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Seb Anthony

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Slow and Bad payers


I note many trainers are freelance and exist as either small partnerships or sole traders. Whilst thsre is merit in contacting credit rating companies to chase payment etc this method is frequently unviable given the stop-start nature of work and contract length.

Many other organisations have forums and registers where this type of information (slow payers and bad debtors) is shared.
Many large consultancies who employ many freelancers at a time are often the main culprits, the size of their machine clogging up the payment process, with the accounts dept unaware of the numerous freelancers that are being affected.

Whilst I appreciate the libel issues involved in this, is it not something worth considering and is it not something that freelancers badly need? Frequently their fiscal exposure is considerable yet their collection power is limited.

I appreciate its a fact of life but that doesnt mean its unsovable.

Just a thought?

Mark Starling

3 Responses

  1. Payers
    The issue is here is often not the credit worthiness of the company not paying but their view on cash flow.So credit searches will show ability not willingness.

    The name and shame method will get you into legal problems so don’t even think of it!

    The best way is to get terms and conditions of business drafted, include stringent payment terms and interest on overview amounts in accordance with current law. Enforce when there is an overdue amount and chase for payment on the day it is due.

    On large amounts owed (in excess of £5000) consider insuring the amount against non payment or liquidation. Also consider factoring your debtors book to release money to you in the waiting period. For amounts that are not disputed over £750 use a statutory demand.

    Stop viewing clients that don’t pay as clients! They have taken your service and now are not paying for it, make sure it is a once off. Either get them working with you and agree a reasonable payment structure or look elsewhere for the work. What is the fee worth to you after 3, 5, 9 months of waiting? Bank rate plus 3% if you are bridging with an overdraft.

    Lime One Ltd
    0870 240 4325

  2. The downfall of any business
    We agree with Lime One, we are a four director Ltd company and have in the past had problems with poor payers. So don’t think its just sole traders that get taken for the ride!

    We worked as part of a strategic partnership/subcontractor arrangement last year. The company involved was of medium size and relies very heavily on ESF/Gov funding.

    We and others ( about 6) became unpaid bankers from the April to late August when we issued a stat demand for the £10950 owed to us ( over £65000 was owed to the 6 of us, most of the others were too worried to chase, in case they got no more work). The demand was made after numerous meetings, phone calls and a couple of visits at our expense to chase payment. There was no dispute over the amount owed.

    Eventually we had payment after one unsigned cheque then one bounced one!

    We would never do business with them again and have revised our own terms to reflect interest penalties on late payment.

    It left a bad taste as the other aspects of our relationship were fine but they had got used to paying everyone late. Any business that has such poor debt control and is unable to manage to pay its suppliers is to be viewed with suspicion. Poor money handling and no procedures to ensure supplier payment is indicative of other weak trading areas and so you could be left as an unpaid creditor in a winding up situation unless you take early action for payment.

    We were daft in the situation above as we showed compassion for the individuals involved and this was interpreted as weakness. We won’t do it again!

    TBD GLobal Ltd
    0870 241 3998

  3. TrainingZONE resources
    knowing that you practically live within TrainingZone you are probably aware of the following doccuments but they may be of use to you on this subject.

    the 2 links below will explain how to check the credit worthiness of your clients and How to maintain your cashflow


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