Freelance work is becoming more common, with many pursuing it as a full-time career. But with the nature of this industry, there can be downsides, some as serious as not getting paid for your work.
For those who count on their freelance paychecks to pay the rent or cover necessities each month, missing even just one payment could be detrimental to their financial health. Missing multiple payments, however, could harm one’s credit score and negatively affect cash flow.
Thankfully, there are collection agencies for when these issues get out of hand. These debt collectors, however, should not be a first-resort solution. Hiring a collections agency will likely result in the loss of your client, and there are many risks and downsides of doing so.
Unless you’ve hit a wall with a non-paying client and have the law on your side, you should wait until you are certain that a collections agency is your only hope. Here’s how to know you’ve reached that point.
Your payment plan was breached.
Before agreeing to do freelance work, set up a payment plan to ensure you and your client are on the same page. That way, if the plan is violated, you have grounds to hire a collections agency and fight for your money.
L. Burke Files, CACM, DDP, president of Financial Examinations and Evaluations Inc., said you should consider choosing an agency if “you have a clear written agreement, including the choice of law for settling disputes.” Any legal document that was signed, then broken, by a client will help back your case to collect any debts.
You’ve spent over 90 days waiting for payment.
If you feel you are wasting too much time waiting, don’t hesitate to seek help, said Files.
Specifically, if an unpaid invoice reaches the 90-day mark, act immediately. After that point, the probability of collecting that debt only decreases. It’s typically a “last straw” for most freelancers.
Read more: https://www.businessnewsdaily.com/11025-freelance-collection-agency.html