Finance Tips for Freelancers from a Former Wall Street Banker-Part 1


Transitioning from the cut throat world of Investment Banking with intense number crunching, all nighters, and hard to meet deadlines to the commercial photography industry filled with freelancers, creatives, and entrepreneurs is quite a stark change. Personalities and career strengths differ completely. Institutional settings and hierarchical structures are complete opposites. However, for me, one of the single biggest differences and challenges between these two work environments has been tackling the payment structure.

In the past, I counted on the consistent bi-weekly paycheck being directly deposited into my bank account and the big performance bonus at the end of the fiscal year. Now, I find myself chasing after invoices overdue by 90+ days without a solid structure in place by which to receive timely payments. My most valuable asset, my time, has been exerted trying to collect overdue payments to keep my accounts receivable balance in check rather than applying my energy to its best use - to enhance and expand my business.

Finances really are the life of a company, so one needs to understand how to manage them. Equally as important is knowing one's rights as a freelancer in regards to collecting payment. In attempting to tackle this issue, I have learned a vast amount of information and a few techniques to help manage my business’ finances and invoice collections that I would like to pass on in hopes of helping you. Today, I will start with the first bit of information which is actually a new law put into place in New York City.

The Freelance Isn't Free Act recently went into effect in May 2017 to help protect freelancers in New York City against non-payment for their work. The law mandates that freelancers must be paid in full for work of $800 or more by a date set forth in writing or within 30 days of completion of the job. The law also aims to protect freelancers against employer retaliation, for example denial of future work. As more than one third of NYC is comprised of freelancers, it's fantastic to see the city doing something to help protect this important workforce. 

Even with this new law in place, I can't emphasize enough the importance of having a basic contract in place to help you enforce your rights. Although a handshake technically suffices as a contract under state law, to make sure you can benefit from all protections, have these basic pieces of information in place in your contract: name and mailing address of both parties, an itemization of services, and either a date when payment will be due or an agreement on how that date of payment will be set. See here for an example contract

The law is revolutionary and the first of its kind in the U.S. Studies conducted in 2015 leading to the drafting of the law found 70 percent of freelancers struggled to receive payment in a timely manner. While this law isn't going to necessarily get you paid on time every time, having it in place should make employers listen, knowing the law can (and will) be enforced. There are clear guidelines in place to follow if you aren't receiving the payment you earned. 

Within two years of the work, a freelancer can file a complaint with the City's Office of Labor Standards, within the Department of Consumer Affairs (DCA), at which time an office director will draft a certified letter to the employer within 20 days, which will explain how the freelancer's contract was allegedly breached. The employer then has 20 days to respond to the complaint. This will hopefully scare employers into paying what is owed rather than the freelancer resorting to claims court (currently ~70% of complaints are resolved without having to go to court).

Unfortunately, court may still be the only route if the employer won't pay out. However, it will be costly for the employer as the new law mandates double damages and attorneys fees if the judge rules in the worker's favor. Additionally, the DCA is mandated to provide information to help find an attorney. For more information on help finding an attorney, visit this website. For additional details, including an interview with the author of the legislation and the Freelancers Union plus answers to FAQs, reference this article. You can also visit the DCA website for a complete resource. 

Hopefully you found this information to be helpful as you pursue your freelance endeavors. There are powerful resources at your disposal, so use them if you need!