Contracts & legal

An arbitration clause is a contract provision whereby all parties agree to resolve future issues with a third-party arbitrator instead of a judge and/or jury in court.

An ACH payment is when funds from one bank are sent to another, and are processed by the U.S.-based ACH network. ACH payments generally take three to five days to clear.

A bank transfer (aka wire transfer or credit transfer) is a method of sending money directly from one bank to another. This process is typically simple, fast, and secure.

Billable hours are the hours that freelancers can include on their invoices and thereby charge a client for. Billable hours may include the time spent working, planning, participating in meetings, and more.

Billing cycle (aka billing period) is the length of time between two payment periods. As an example, freelancers may choose to invoice their clients on the 15th of each month.

A business account refers to a bank account that’s solely used for business transactions. It can be opened as a checking, savings, credit card, or merchant services account.

A change order is a written agreement to modify the original scope of work or other terms of a contract. Both the client and vendor must agree to the amendment before it is considered valid.

A client is a person or business who purchases a service from a third-party vendor, such as a freelancer. Most client relationships are not merely transactional—many are ongoing and collaborative.

Confidentiality is the act of keeping sensitive information private between two parties, unless there is written agreement that says otherwise. A confidentiality agreement or clause is also known as a nondisclosure agreement.

A conflict of interest is when a party has competing loyalties or interests that could compromise the fairness, quality, and/or motivations behind their decisions.

A contract-to-hire job is a short-term role that has the potential to become a full-time position in the future. The length of the short-term role can vary from job to job.

A copyright is a form of intellectual property that gives the owner exclusive rights to publish, copy, and distribute creative work—or to authorize others to do the same.

In law, damages refer to money that is paid, either for punitive or compensatory reasons. In the latter case, money from one party is owed to another as compensation for an injury or loss.

A data processing agreement (DPA) is a contract between a data controller and a processor that states the terms and conditions of handling data, such as personal info.

A deliverable is any piece of work that must be completed for a project to be considered done. It can be internal or external-facing, and can come in various forms (product, service, document, etc.).

A deposit (aka retainer fee) is a type of partial payment that freelancers may require prior to starting work. A deposit helps to show that a client is willing and able to pay for your work.

A direct deposit is a type of ACH transfer in which money is sent straight to your checking or savings account. Payroll employees are typically paid via this method, as are some freelancers.

“Due upon receipt” means that a client must pay the full amount owed as soon as he/she receives the invoice. This is often a vehicle for getting paid upfront or establishing trust with a new client.

Early payment is when a client completes payment (partial or full) before its due date. Freelancers may offer early-payment discounts in order to get paid faster.

An electronic funds transfer (EFT) refers to any method of transferring funds from one bank to another via digital means. It is an umbrella term that includes ACH and wire transfers.

Force majeure is a clause frequently used in contracts. It releases both parties from their contractual obligations when something completely out of their control (“acts of god”) happens.

Full payment is when a client is required to pay the total cost of services at the time of invoicing. Full payment may be required upfront or after a project is completed.

An indemnification clause is essentially a promise to compensate the other party for a loss or harm (such as legal fees) in connection with a certain outcome or event.

An independent contractor is a person or business that provides services to another business on a non-employee basis. Independent contractors are considered self-employed.

IP broadly refers to intangible assets—like literary works, logos, symbols, and names—that are legally protected via patents, copyrights, trademarks, or trade secrets.

An invoice is an itemized list of services or products that have been delivered to a client. It includes the total payment that is due, in addition to payment terms and business info.

A kill fee is a negotiated rate that a client pays a freelancer if a project is canceled or cut short. This term is also used in publishing when an editor decides not to run your story.

An LLC is a business structure in the U.S. that protects an owner’s personal assets from lawsuits. An LLC offers tax advantages and is relatively easy to manage.

Net 10 (or other) payment terms means that a client must pay the full amount owed within 10 days of receiving the invoice. The payment period can be adjusted as desired by the vendor.

A non-compete agreement (aka non-compete clause) is a contract in which an employee agrees not to work for—or to start—a competing business for a specified period of time after leaving his or her job.

An NDA (aka confidentiality agreement) is a legally enforceable contract barring you from sharing any information that’s covered by the agreement.

In freelancing, overtime refers to the time that a freelancer works beyond the amount that was quoted or specified on the retainer agreement. Paid overtime is not guaranteed and should be negotiated upfront.

Partial payment is when a client is required to pay a portion of the total amount owed for a product or service. Freelancers may offer installments plans as an incentive for new clients.

“Payment in advance” (aka advanced payment) ensures that you get paid fully before rendering any services. This helps to thwart payment issues, such as late payment.

Payment terms are usually included on an invoice to specify expectations for payment. For instance, a freelancer may enforce net 30 terms and penalties for late payment.

Per diem is a daily allowance that companies typically offer to their employees and/or freelancers to cover travel or living expenses. Per diem amounts are set by the company.

A point of contact (PoC) is the main person or department responsible for receiving any inquiries for a certain project, program, or organization.

A project scope is an outline of the specific deliverables, tasks, timelines, and resources of a project. It is intended to set boundaries and prevent “out-of-scope” requests.

In freelancing, a quote is a description of the services—as well as a price breakdown—for the client to review. This helps to set expectations before a contract is signed or an invoice is sent.

A retainer agreement is a type of contract in which a client pays upfront for work that is to be done in the future. Payments may be made as a one-time payment or as recurring fees.

A statement of work (SOW) is a document outlining the deliverables, timeline, and other requirements of a project. They are intended to define the exact scope of work.

Subcontractors are people or companies that are hired by a contractor to handle certain parts of a project. For example, as a freelance writer, you may subcontract a graphic designer to complete an assignment.

Turnaround time is the length of time between the moment a request was received to the moment that it is completed. For example, a freelance writer may require a five-day TAT for a draft.

A vendor (aka supplier) refers to the person or business that provides goods or services to paying customers. In other words, freelancers are a type of vendor.

A wire transfer (aka bank transfer or credit transfer) is a method of payment whereby funds are moved directly from one bank to another.