Chargebacks
Chargebacks occur when a customer disputes a charge on their credit card, and the funds are returned to the customer by the credit card company. Freelancers should be aware of chargeback policies and take steps to protect themselves by providing quality services and communicating with clients.
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Refunds
Refunds involve returning money to a client, usually because the client is dissatisfied with the work provided or due to a mutual agreement to terminate a project. Freelancers should have a clear refund policy outlined in their contracts.
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Disputes
Disputes in the context of freelancing refer to disagreements between the freelancer and client, usually over payment or the quality of work. Handling disputes professionally and amicably is important for maintaining reputation and client relationships.
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Collections
Collections is the process of pursuing payments that are significantly overdue. This can involve turning the account over to a collections agency. For freelancers, this is usually a last resort after attempting to collect the payment through reminders and discussions with the client.
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Late Fees
Late fees are additional charges imposed on a payment that is made after its due date. Freelancers may include a late fee policy in their contracts to encourage timely payments and to compensate for the inconvenience of delayed payments.
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Overdue Payments
Overdue payments are payments that have not been made by the agreed-upon due date. For freelancers, managing and following up on overdue payments is crucial to maintain cash flow and financial stability.
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Money Order
A money order is a paper document, similar to a check, used for making payments. It’s prepaid, so it’s considered more trusted than a check. Freelancers may accept money orders as payment, especially if the client prefers not to send cash or use electronic payment methods.
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Bank Wire
A bank wire is an electronic transfer of funds across a network administered by hundreds of banks worldwide. Wire transfers are a reliable and secure but often more expensive method for transferring large sums of money, especially internationally.
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Direct Deposit
Direct deposit is a method of payment where funds are electronically transferred directly into the recipient’s bank account. This is a common and efficient way for freelancers to receive payments from clients, especially for recurring projects.
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ACH Processing
ACH stands for Automated Clearing House. ACH processing involves electronic movement of money between bank accounts through the ACH network. It's a common method for direct deposit of paychecks and automatic bill payments, and can be used by clients to pay freelancers.
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Credit Card Processing
Credit card processing involves handling transactions made through credit cards. This includes verifying transaction information, ensuring funds are available, and completing the transaction by transferring funds from the customer’s credit card to the freelancer’s account.
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Invoice Management
Invoice management involves creating, sending, and tracking invoices for services provided. It's an essential part of a freelancer’s workflow to ensure that they are paid accurately and on time for the work they've completed.
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Payment Collection
Payment collection is the process of obtaining payment from clients for services provided. This can include sending invoices, reminding clients of upcoming or past due payments, and receiving and processing payments. For freelancers, effective payment collection is crucial for maintaining cash flow.
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Payment Gateway
A payment gateway is a technology used to accept and process credit card transactions. It acts as an intermediary between the payment page and the bank, ensuring that transaction information is securely passed back and forth, and that the payment is processed correctly.
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Payment Processing
Payment processing is the handling and validation of transactions when clients make payments for services. For freelancers, choosing an efficient payment processor is essential to ensure quick and seamless transactions.
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Payment Method
Payment method refers to the way a client sends money for services rendered. Common payment methods include bank transfers, credit card payments, checks, and online payment services like PayPal. Freelancers should be flexible in accepting different payment methods while ensuring security and convenience.
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Payment Schedule
A payment schedule is a plan that outlines the specific dates on which payments are to be made. For freelancers working on long-term projects, having a payment schedule ensures a steady cash flow and clear expectations of when payments should be received.
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Payment Terms
Payment terms are the conditions under which a seller will complete a sale. Typically, these terms specify the period that is allowed to a buyer to pay off the amount due, and may also include cash discounts if a client pays a bill before the due date. For freelancers, setting clear payment terms is important to manage cash flow.
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Time Tracking
Time tracking involves recording the amount of time spent on various tasks or projects. Freelancers often use time tracking tools or software to monitor their work hours, especially when billing clients on an hourly basis. This practice helps in providing transparency and building trust with clients.
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Overhead Costs
Overhead costs refer to ongoing expenses that freelancers incur regardless of whether they are working on a project. These include software subscriptions, office supplies, and utilities. Understanding and managing overhead costs are crucial for freelancers in determining pricing and maintaining profitability.
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Net Payment Terms
Net payment terms are used to define the amount of time a client has to pay an invoice once it’s issued. Common terms include Net 30, Net 60, etc., where the number refers to the days within which payment must be made. These terms are usually mentioned in contracts and invoices.
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Cold Pitching
Cold pitching is a method freelancers use to acquire new clients by reaching out to potential clients unsolicited, usually via email or social media. A cold pitch typically involves introducing oneself, explaining the services offered, and how these services can benefit the client. Cold pitching requires research and personalization to be effective.
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Milestones
In freelancing, milestones are specific points in a project timeline that signify the completion of a major task or set of tasks. Payment schedules are often tied to milestones, ensuring that the freelancer receives payment at different stages of the project. This can be especially useful in long-term projects.
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Kill Fee
A kill fee is a payment made to a freelancer when a client cancels a project after work has begun but before it is completed. Kill fees compensate the freelancer for the time and effort invested in the project up to the point of cancellation and are usually stipulated in the contract.
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Contract Agreement
Contract agreements for freelancers are legal documents that outline the terms and conditions of the service to be provided. A good contract protects both the freelancer and the client by setting clear expectations regarding scope of work, payment terms, deadlines, and other important aspects of the project.
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Client Relationship Management
Client relationship management (CRM) is essential for freelancers and involves maintaining and managing relationships with clients. This includes communication, understanding client needs, delivering high-quality work, and following up for feedback and further collaboration. Effective CRM can lead to repeat business and referrals, which are valuable for freelancers.
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Scope Creep
Scope creep refers to the situation where a project’s requirements and scope expand beyond what was originally agreed upon, without corresponding adjustments in time, budget, or resources. Freelancers should be cautious of scope creep as it can lead to extra work without additional pay.
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Passive Income
Passive income for freelancers refers to earnings derived from sources that do not require active involvement, such as royalties, affiliate marketing, or selling digital products. Generating passive income can help freelancers to stabilize their earnings.
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Project-Based Payment
Project-based payment is a payment structure where freelancers are paid a fixed fee for a specific project, regardless of the time it takes to complete it. This is in contrast to an hourly rate, and is often used for projects with well-defined scopes.
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Gig Economy
The gig economy is a labor market characterized by short-term contracts or freelance work, as opposed to permanent jobs. Many freelancers are part of the gig economy, which is known for its flexibility but also for its lack of job security and benefits.
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Retainer Agreement
A retainer agreement is a contractual arrangement whereby a client pays a freelancer a set fee for specified services over a period. This provides the freelancer with a guaranteed income and allows the client to have ongoing access to the freelancer’s services.
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Freelance Portfolio
A freelance portfolio is a collection of a freelancer's work and accomplishments. It serves as a way to showcase skills and expertise to potential clients. A well-constructed portfolio can be a critical tool in acquiring new clients and projects.
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Bank Statements
Bank statements are documents provided by banks which summarize financial transactions over a certain period. Freelancers can use bank statements as proof of income when applying for loans or when required to prove their financial stability.
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Financial Security
Financial security for freelancers involves having enough savings, income, and investments to afford a comfortable lifestyle and handle emergencies. Since freelancers might not have a stable income, it’s important to manage finances prudently and save for the future.
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Payment Apps
Payment apps are applications used to send and receive money. For freelancers, they are an important tool for getting paid, especially when working with clients who are located in different geographical locations. Popular payment apps for freelancers include PayPal, Venmo, and TransferWise.
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Negotiation
Negotiation in freelancing involves discussing terms, conditions, and payments with clients to reach an agreement that is acceptable to both parties. Effective negotiation skills are essential for freelancers to ensure that they are compensated fairly for their work.
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Late Payment Collection
Late payment collection refers to the methods and practices employed by freelancers to collect payments that are past due. This may involve sending reminder emails, making phone calls, or, in extreme cases, taking legal action. Freelancers should have a clear payment policy to minimize the instances of late payments.
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Invoicing
Invoicing is the process by which freelancers bill their clients for services rendered. An invoice typically includes details such as the services provided, the amount due, payment terms, and the due date. Proper invoicing is essential for maintaining cash flow and keeping a record of earnings.
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Pay Stub
A pay stub is a document that details an employee's earnings and deductions for a specific pay period. While traditional employees receive pay stubs from their employer, freelancers who are self-employed can create their own pay stubs to provide a record of their earnings and withholdings, which can be useful for purposes like applying for loans.
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Independent Contractor
An independent contractor is someone who provides services or skills to clients or businesses on a contractual basis rather than as an employee. Freelancers are often classified as independent contractors. Unlike employees, independent contractors are not subject to withholding taxes and do not receive employee benefits.
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Sole Proprietorship
A sole proprietorship is a type of unincorporated business that is owned and run by one individual. Freelancers often operate as sole proprietors. In a sole proprietorship, there's no distinction between the business and the owner, meaning that the owner is entitled to all profits but is also personally liable for all debts, losses, and liabilities.
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Side Hustle
A side hustle is an additional job or freelance work taken up alongside a main job. Freelancing can be a great side hustle as it provides an additional stream of income and offers flexibility. However, it’s important to manage time effectively to ensure that it doesn’t impact your primary job.
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Monthly Income Calculation
Calculating monthly income as a freelancer involves totaling all the payments received for services rendered during a month. This includes hourly wages, fixed project fees, and any other sources of income. Since freelance income can fluctuate, it’s important to have a clear understanding of your average monthly income for budgeting purposes.
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Time Management
Time management is essential for freelancers as they often juggle multiple projects and clients. Efficient time management involves planning and allocating your time wisely to ensure that deadlines are met and work quality is maintained. This is even more critical when balancing freelance work with a full-time job.
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Hourly Rate
Hourly rate is the amount of money a freelancer charges for one hour of their work. Calculating an appropriate hourly rate is important to ensure that the freelancer is being compensated fairly for their time and skills, and it typically takes into account factors such as industry standards, experience, and costs of doing business.
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Financial Management
Financial management for freelancers involves handling all financial aspects of freelancing – budgeting, invoicing, tracking expenses, ensuring payments are received on time, and saving for taxes. Good financial management is crucial for the sustainability and growth of a freelance business.
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Expense Tracking
Expense tracking is the process of recording and monitoring all costs incurred in the course of freelancing. This includes purchasing equipment, subscriptions to software, travel expenses, and more. Keeping a record of these expenses is vital for managing your budget, and can also be beneficial for tax deductions.
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Freelance Income
Freelance income refers to the earnings a freelancer receives in exchange for their services. This could be from various sources such as client projects, consulting, writing, design work, etc. Freelancers typically don’t have a fixed salary and their income might vary widely from month to month based on the number and type of projects they take on.
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