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Write From Home
Kim Wilson
P.O. Box 4145
Hamilton, NJ 08610

E-mail: kim @ writefromhome.com

Picking Up Pennies:
How to Allot for Out of Pocket Expenses
by Brian S. Konradt of BSK Communications and Associates

In one year, commercial freelance writer Joseph Mathews had spent more than $1,000 on out of pocket expenses for his clients. This was money that had come directly out of his pocket—not his clients'—as he worked on their assignments and projects.

He had spent money on photocopying, postage, expensive online research services, tolls, parking meters, and attending meetings 20 miles or longer away. Fortunately, he knew how to collect these out of pocket expenses that many beginners forget to collect.

The solution: "Make sure you include [in your Letter of Agreement] a breakdown or a percentage of estimated out of pocket expenses...," says Matthews. And explain to clients that they are required to reimburse you for these costs.

Although not all projects and assignments will require out of pocket expenses, there are some that do. You may or may not know which types of assignments and projects these are—and sometimes you will know because it's obvious what's going to be involved.

Mathews suggests that, to determine an estimate of out of pocket expenses, you first do an assessment of the assignment or project that the client has described to you (but has not yet outsourced to you).

You can do an assessment by asking yourself these questions:

Will the client require me to attend meetings at his place of business? If so, Mathews suggests you charge your hourly rate to attend the meeting, plus the out of pocket expenses of car mileage to get you to the meeting and back. "There also may be tolls and parking meters you might have to pay up front, too," says Mathews. "Make sure the client reimburses you for these costs." The client should also reimburse you for any other types of transportation, such train, cab or bus fare.

How much research will be involved? You may need to call people long-distance for interviews, use online research databases to collect information, sometimes even buy books or magazines to cater to the client's specialized needs. These, too, are extra costs that the client should pay for.

Will I need to spend money on photocopying? One PR project I had required me to make photocopies of a query letter that I would send off to a magazine. I made sure my client paid for these photocopying expenses, plus the postage I used to mail the query letter to the magazine as well as the long-distance phone call I made to the editor.

Will I have to travel long distances? Sometimes a client in a different state may require you to meet him in person. This may involve out of pocket expenses for air fare, car rentals, bus and cab fare, hotel and food accommodations, etc. Again, these are all costs that the client pays for. Mathews suggests on such exhausting expenses that you:

A. ask the client to pay for these travel costs up front;
ask the client to pay you 50-60% of the project up front;
use your credit card and then send the credit card statement to the client to pay.

"...remember, you will probably not be reimbursed for these out of pocket expenses until 30 or so days when the project is completed, so it's important that you make some type of special payment arrangement with the client."

How will I send the finished project to my client? When you've completed the project, will you have to mail it to the client, drive it over to him, use FedEx or UPS? Whichever way you choose, the client should reimburse you for the shipping expenses. "Sometimes the out of pocket expenses for a single project may be so nominal," says Mathews, "it's not necessary to include the cost in your Agreement. Usually your hourly rate or project rate has been set up to cover the extra cost."

For instance, Mathews does not let the client see the extra cost of shipping the copy back to him; his pay rate has been set up to accommodate this nominal, extra cost.

My own experiences of billing clients for out of pocket expenses have told me to collect receipts on everything, whenever possible. It's funny yet bizarre that you will encounter clients who have no problem paying you $500 to write copy but will bicker, complain or question some of your out of pocket expenses. A receipt usually provides a remedy to the situation since most clients want to see proof of your purchase and evidence as to what they had paid for.

Brian Konradt is the owner and operator of FreelanceWriting.com, a Web site dedicated to help writers master the business and creative sides of freelance writing. Mr. Konradt is also the principal of BSK Communications & Associates, a communications/publishing business in New Jersey, which he established in 1992.









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