Guide to Freelancing - PCG

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Your terms and conditions should cover your costs, your delivery arrangements and your payment terms. For example, do you want full or part payment in advance or payment in arrears? If you are prepared to give credit – say 30 days, then say so here. Many businesses give credit to clients, but if you‟re not certain that the client will pay up then you can ask for payment upfront. You can also state your right to charge interest on late payments and to claim compensation for debt recovery costs. You need to make your client aware of, and agree to, your terms and conditions at the outset and give the client the opportunity to discuss any problems they may have before you submit your invoice. Make sure your terms and conditions are also sent out with the invoice once the work is complete. PCG members can download template terms and conditions from www.pcg.org.uk/resources Tackling late payments “Credit vetting, terms of trade, accurate invoices and a good rapport should all form part of the structured approach you take when dealing with your customers,” says Philip King, director general of the Institute of Credit Management. However, even with a good system in place, sooner or later most freelancers and contractors will have to chase up a late payment. When that does happen, it helps to be armed with the latest information on your clients‟ legal requirements. Since November 1998, small companies have been able to charge business customers interest on late payments, under the Late Payment of Commercial Debts (Interest) Act 1998. Small businesses can charge other businesses interest at eight percent over base rate. If you have not specified a credit period in your contract it will be assumed to be 30 days from delivery or invoice, whichever is later. If payment is not forthcoming, after the credit period is up you need to follow up the invoice with reminders, which can be phone calls, letters, emails or faxes. Remember, when it comes to tackling late payments you generally deal with the accounts department rather than your direct client so it can make the process less awkward. During the collection process you may encounter customers who either can‟t or won‟t pay. You may need to impose collection sanctions such as stopping supply, reviewing the credit limit, imposing interest, use of a collection agency or legal action. “For customers who genuinely can‟t pay, it is important to determine the cause of the problem and how serious it is, what is being done to resolve it, what you can do to help and what, if any, assurances can be offered in return for your help,” suggests King. It may be in your interest to negotiate a settlement such as a payment plan. For customers who simply ignore requests for payment, or make endless promises to pay you may need to threaten, or even take legal action. Take the advice of a solicitor before taking legal action. If you do have to take legal action to recover a debt then you may be able to do this online via the Courts Service Money Claim Online service; visit http://www.hmcourtsservice.gov.uk/onlineservices2/mcol/index.htm Copyright PCG September 2011 Guide to Freelancing Version 7.0 36
Debt collection top tips Be courteous Remember that every contact you make with your client can add to your existing relationship. A professional but friendly approach can earn your debtor‟s respect and cement loyalty. Convey urgency Emails and faxes are useful tools in the collection armoury as they convey urgency and often beat defensive barriers when letters are being ignored or phone calls diverted. Be systematic Incorporate phone calls into your collection strategy. A good strategy will timetable appropriate dates for issuing invoices, making phone calls and issuing reminders. Be prepared Check that the information relating to the outstanding debt is correct and that the information is readily available when making phone calls – i.e. the account number, the invoice date and the balance due. Be organised Log the details of the phone call to remind you what action to take next, but make sure that you do not log any information that contravenes the Data Protection Act 1998. The website of the Office of Public Sector Information includes further details on this Act. For further information see also CreditSafe's fee recovery service and PCG's Guide to Credit Management and Control “With new clients I often call the accounts department before an invoice is due to check that it‟s in the system. Many organisations have fixed days when they do payment runs – I time my invoicing accordingly. It tends to be the suppliers who are politely persistent who get paid first.” Charlie Bradburn, copywriter/consultant IN A NUTSHELL: MONEY IN THE BANK Set up a dedicated business bank account - for a list of possible providers visit www.pcg.org.uk/banking Make your credit terms clear in your initial client contract. Terms do not need to necessarily be 30 days Create an invoice template which meets all legal requirements Different rules apply when invoicing clients outside the UK Errors on invoices are likely to delay payment, check the details with the client before submitting your invoice Send invoices promptly and have a system in place for following up on late payments. Copyright PCG September 2011 Guide to Freelancing Version 7.0 37
Page 3 and 4: SECTION 1: INTRODUCTION 1. About th
Page 5 and 6: SECTION 1 Introduction This section
Page 7 and 8: “I can‟t tell you how much admi
Page 9 and 10: THE FREELANCE CHECKLIST Time estima
Page 11 and 12: FREELANCE CHECKLIST CONTINUED... Ti
Page 13 and 14: Once you go freelance, you enter a
Page 15 and 16: What the IR35 Intermediaries legisl
Page 17 and 18: Specify your working relationship b
Page 19 and 20: Although it‟s perfectly possible
Page 21 and 22: • The registered office is the co
Page 23 and 24: Comparison between dividend and cap
Page 25 and 26: PARTNERSHIPS A partnership is a sim
Page 27 and 28: UMBRELLA COMPANY An umbrella compan
Page 29 and 30: SECTION 3 THE BOOKS This section co
Page 31 and 32: Do they come well recommended? If p
Page 33 and 34: KEEPING RECORDS What records should
Page 35 and 36: GET A BUSINESS BANK ACCOUNT Before
Page 37: Invoicing clients outside the UK If
Page 41 and 42: 5. Pay all three taxes (PAYE, Emplo
Page 43 and 44: HOW TO PAY BILLS AND EXPENSES When
Page 45 and 46: Travel If you run a limited company
Page 47 and 48: SECTION 4 Paying the taxman This se
Page 49 and 50: WAYS OF ACCOUNTING FOR VAT Cash acc
Page 51 and 52: You can deduct one percent off the
Page 53 and 54: Upper Earnings Limit (UEL): £817 p
Page 55 and 56: Sole traders, partners and members
Page 57 and 58: SECTION 5 Running the show This sec
Page 59 and 60: 10 Top tips from experienced home w
Page 61 and 62: WORKING AT THE CLIENT‟S SITE It m
Page 63 and 64: WORKING THROUGH RECRUITMENT AGENCIE
Page 65 and 66: Legal Considerations: Agencies are
Page 67 and 68: Building rapport is ESSENTIAL. If y
Page 69 and 70: Website In the 2010 National Freela
Page 71 and 72: Freelancers often complain about th
Page 73 and 74: A good way of doing that is to send
Page 75 and 76: The value of the final pension you
Page 77 and 78: 6 Risk prevention This section cove
Page 79 and 80: EMPLOYERS‟ LIABILITY INSURANCE Al
Page 81 and 82: PROFESSIONAL INDEMNITY INSURANCE Pr
Page 83 and 84: PRE-DISPUTE TAX COVER HMRC Officers
Page 85 and 86: BUSINESS INTERRUPTION INSURANCE Bus

Guide to Freelancing - PCG

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