Freelance glossary

Clear definitions for proposals, invoicing, deposits, payment terms, and contracts. Written for freelancers, not accountants.

B

Billable Hours

The hours a freelancer spends on client work that can be directly charged to the client, as opposed to non-billable time spent on admin, marketing, or internal tasks.

Invoicing

C

Change Order

A formal document that modifies the original project scope, timeline, or price after a contract has been signed, protecting both freelancer and client from unmanaged scope changes.

Freelance business

D

Deposit

An upfront partial payment collected before work begins, typically 25-50% of the total project cost, that secures the freelancer's commitment and reduces payment risk.

Invoicing

Due on Receipt

A payment term meaning the invoice amount is owed immediately upon the client receiving it, with no extended grace period.

Invoicing

E

Estimate

A rough cost projection for a project based on limited information, used to help clients budget before a formal proposal or quote is created.

Proposals

F

Fixed Pricing

A pricing model where the freelancer quotes a single, predetermined price for an entire project regardless of how many hours it takes to complete.

Freelance business

H

Hourly Rate

The amount a freelancer charges per hour of work, used as a pricing model where the total cost depends on how many hours a project takes.

Freelance business

I

Invoice

A formal document a freelancer sends to a client requesting payment for completed work, detailing services rendered, amounts owed, and payment terms.

Invoicing

K

Kill Fee

A predetermined fee paid to a freelancer when a client cancels a project after work has begun, compensating for time, effort, and lost opportunity.

Freelance business

L

Late Payment Fee

A charge added to an unpaid invoice after the due date passes, typically calculated as a flat fee or monthly percentage of the outstanding balance.

Invoicing

M

Milestone Payments

A payment structure where the total project fee is split into installments tied to specific deliverables or project phases, reducing risk for both freelancer and client.

Invoicing

N

NDA

A non-disclosure agreement (NDA) is a legal contract that prevents one or both parties from sharing confidential information disclosed during a business relationship.

Legal and contracts

Net 30

A payment term meaning the full invoice amount is due within 30 calendar days of the invoice date.

Invoicing

P

Payment Terms

The conditions under which a freelancer expects to be paid, including when payment is due, accepted methods, late fees, and deposit requirements.

Invoicing

Proposal

A document a freelancer sends to a prospective client outlining the project approach, scope, timeline, pricing, and terms — designed to win the work and set clear expectations.

Proposals

R

Retainer

A recurring payment arrangement where a client pays a fixed fee on a regular schedule (usually monthly) to reserve a freelancer's time and availability.

Invoicing

S

Scope creep

The gradual expansion of a project beyond its original boundaries, typically through small, unplanned additions that accumulate into significant unpaid work for the freelancer.

Freelance business

Scope of work

A detailed document outlining the specific tasks, deliverables, timeline, and boundaries of a freelance project, serving as the agreed blueprint between you and your client.

Proposals

V

Value-Based Pricing

A pricing strategy where the fee is based on the measurable value or outcome the work delivers to the client, rather than the time or effort required to complete it.

Freelance business

W

Work for Hire

A legal arrangement where the client, not the freelancer, owns the intellectual property rights to the work produced, as if the client had created it themselves.

Legal and contracts