Contractor Not Been Paid for Work – What Should You Do?
Contractor Not Been Paid for Work – What Should You Do?
If you are a contractor that has not been paid for work then this is a frustrating scenario. Having submitted your invoices or time sheets to the contracting party, you expect them to be paid on time.
Being a contractor can be challenging at best on occasions but when you are a contractor that has not been paid, this can be the greatest challenge of all. When your cash flow is affected and it is becoming a stress, this can make things even worse.
In the UK, Contractors can be self-employed, and work independently as sole traders, or they can run their own limited company.
It is of paramount importance that a contractor is paid on time by the contracting parties they work for. Contractors can sometimes be instructed on a casual basis but they should still keep adequate proof that services have been provided for their own well being.
Companies use contractors and freelancers as a more cost-effective option, so why do they still leave them unpaid? There are unscrupulous business people that avoid paying contractors on time or at all. Self employed and not getting paid can have a serious effect on a persons well being not to forget their bank balance.
If you find yourself in any situation similar to this, you must know which action to take to rectify this.
We have put together this helpful guide to help take the stress out of having to recover money from your clients.
Are You a Contractor Who Has Not Been Paid?
In the United Kingdom, around 1.77 million contractors are working across a variety of business sectors.
The construction industry alone has various types of contractors, including those that work in steel, framing, electrical, plumbing, roofing, etc.
Contractors have transferable skills, meaning they can often find work with a variety of businesses, regardless of sector.
This, along with the large total number, increases the chances that a contractor may end up not getting paid.
One of the key responsibilities of a contractor is to ensure that all suppliers and subcontractors are paid for the goods or services.
This is why when a contractor has not been paid by their client, it can be very disappointing.
The business you are working for may use any excuse to withhold payment, such as claims of unsatisfactory work, invoice issues, financial payment problems etc.
As a contractor not been paid, you need to take action to recover this quickly to not further jeopardise your cash flow.
How to Recover Money Owed – Contractor Not Been Paid
Contractors are not paid a salary, like full-time employees, so rely heavily on getting paid for each job they undertake to progress.
The cost of the work and working hours are calculated before the contractor begins, providing a clear view of how much is to be paid.
Despite this, payments are still disputed by the businesses resulting in invoices becoming overdue.
Due to this, contractors should always make preparations in case the worst happens and they are left short.
Federal Management has outlined 5 things that will assist you in getting the client to pay any unpaid invoices.
5 Ways to Recover Money for a Contractor Not Been Paid
1. Stop Working for the Client Until They Pay
If you have a positive relationship with your client, it is best to give them the benefit of the doubt if an invoice is overdue.
Should the client refuse to pay you regularly, we recommend that you stop working for them until they pay what is owed.
After all, wasting your energy when you could be working elsewhere AND getting paid is not recommended.
2. Talk to the Client
Communicating with the client is a beneficial way to discuss the reasons for the overdue payment.
Sending an email or making a phone call can go a long way to understanding why the client has not paid.
They may be experiencing financial difficulties, which you would not have known if you hadn’t contacted them.
This also helps to maintain the relationship with the client, should you wish to conduct work with them again.
3. Set Out Your Payment Terms
Payment terms are common in most business-to-business settings and outline all terms and conditions related to payment.
Contractors should discuss these terms and conditions with the business before they start work.
We recommend that you get this in writing and that any documentation related to payment is signed by the client.
This gives you a contractual document you can fall back on if the client continually refuses to pay.
4. Add Interest to Any Late Payments
In addition to the payment terms, you may wish to charge interest on overdue payments as a way to encourage clients to pay on time.
This is a standard accounting practice and can be utilised for both large and small businesses.
The Late Payment of Commercial Debts (Interest) Act of 1998 set by the government can serve as a guide for this.
The guide explains that a charge of 8% plus the Bank of England base rate can be applied to any overdue payments.
5. Contact a Debt Collection Agency for Contractor Not Been Paid
If you have followed the above advice and are still not getting paid, it is recommended to contact Federal Management.
We have a team of professionals that have unrivalled experience and expertise conducting commercial debt collection for contractors just like you.
Throughout our long history, we have experienced every scenario in regards to those who are Self Employed And Not Been Paid.
Across the UK, we are known as the leading debt collection agency for recovering overdue invoice payments.
We pride ourselves on providing a low-cost service that boasts high success rates of 90% and above. Also, our debt collection service is authorised and regulated by the Financial Conduct Authority (FCA).
When a contractor has not been paid, this can create an array of financial issues that need a dedicated solution to rectify.
Choosing Federal Management to recover your unpaid debts is the best way to ensure future relationships can be had with your clients.
For more information on how we can help a contractor not been paid for work, contact our recovery specialists today.
Contractor Not Been Paid – Frequently Asked Questions
I am a contractor not been paid, what should I do?
If you are owed money by a business that you have carried out work for, there are many options available for debt recovery. You should start by contacting the business to chase payment.
What is the best way to recover money for a contractor not been paid?
Whilst there are many options available, it is best to use a professional debt collection agency. Federal Management, for example, has recovered millions of pounds on behalf of contractors since 2004.
What is the debt collection process for a contractor not been paid?
Once you have provided all of the information related to your unpaid work, we will provide you with a free pre-action appraisal. This will outline the chances of recovery, and how much this is likely to cost.
What is the success rate of unpaid contractor debt collection?
Federal Management is unrivalled in the results they provide their clients, with a success rate of 90% and above.
How long will it take to recover the money owed to me?
The length of time it takes to recover debts is based on the individual case and its circumstances. Our debt recovery specialists have many years’ experience, meaning we collect money as quickly as possible.