How to Make Sure You Get Paid When Contracting

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How to Make Sure You Get Paid When Contracting

There’s nothing worse than having to chase payments from clients whose work you finished a long time ago. What’s even worse is not getting paid at all, and unfortunately, this can happen to anyone.

The good news is that there are certain strategies that you can employ to ensure that you do get paid for your services. For one, it’s important to do a background check on any prospective clients before you sign a contract with them to make sure that they have a good track record. It’s also a good idea to be flexible when negotiating rates so that you can reach an agreement that makes both you and the client happy.

Still, this doesn’t guarantee that the client will pay you. The best thing you can do when you find yourself in a situation where you’re not being paid what you’re owed is to stop working and then start the legal recovery process.

How to Check If Your Client is Solvent before Starting a Contract

Before an agency or a large company falls, there are certain warning signs that appear. Be sure to take them into consideration before making the decision to work with a client.

The best part is that these days contractors can download a company’s full records through verified reports for only £2. Some of the warning bells that a contractor should look out for in these documents include low cash balances, county court judgements and poor credit scores.

To confirm your suspicions that a company is in the red, you can procure a full credit report on them for as little as a few pounds. At the end of the day, spending these nominal amounts to do your due diligence can save you tens of thousands of pounds in lost time and money spent working for a client that may default on payment.

How to Get Paid in Advance When Contracting Direct

If you find warning signs on a company’s track record but you still want to work with them, then you can impose certain conditions in the contract to ensure remuneration, such as demanding upfront payment.

The next best thing is to have the client pay 50% of what they owe you for the project upfront and the rest upon completion. It’s also imperative for a contractor to be organised when it comes to their invoicing and make sure that they invoice the client for the outstanding amount at the end of the month, as well as 50% upfront payment for the following month’s work.

What Payment Terms to Use in Order to Reduce the Risk of Non-Payment?

You can also include payment terms in the contract to stipulate the number of days that the client is given to settle payment from the time of receiving their invoice. Depending on the size of the company, the client may insist on a 28, 30, 60 or 120 day notice period to pass before they’ll be required to pay an invoice. Most freelancers and contractors prefer to stick with a seven-day payment period from the date of invoice.

Also included in the terms should be information on what measures will be taken if the client fails to pay on time. The contract can also stipulate that the contractor will be invoicing the client every seven days.

After the contractor and client have agreed on the terms, they should incorporate them into a legally binding, written contract that will be signed by both parties before work starts.

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