There’s a nice piece in .net by Jon Norris about taking care of business when you’re a freelance, and while it’s aimed at web pros it’s relevant to any kind of freelancing. This one is particularly good:
The very first thing is to invoice promptly. If you’re the kind of person who puts aside one day every month to ‘do the books’, four weeks may have passed between finishing your project and the invoice being issued. Add on another four weeks’ payment terms, and suddenly you’re giving your client two months of interest-free credit.
I’d add another tip: don’t be afraid to assert yourself if your payments don’t come through in time.
Provided you keep things businesslike and don’t act like an arse, it’s very unlikely that chasing overdue payments will affect your relationship with a client. I’ve experienced late payments on and off for fourteen years now, and most of the time the reason for late payment hasn’t been malice: it’s been an admin error or some other cock-up (and sometimes the cock-up has been mine, such as putting the wrong order number on an invoice). If it’s happening a lot, there’s nothing wrong with calling up before the payment is due to make sure it’s scheduled. Better to be a bit of a pain than to spend the next few weeks fielding calls from people you owe money to.