If you’re tired of hunting down clients when they’re tardy in paying invoices, there’s some good news for you by way of some new government programmes.
There’s nothing more frustrating for a contractor or a freelancer than trying to convince a firm to pay them for services rendered, only to be given the runaround. It seems that there’s little you can do to actually get the ball rolling, but that’s set to change thanks to the Late Payment Directive, a new EU directive that will provide some incentive for companies to pay their bills on time – as not doing so will end up seeing them accrue interest!
The LPD allows contractors to charge not just interest but actually a ‘reasonable’ recovery fee as well, though as of now there’s not much guidance on what reasonable might be. Private firms will be given 60 days before interest stats being charged, while public bodies will be given just half that; past that date firms and government departments can see fixed penalties ranging from £40 to £100 depending on the amount owed in addition to any recovery fees, which will be independently set (most likely by contractors themselves).
I think this is an amazing step in the right direction when it comes to forcing companies to act with a bit of class and decorum when it comes to dealing with the freelancers and contractors they use, often on a regular basis; oftentimes a contract worker used by a larger company is seen as a bit of a ‘small fish in a big pond’ when it comes to settling accounts, despite the fact that freelance workers are an integral part of the entire European recovery efforts.
For what it’s worth, many of these companies both large and small are reaping massive rewards by using interim workers to complete projects instead of increasing their permanent workforce, as the flexibility of contractors is an ideal way to control costs while still completing projects on time – and more importantly under budget. To treat contractors with such little deference as to simply ‘get around to paying them’ whenever it’s convenient for the firm and not when a contractor needs those funds to keep his own business out of the red is absolutely disrespectful and denigrates the massive contributions that freelancers make to the continued existence of these very firms!
Let’s hope this new directive convinces any firms that drag its feet in paying its contractors to sort themselves out. Nothing motivates like increased costs, after all!