There are so many benefits to being self-employed, not only do you have the type of freedom, control and flexibility permanent workers can only dream of, you could also potentially earn more compared to a full time worker in the same role.
Other advantages include:
- You can work when you want, can take holiday days as little or as often as you wish (although it’s worth remembering you won’t get paid for this time off) and you can potentially have a better work / life balance.
- The majority of contractors can charge a daily or hourly rate much higher than a permanent employee in the same role. Of course, your individual skills and your industry could mean your rates could be even higher.
- You are able to claim back expenses that are made for the running of your business, which can then reduce your tax bill at the end of the tax year.
- You will gain in terms of skills and experience by working with a number of clients in various industries.
Of course being your own boss will come with more responsibilities and there are some risks, with one of these being that you could find yourself in a situation where you are paid late by your client.
Late payments
Having to chase up a late payment is extremely inconvenient for someone who is self-employed.
Late payments can be an issue for many contractors, with research showing that this can be the cause of many small businesses getting into financial difficulties.
However, the government is working hard at preventing SMEs finding themselves in this situation. On 31st January 2017, the government released a statement about late payment reporting guidance for large businesses; the plan is for large firms to publish details on the time taken to pay their suppliers in order to shine a light on ‘bad practice’.
How do I go about chasing a late payment?
It is never a nice situation to have to remind a client to pay up; you just have to remember that there could be consequences for whatever action you take. It could mean no longer working with this client in the future, as things might get a bit awkward, but at the same time do you even want to work with them if they are going to cause you issues with payment?
Make sure you keep it civil and polite to begin with, as you could even find that this is a genuine mistake and that the client has simply forgotten. This would be the ideal scenario.
The first step to take is to phone or email the client and if you email and don’t get a response, call them.
If you still don’t get paid then write a letter or email to them explaining that they have a certain number of days to make payment, otherwise they will be charged statutory interest.
There is also the option of using a debt collection service or solicitor, with both being able to give you the best advice of how best to go about retrieving your payment. Although this could end up costing you money, you are well within your rights to charge the client a fixed amount for the costs incurred while trying to recover the payment.
How to avoid late payment
Prevention is better than cure and so whether you’ve had to learn the hard way or not when it comes to chasing unpaid invoices, it is most definitely worth taking precautions in order to avoid being in the situation at all.
Although easier said than done, it is worth doing a bit of research on the client you will be working with in advance to find out if they are a reputable company, perhaps even running a credit check too.
Look at creating your own payment terms and conditions with clear information on when a payment is due etc.
Consider requesting payment up front before work is carried out, or if a client doesn’t agree with this, at least ask for a deposit.
Make sure you invoice the client immediately after finishing the work, including information on statutory late payment interest.
Trusted by over 1,000 contractors |