Five freelancing tips for when you're not paid <br>
Prevention is of course better than cure when sole traders, freelancers and the self-employed come to facing the thorny issue of late payment for their services, Charles Wilson, of Lovetts, a debt recovery law specialist, writes. In the current climate, late payments will inevitably crop up, meaning debt can hit a business of any size. But for one-person-businesses such as freelancers, the importance of keeping debt from turning into ‘bad debt’ (an uncollected sum that is written off) cannot be overestimated.
Five freelancer tips for managing debt and late payment
1. Stay on top of outstanding debts and chase in the most efficient way to reduce the cost and impact on your business. When a payment is overdue, act as soon as possible to reduce risk and increase the chances of payment.
2. Consider using a specialist commercial debt management company to manage this process so that you can focus on the day job. Currently , our findings show a ‘Letter Before Action’ prompts a response or payment in over 80% of cases.
3. Ensure your paperwork is accurate and timely - leave no room for error and resolve any queries promptly.
4. Late payment is a cost to your business. Make sure you investigate and instigate Late Payment Interest (LPI) and compensation, and claim for debt recovery costs. This will not only deter the customer from paying late in future, but will also ensure you do not lose out. Ensure LPI and debt recovery costs are mentioned in your terms and conditions, and that your credit management system is adapted to implement the extra charges.
chasing late payments and particularly if utilising LPI legislation, do take
into account the relationship you have with the customer, and whether it is
likely to be damaged by this action.