Alternative Methods of Payment

If you’re like me, you grew up with the notion of getting a regular paycheck in return for your labor. However, there are alternative methods of payment available to the freelancer–they just might involve delayed gratification or a bit of risk.

As I’ve gotten older, I’ve noticed longer and longer gaps between paychecks. I was a paycheck-weekly guy for nearly 20 years before I got my first technical writing job and the pay came in every two weeks. Then twice a month. As a freelancer, I’m now down to once a month. I have friends who run large events, and they get paid once a year. On the plus side, as those paychecks decrease in frequency, they also increase in amount. At least that’s the theory.

If you’re running your budget close to the margin, that can be cutting things close, especially if you have bills to pay on specific days. However, if you have multiple clients, and some of them don’t have as much cash handy as you (or they) would like, there are some alternate methods of getting “paid.” Mind you, I don’t recommend that you do this as a lifestyle (unless you’re bringing in enough cash to pay your bills on a regular basis), but here are some other options you might consider.


I’ve done this once or twice for small jobs. If someone doesn’t have cash on hand but they have access to something or someone I do need, I might ask them to provide me with that introduction/reference or access. Why yes, I am a godfather, why do you ask? 🙂

Sweat equity/IOUs…for which I will gladly pay you Tuesday

You might be doing work for a small, entrepreneurial firm that can’t pay you on your expected billing cycle. The money’s coming, it’s just not there now. You can do the work with the promise that you’ll get paid at some point in the near future (preferably <1 year). Obviously there would be a lot of variables involved here:

  • How well do you know the company or individuals involved?
  • How old is the company?
  • How much work are you doing?
  • How much money is involved?
  • How long will it be until your customer expects to have enough money to pay you?

Obviously these sorts of situations boil down to trust. I would not take an IOU from a new customer, especially a sole proprietor. Individuals are much harder to pin down and can find many excuses for not paying. Companies, however, have a reputation to protect.

If your customer is at the point of asking to give you an IOU, the most important thing you can do is get it in writing, preferably with an amount due and the expected due date. You, in turn, submit an invoice with your services/hours documented. All of that leaves a paper trail that you can maintain as evidence should you feel yourself driven to civil court proceedings. And even if you get a phone call around the deadline asking for more time, follow up that discussion with an email right after the call, summarizing your understanding of the revised payment schedule. How you go forward after that is up to you.

At some point you might have to either write off the loss and chalk it up to a “lesson learned” or, as suggested above, take your client to court. That involves hiring a lawyer, court costs, and potentially acrimonious discussions with your client. Will they be your client again after you’ve taken them to court? A lot would have to do with the relationship you had prior to the request for an IOU.

In-kind services

You might have a client who’s short on cash but provides a service you happen to need at the time–home renovation, web development, plumbing, etc. Assuming you can come to agreement on the value of what the customer owes you and how much work you can get from them for that same amount, it might be considered a fair trade. A lot would depend on how much confidence you have in your customer’s services in the first place. You might want to talk to an H&R Block person about how that works on your taxes, though.This sort of transaction is usually done in nonprofit situations.

Stock options

Small firms looking to make big money based on the value or quality of their future work might offer stock options in lieu of pay. This isn’t as far-fetched as it sounds. While I was answering complaints and doing customer service jobs in the 1990s, many of my Gen X peers were in Silicon Valley, making ridiculous amounts of money from the stock options offered by their dot-com employers after they went public or got bought out. I don’t know how those same folks are doing now, but many of them entered the new millennium a lot richer than me.

The bottom line

If you’ve got an appetite for risk or you have the capital to attempt alternative payment arrangements, you might give it a shot. Just go in understanding the risks. And, as my father often reminds me, “Don’t make a habit of it.”

About Bart Leahy

Freelance Technical Writer, Science Cheerleader Event & Membership Director, and an all-around nice guy. Here to help.
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