Ways Freelancers Lose Money on Gigs: And How to Avoid Them

If you are reading this, it's likely that you have already faced the infuriating experience most veteran freelancers have encountered: not getting paid.

As a freelancer, you’ve worked hard, built your portfolio from zero, and slowly increased your ability to take on higher value clients and projects. But the larger the sums involved in a gig, the greater the commitment of your time and resources is to a single client.

Not getting paid after all the work that you’ve already done can be devastating as a freelancer.

Here are some of the most common things that can go wrong for freelancers, when it comes to getting paid by clients for work done - and how to avoid them.

6 most common ways freelancers lose money on Gigs

1. Late payments

As the old adage goes “Don’t count your chickens before they hatch”. A client agreeing to pay you on time is one thing. Actually seeing the money come into your bank account is another matter. 

Clients may delay making payments after the work is done. Sometimes this happens because of administrative errors, or miscommunication between your client, and their finance department. Especially when working with large companies with complicated internal processes, or global teams across timezones, there can be long lags in communication.

When serving small businesses, cash flow and budgeting issues that your client may be facing could also see them passing those onto you as a freelancer.

Whatever the reason, late payments can impact your cash flow as a freelancer. Especially if you start taking on larger projects, a single large client that is tardy in paying up often means that you will take home far less that month than expected.‍

2. Discount bargaining

Getting paid less can sometimes be worse than being paid late. Another dreaded conversation that freelancers have with clients is when they try to bargain down your fees after the work is done. 

Common tactics that clients may use to bargain for a discount is dangling the promise of future work, referrals to other clients, or seeking pity for their own financial difficulties. While often tempting, veteran freelancers know that these are often hollow promises, or worse - simply made-up excuses.

Especially for freelancers just beginning to take on larger clients, bargaining for a discount typically happens due to a lack of clear, contractually-binding payment terms. 

If a client really wants a bulk discount, or has a hard budget constraint for the project, these issues should always be discussed upfront during the negotiation process before the works commence.

Without clear payment terms in place, freelancers may find it difficult to ensure that they are paid on time and in full.

‍3. Non-payment

Worse than being paid less, or being paid late is not being paid at all. 

The ultimate nightmare scenario is when a client ghosts you after the project ends, effectively refusing to pay for the work done. This can leave freelancers seriously out of pocket after all the time and resources invested into the project.

Sometimes this may be done in bad faith, with a client that decides to pull the rug from under you. In rare cases, a client may also themselves become insolvent or bankrupt, and be simply unable to pay for the freelance services they contracted you for.

Especially if a client files for bankruptcy, debtors are highly likely to write off the sums owed - and freelancers unfortunately tend to be last in line of larger debtors waiting to be paid.

4. Disputes over the quality of work ‍

Clients may dispute the quality of work provided, which can lead to delays or non-payment.

Here’s where things can get a lot more complicated for freelancers. Rather than refusing to pay, paying late, or bargaining on price, clients may simply be unhappy with the work done. 

The reasons for disputes can vary from communication issues during the project briefs, to the downright unreasonable. Often, B2B service level agreements in industries like hardware or software will stipulate certain conditions for a user acceptance test, or “UAT”. 

But when dealing with intangible services, or when it comes to creative works, it can be hard for freelancers and clients to clearly define what is considered acceptable.‍

5. Difficulty in tracking hours and expenses

Setting aside nightmarish clients, freelancers may find it difficult to track the hours and expenses associated with a project, which can make it difficult to invoice clients accurately or in a timely manner.

Especially when the engagement involves billable hours, logging hours spent can be an issue if freelancers don’t agree with clients on how this will be calculated. 

Getting compensated for out-of-pocket expenses incurred can also be a challenge if freelancers don’t clearly define what is claimable from clients, or have a good system to track their expenses incurred.‍

6. Difficulty in collecting payment from international clients

One of the glorious things about freelancing in an internet age, is being able to take on clients from all around the world. 

But freelancers may face challenges in collecting payment from clients located in different countries, due to different laws and regulations that govern banking and payments. For instance, some countries may have laws that require that certain types of companies, or companies in certain sectors engage contractors that have been vetted.

Freelancers may also face challenges in setting up a payment method that is acceptable to the client, leading to delays in getting paid. While the popularity of payment processors like PayPal or Wise are common for small, P2P transfers, larger enterprise clients may not use such methods to make payouts. Or in some cases, a particular payment processor may simply be unavailable to your clients in their country.