When you’re self-employed, you don’t have a guaranteed wage going into your bank on the same day every month. Working for yourself means it’s up to you to make sure you get paid. Unfortunately, it’s not uncommon to have to deal with late and non-payments. Not being paid on time can be incredibly problematic, with time wasted chasing payment and the possibility of not being able to pay your bills.
Tradespeople such as electricians and gas engineers are hit harder than most by late and non-payments. Small or medium-sized construction businesses, builders and tradespeople are reported to be owed up to £30 billion. (Source: SimplyBusiness)
It’s issues like this that make self-employment risky. However, there are some things you can do to reduce the risk of late or non-payment.
Customers will have done their research on you before hiring you, so why not do your research on them? As you’re entering a business agreement, you’re entitled to know about them. Most importantly, whether they will be able to pay you. Online credit check tools are easy to use and will save you any hassle if it turns out a customer doesn’t have the means to pay.
From the start, be completely clear about what you expect. When you quote for work, make sure the customer knows what you are and aren’t quoting for. Set a date for payment of your work and the methods of payment available.
Write It Down
Once everything is agreed, from what work will be done to when you will finish it and how much it’ll cost, get it in writing. Create a binding contract so that if things do go wrong and a customer hasn’t paid you, you hold evidence of them agreeing to it all.
Providing you deliver the high-quality work promised in the time-frame stated, customers shouldn’t delay payment.
Payment In Stages
Another option is to get the work signed off at each stage and request payment each time. This way, you get regular payments throughout the job, and there is little room for complaints upon completion.
Send over an invoice as soon as possible once work is complete. Outline the job you are invoicing for and request receipt of the invoice. Staged payments will require multiple invoices throughout – set up reminders to ensure you don’t miss one.
To ensure prompt payment, inform customers of when and how you expect payment. Make it clear whether you want immediate payment or if you’re happy to offer a window or 7, 14, 21 days etc. Making it clear avoids a situation in which the customer isn’t aware of the payment deadline.
If They Still Won’t Pay
Despite doing everything you can, sometimes customers still won’t make the payment. Send a letter or e-mail reminder of the price to encourage customers to keep their end of the deal. You are also entitled to make regular phone calls to the customers – providing they are at a reasonable time of day, and they aren’t constant. Keep a record of any forms of communication you have with the customer, and you could even try offering payment options to help them out. If all of these tactics fail, you will have to take the matter to court, filing a suit in the Small Claims Court. Copies of invoices, receipts and a communication log will make your case much more substantial.