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 deal with late or even non-payments. Customers not paying can be incredibly problematic, with time wasted chasing payment and the possibility of being unable to cover 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.
Credit Checks
Customers will have researched 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.
Be Clear
From the start, be completely clear about what you expect. When you quote for work, ensure the customer knows what you are and aren’t quoting for. Set a date for payment of your work and the payment methods available.
Payment Options
Nowadays, there are numerous ways to pay. However, if you only accept one option, customers may delay payment. Sometimes this is because they can’t pay via your preferred method.
Many people have gone digital when it comes to money, so investing in a card reader could help you get payment there and then. Otherwise, set up a PayPal account or provide bank details, etc. Some prefer to keep it old school, so while a cheque may require a trip to the bank, if it’s the easiest option for the customer, accept it.
Write It Down
Once everything is agreed upon, 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 you hold evidence of them agreeing to it if things go wrong and a customer hasn’t paid you.
High-Quality Work
Customers shouldn’t delay payment if you deliver the high-quality work promised in the stated timeframe.
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.
Invoice
Send over an invoice as soon as possible once the 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.
Tools such as Powered Now as specifically designed to help tradespeople with invoices, quotes and keeping track of their schedule. And best of all, as an Options Skills student, you can claim 12 months free!
Due Date
To ensure prompt payment, inform customers of when and how you expect payment. For example, make it clear whether you want immediate payment or are happy to offer a window of 7, 14, 21 days etc. Make it clear to avoid a situation where 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. Begin by sending 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 aren’t constant.
Keep a record of your communication with the customer; you could even try offering payment options to help them out.
If these tactics fail, you will have to take the matter to court. If you’re owed less than £5,000, you can go through your local county court to recoup the money. For claims of up to £25,000, claims are typically issued in a county course, while for anything over £25,000, you can take claims to the High Court.
Again, keep copies of invoices, receipts, and a communication log, as it will make your case much more substantial, and you’re more likely to win and get paid.
