty based on gross, they haven't recouped their costs yet. They try to keep it small to ensure that they can both pay off their costs, pay you, and still retain some profit. If they're deducting costs before they calculate your royalty, makes sure that those costs are directly related to making, marketing, and selling your work. They shouldn't be recouping overhead costs from your sales, things like rent, salaries, and office supplies. It's also best if they can only recoup out of pocket costs. Situations where they actually had to pay another person for a good or service rather than trading somebody in kind or having somebody internally do the work for them. I always encourage creators to do the math before they sign any contract. Assume the party that is selling your work sold a 100 items or made a $1000 in sales using what you have in the contract and your understanding of industry standards, can you figure out how your royalty will be calculated? Do you have a sense of the costs that will be recouped? If anything is unclear, ask. If they tell you, it depends, that's okay. Ask them for an average or what's most common when they're selling work like yours. If they can't tell you or hesitant to even provide a ballpark figure. That's a red flag. It's perfectly reasonable if they don't want to make promises to you about how much they're going to sell or how much you'll make. But they should be able to give you a rough idea of the costs based on a hypothetical number of items. Whenever someone else's doing the math to figure out how much you've earned, you should have the right to review their financial records and make sure they've paid you in accordance with your contract. This is called a right to audit and if you don't see it in your contract for royalties, asked for it. Traditionally, the person asking for the audit, you will only be able to audit the sellers books once every year or couple of years. It's also common that you'll have to give them notice and limit your inquiry to records related to what you're owed. More than likely you'll have to pay for a CPA to perform the audit. But if the audit shows that you've been underpaid by a certain amount, it's also common for the seller to have to pay the costs of the audit in addition to paying you the money that they owe you, the exact rights that you will have in your situation will be written out in your agreement. So don't assume, if the terms that I've described here aren't in your contract, they don't apply. If you want them, ask for them. When you're being paid a royalty, you should be given an accounting statement every time you're paid or at least once a year. The statements should provide enough information that you understand how they calculated your royalty, the accounting statements, what they'll include and how often they'll be provided should all be mentioned in your agreement. Royalties can be a great way of getting paid. As long as you have a contract that clearly explains what you're going to get and gives you the tools that you need to make sure you've been paid correctly. 6. Bad Payment Terms: Bad payment terms are terms that frustrate your goals for a project. Most of the time we think of that frustration being related to getting paid. But it can also be with how your clients behave when reviewing your work or how flexible they are when it comes to deadline changes. When considering what payment terms to include in your contract, it's important to step back and ask yourself, ''What will these terms encourage my client to do?'' In my experience, the number one cause of bad payment terms is anxiety. Some amount of worry is actually helpful and healthy when you're putting together a contract. A term that allows you to stop work if your client is late in paying you is the result of a healthy amount of worry. Too much worry though, can actually lead to terms that don't support the project and endanger your relationship with your client. Stopping work, applying a late fee, and assessing ongoing interest while the payment remains unpaid is an example of too much worry. One or two of these tools is sufficient for most work. Piling on all three tells the client that you don't trust them. Clients do this too. For example, when they insist on withholding all payment until the very end, they're worried about being taken advantage of. If you can respond to that worry and help them see how it's getting in the way of their goals for the project, you'll be in a better position to negotiate better terms for you and the project. Here are some common terms that are inspired by anxiety and what you can do to address them. We'll start off with that client that doesn't want to pay you until everything is done. This term might make sense if the job is really quick, isn't for very much money, and they agree to pay you in 15 days or less. But if that's not your situation, talk to your client about how this will impact your ability to do the work. Explain how you have several clients at the same time and work that's not been paid for, at least in part, can't be prioritized over work that has been. If they insist on withholding payment until the very end, you're not going to be able to guarantee the timeline they requested. It's also helpful to point out to them that if you're not paid until the work is done, you can't agree to work for hire terms. Work for hire terms mean that you don't have any rights to the work and that means that you don't have a way of ensuring you'll get paid when the work is done. If they're insisting on withholding payment until the very end, you're going to have to change the terms so that copyright transfers when payment happens. You can't do work for hire in that situation. Finally, if your work requires hiring specialists or particular materials, you can't agree to foot the bill up front. They're going to need to make some payment so that the project will be able to afford those extras. If they're insisting on withholding payment until the very end, you can't agree to do a project that requires those extra materials or services. This doesn't happen quite as often as it did when the recession was in full force but I still see contracts that have 60 or 90 day payment terms. You might see them expressed as net 60 or net 90. Usually, the reason for terms like this is because the client can make a good bit of money by keeping their cash in the bank for a little bit longer, interest. It also happens when the client is very worried about cash flow. They need that money that they would pay you to do lots of different things and it just turns out that paying you isn't the priority in that list. My recommendation in situations like this is to raise your price. You can tell them that you bid the project assuming 30-day payment terms. If they're going to insist on having longer to pay you, you're going to have to revise the estimate that you gave them. So your work is now $5 an hour more or whatever makes sense in your situation. Then you can ask them, would they rather pay the lower amount or have longer to pay your bill? By presenting this as the choice, you're showing them that you are listening to their concerns but there is going to be a consequence if they insist on having things their way. This is a pet peeve of mine. You're accepting a huge risk when you agree to a contract that doesn't explain how or what you'll be paid if the client terminates the project early. If the reason they're terminating is for their convenience, you've done everything that you promised you would but they've just decided to go in a different direction, then the contract should at the very least, guarantee that you'll be paid for the work that you did up until the point they terminated the contract. I also like to make sure that those sorts of payments are made very quickly; at most, 15 or 30 days from the date of termination. If the contract that you are expecting to make quite a bit of money on disappears out of the blue, you can't afford to sit around and wait for your final payment. You can somewhat limit the risk of early termination by making the initial payment a non-refundable deposit. But it's really only a helpful solution if the project is terminated early on. If you've gotten through two thirds of the project, chances are you've done more work than the deposit covers. Unlike in our previous two examples, where you were offering your client alternatives of how you can handle that particular term, in this situation, you just want to fix the problem. You want to make sure that the contract has some provision that guarantees you'll be paid if the project is terminated early. If you're working on a fixed-price project, pay special attention to how this language is worded. If you're only guaranteed payment at an hourly rate, chances are you will walk away with a lot less than if you are guaranteed a percentage of your fee that's based on the amount of the project that was completed before they terminated the contract. 7. Ugly Payment Terms: Ugly payment terms happen when one of our three key elements is missing. The contract blunders by not having an obligation, not having a trigger, or not having a consequence, sometimes it doesn't have any of those things. Because contracts can be so difficult to read, it can be easy to miss when one of these things is missing, but if you carefully check your contracts to make sure that every payment term has each one of these elements you'll be able to avoid some really ugly payment terms. This payment term is missing all three of our key elements, but because it has a payment amount you might not notice. Read the contract carefully and make sure any payment term has an obligation, something that someone must do, a trigger, something that causes that obligation to be effective, and a consequence. What happens if the obligation isn't met? If the details of how you'll be paid are important, for instance, if you're doing work for someone overseas and you don't want to have to pay the wire transfer fees, make sure those details are addressed in your contract. The most common unexplained trigger is acceptance. Acceptance has a particular meaning when we're talking about goods, things like plushies, prints or widgets, but it's wonky when it comes to services like creating a website or custom illustration. If acceptance is the trigger, it needs to be defined in the contract and the definition needs to be objective, not subjective. The client shouldn't be able to weasel out of paying you because they don't like what you've done. Rather than using acceptance as the payment trigger, I like to use concrete events like dates or delivering sketches. It's almost impossible to win an argument over whether or not your services are ''acceptable'', but it's pretty easy to determine whether or not June 30th happened. Sometimes contracts are very clear about the obligation and the trigger and even have comprehensive details about how you'll be paid, but the consequences been overlooked, or even worse it's possible that the trigger won't ever happen. You can avoid payment holds like this by asking yourself a series of what if questions. What if the project is delayed or put on hold? What if the client adds new work to the scope? What if you pay for materials like a software license that you're going to transfer to the client once the project is complete? What if they don't like what you make? What if they cancel the project early? Not all contracts are going to have answers to each of these questions, and not all projects need these questions to have answers. But by playing these scenarios through, you'll have a better understanding of how your contract works, and you'll know what tools you have available to you if the unexpected happens. 8. If You're Already Stuck with Bad Terms: If you've been watching these videos with a sense of sinking dread because you're in the middle of a project that has all of the bad terms, a couple of the ugly ones, and none of the good ones, don't despair. Yes, it sucks to be in a crappy situation, but it is not a judgment on your intelligence or your ability to hack it as a freelancer. Everyone and I do mean everyone has agreed to terms that later they wish they hadn't. The best thing to do in a situation like this is to figure out what isn't working, do your best to address it and gather information for how you can avoid this problem in the future. The first question to ask yourself is, are these crappy terms actually affecting you? Just because a contract has bad terms, does it mean those bad terms are necessarily going to impact you. Remember, most terms have triggers, something that needs to happen before the term can apply. So if you've realized that you have a contract with less than great terms, the best thing for you to do is to determine what the trigger for those bad terms is, and then determine what you can do to prevent the trigger from triggering. Here's an example. The contract says that the payment is due upon acceptance, but acceptance isn't defined in the contract. Put together a form that your clients can fill out when they're reviewing an iteration of the project, have space where they can provide feedback. You can even guide their feedback so that you get specific helpful information, and include a space where they can sign off on the review. For the final review, have them sign saying that the final version meets the requirements of the contract and they don't have additional revisions. Congratulations, you've just created a way of capturing their acceptance. Plus you've put together a pretty helpful administrative tool. Forms work best when the work that you've agreed to do is fairly well-defined in the contract. If your contract also hasn't defined the work very well, you may need to use that form to make sure that both you and your client are on the same page about what the work is. Also pro tip, but not a pro tip because you should do this. Make sure the person who's signing the form is somebody who's authorized to sign things for the company. You want somebody who's authorized to say, yes, this is what we need as opposed to somebody who doesn't have that authority. So the client can later come back and say, Jim, We have no idea who Jim is. If you've got bad terms and they are impacting you, that means they're likely having a negative impact on the project as well. Talk to your client, explain how it's impacting the project and ask that they agree to an alternative. Clients insist on bad payment terms out of fear. They're worried you won't do what you've promised to do, or that you'll give them something that they can't use. If you can show them how the term that they've created out of fear is negatively impacting something that they care about the project's success, you're more likely to get them to agree to alternative terms. If you client isn't willing to budge, finished the work as quickly as possible, racket up as a lesson, and never agree to the work under those terms again. If that particular client wants to work with you again, they'll need to agree to terms that are better suited for you and the type of work that you do. 9. Final Thoughts: Getting paid for your work is always important. But when you work for yourself, it is incredibly important that what, how, and when you'll be paid is clearly established and agreed to. It's important that you and your client know upfront what will happen if the unexpected occurs, like late payments are canceled projects. By reviewing your contract to make sure that it clearly addresses payment obligations, triggers for those obligations and consequences if the obligation isn't met, you can avoid most payment problems. If they do happen, you'll know that your contract has the guidance and tools that you need to get paid and get the project back on track. Not all payment terms work for all types of work. The payment terms that work well for an illustrator might not work well for a graphic designer. There'll be different still from somebody who consults on software. The class project provides prompts that will help you put together a customized checklist so that you can make sure the contracts that you sign have the payment terms that are best suited for you and your work. Having a checklist means that you don't have to keep everything you just learned in your head. Each time you get a new contract, you can compare it against your checklist and you'll be able to figure out if it has the terms that you need. I encourage you to do the project and then post your checklist in a class project section, I will review and comment on any project that's posted, and that way you can feel confident that you're headed in the right direction. Plus by sharing your work, you may be helping another freelancer. You may find inspiration from something that someone else posts. I've had a lot of fun putting this class together and I hope that you found it helpful. If you have, please take a couple seconds and leave a review. It really helps people find the class and understand whether or not it's going to be the right fit for them. You can leave a review by clicking yes to the pop-up question. Do you recommend this class? Or by clicking the lever review button that's on the left-hand side of your screen, just below the video player. In addition to this class, I have other lessons in the contracts for creative freelancers series that help you navigate your contracts. There are links to those classes in the class description section. If you click the follow button, which is right up there above my head, you'll get updates as I released new classes. Right now I am working on classes that teach you how to write an SOW so that your clients love you and are easier to manage. A lesson that talks about why your proposal should never be your contract. A lesson about how to negotiate contract terms with your clients. Follow me and you'll get the opportunity to influence how I tackle these topics. You'll be notified as new classes are released. Thanks so much for watching.