Freelancers and independent contractors have a lot of freedom in their jobs because nobody can dictate what work to take or how to do it but them. However, sometimes there’s a trade-off: they also need to hunt down work.
They don’t get paid a salary, so they need to ensure there’s always a job lined up. After a few years, hopefully, the contractor or freelancer has made connections, so looking for work isn’t such a burden or a problem.
Even when they’ve done the job, that doesn’t mean the pay appears in their accounts when it’s supposed to. Plus, freelancers don’t have an HR department that can track down these payments and gently nudge debtors. They have to do everything themselves.
Let’s take a look at some of the options those working alone have and how the dependable debt collection service from Summit Collects can help them focus on the work ahead.
A Gentle Reminder
Freelancers and contractors depend on their business relations with clients to get more work in the future. Accordingly, there’s always a tension between requesting money when owed and worrying about potentially fraying a relationship.
Even when companies or clients promise to give money in exchange for a job, they can get upset or embarrassed when you mention they haven’t paid. It may not be fair, but if they’re owed money, freelancers and contractors should start by sending an email as a gentle reminder,
One of the realistic things about being a freelancer is that getting paid late and collecting overdue payments is a common part of the job. It would be great if everybody who owed money paid it after receiving a gentle reminder, but sometimes this isn’t enough.
Letters of Demand
A gentle reminder is an informal message. Freelancers and contractors owed money can take it up a notch by sending what’s called a letter of demand. Such letters notify a company or client that they have a legal obligation to honour their contract or pay a sum of money.
They’re not necessary to initiate a lawsuit, but hopefully, the debtor will read it and understand it’s time to finally make the payments. Letters of demand usually have a few common elements:
- The recipient’s contact information and the date.
- The phrase “without prejudice” to protest the letters’ contents from being used against you later in court.
- A summary of the agreement and problem at hand.
- The demand for the pay owed.
- Deadline when money is owed along a reasonable timeline.
- Stating that you intend to follow up with a lawsuit if demands aren’t met.
- Fair and specified terms.
Anybody can send a letter of demand. You don’t need to be a lawyer or professional. Freelancers and contractors may feel like sending such a letter may leave a bad taste in the other side’s mouth, even if it won’t!
It can be a hard step to take, even if you feel squeezed for money. That conflict between wanting the money you’re owed and wanting future business isn’t an enviable position. Summit Collects can help.
If a freelancer or contractor is owed money from someone who doesn’t want to be found, they rarely have the time or resources to pause their work and go find the person. Summit Collect’s skip tracing solutions go beyond what they could do on their own and exceed industry standards.
Unlike almost every debt collection service in the US, we have a licensed private investigator in-house that you can use without paying an extra fee. We can find not only the debtor but their assets too.
People who owe money tend to put their unpaid debt excuses aside when they see their credit rating dip.
Credit Bureau Reporting
Usually, people want to pay the money they owe to a freelancer or contractor. Sometimes, their finances are stretched too thin, and finding the money is a struggle.
The reality is that if the costs of not paying what they owe exceed the benefits, they’ll pay. They’re trying to run a business, and they don’t always have piles of money lying around. That’s their problem, not yours! But their problem can become yours if you don’t have a way to motivate them to pay.
Most freelancers and contractors don’t handle unpaid receivables in-house, something delinquent customers know. They probably aren’t worried that their credit rating will drop by not paying you.
Summit Collects reports these debts to all three major credit bureaus at no additional cost to create some urgency to get customers to pay. All reported accounts comply with the FCRA, and we handle any potential dispute swiftly.
Feel free to partake in this complimentary service or not, as you please.
Accounts Receivable Consulting
Freelancers and consultants sometimes know more about their area of specialization than the pure business side of things, like managing accounts receivable. Consulting with our experts can sometimes fix the fundamentals of their operations, preventing problems down the road from occurring before they become an issue.
Chat with us to learn more about how to improve your cash flow while reducing bad debt write-offs. Our collection service for business owners is always available, but preventing debt collection problems from arising in the first place is ideal.
As freelancers and contractors surely know, getting paid on time is not always in their control! We have tips and best practices you should be aware of, and we’re always here for you if that isn’t enough.
Ideally, freelancers and independent contractors should be able to focus on their work and ensure they have jobs lined up for the days ahead. The reality is quite different. Going it on your own can be very liberating, but you’re also more dependent on clients’ willingness to pay and pay on time. If you’re a freelancer or contractor and your gentle and stern reminders to pay don’t work, contact Summit Collects today.