Late payments threaten to derail the freelance industry

UK freelancers are increasingly struggling with late invoice payments, with around half admitting they have considered quitting life as a freelancer because of worries over continued late payment, and 46% stressing about having enough cash to live on.

Our latest research here at Ormsby Street, also reveals that one in ten freelancers have faced difficulties paying their mortgage or rent because of late invoice payment, and many have turned to family (37%) or even payday loans companies (36%) to cover a shortfall brought about by late payment.

While a fortunate 19% of respondents say most of their invoices are always paid on time, a freelancer’s invoices are paid on average 18 and a half days after their due date. At any one time, a freelancer in the UK is owed on average £5,431.03 in late payments and 79% of freelancers say that cash-flow is the number one concern for their business.

“Every freelancer knows that late invoice payment is one of the biggest frustrations, impacting cash-flow and causing much stress, from paying the mortgage to having enough money to live on,” said Martin Campbell, Managing Director, Ormsby Street. “For a freelancer to be owed more than £5,000 is clearly unacceptable and threatens the emerging freelance economy in the UK, which brings flexibility and work / life balance to so many.” 

The Office for National Statistics revealed in 2015 that 4.55 million Britons are now their own boss and research by the Association of Independent Professionals and the Self-Employed (IPSE) found three in five businesses agree that it would be difficult to operate without hiring freelancers. The Ormsby Street survey of 1,002 freelancers and sole-traders, revealed that 40% of respondents have taken out a County Court Judgement (CCJ) in the last year to chase a bad debt, and more than half say that late invoice payment is getting worse not better.

It remains a problem for many freelancers when it comes to chasing clients over late payment, partly because they do not have the time to spare, but also because of fears this might impact future work with that company.  57% of respondents say they worry that if they chase for payment that client might not use their services again, while two-thirds say they feel uncomfortable and awkward chasing clients for late payment.

“Why should a freelancer waste their own billable hours chasing payment for work that has been successfully completed and is already due for payment,” continued Martin Campbell. “If customers are not willing to pay within the agreed terms then it’s time for freelancers to become more informed over whom they work with, and either ask for payment upfront or even choose to not work with company.”

Special Freelancer rate!

With 49% of freelancers having had to turn down a contract because of concerns over a client’s ability / willingness to pay on time, we’re offering access to CreditHQ for the special freelancer rate of £12.50 for the standard subscription; allowing freelancers to obtain financial insight into every company they trade with. Sign up here to take advantage of this offer

“Freelancing has grown in popularity because of the choice and flexibility it gives people over their career, but its success relies on the prompt payment of invoices, which is not happening enough,” concluded Martin Campbell. “Credit-checking potential customers and partners is straightforward to do and should be done by a freelancer every time they work with someone, to protect themselves against late payment.”

About the research

An online survey of 1,003 freelancers and sole-traders was undertaken by TLF Research in March and April 2016.

CreditHQ, the credit-checking tool built by Ormsby Street, collates credit and trade information from Companies House, Experian and Dun & Bradstreet and presents that information in simple-to-understand credit and payment indicators, so a freelancer can assess which businesses are likely to pay them on time, or after 30 or more days.

Formed in 2014 to take over the operation of the financial data proposition of BCSG, Ormsby Street is developing the next generation of financial data services for small businesses. Its team of high-performing product innovators and software engineers are quietly taking sophisticated financial information and turning it into a next-generation digital tool to help businesses make good decisions about customers, suppliers and themselves.

CreditHQ now available in Germany

German small businesses now able to use award-winning credit-checking tool, CreditHQ

CreditHQ is now available in Germany, as part of a new partnership with one of Germany’s biggest banks.

CreditHQ allows a small business to check the financial health and credit status of any customer or partner and will be available to the small business customers of its German partner bank. Its German launch is the next stage of an ambitious international expansion programme that will look to target Poland, the US, Australia and other European markets over the next 12 months. 

More than 4 million German enterprises are classified as small and medium-sized enterprises, accounting for 99.6% of the total number of enterprises. German SMEs generated an annual turnover of approx. € 2,149 bn in 2012, which representing 35.3% of the total turnover of German enterprises.

“Despite new regulations brought in to combat late payment culture in July 2014, late payment remains a major issue for German small businesses, impacting on cash-flow and the ability to grow,” said Martin Campbell, MD, Ormsby Street. “There is a growing need in Germany for an easy way of checking the credit status and payment performance of customers and CreditHQ meets that requirement head-on. Partnering with a bank in Germany is a great way of bringing CreditHQ to the German market and we are confident it will mirror our success in the UK.”

CreditHQ is working with credit supplier, Burgel and will allow small businesses to check the credit status, payment performance and general financial health of millions of German small businesses. The simple traffic light ratings system shows clearly the level of risk associated with the company in question, and users are given two different ratings, one addressing credit risk and the other payment performance.

CreditHQ is used by more than 27,000 UK small businesses, and launched in Italy in 2015. Ormsby Street has just returned from the SXSW event in Austin, Texas, where it was representing UKTI as a UK Tech Ambassador and seeking new partnerships with US banks to further expansion into the US market.   

“Late payment is a problem for small businesses all over the world and the next 12 months will see us launch in at least another four countries,” continued Martin Campbell. “It is impossible to force someone to pay on time, so small businesses have to protect themselves against late payment as best they can. CreditHQ’s use of big data to address that problem gives small businesses the insight and power to do just that, and is suited to almost any territory in the world.”

About Ormsby Street

CreditHQ is built by Ormsby Street, a Software-as-a-Service business based in Old Street, London. Formed in 2014 to take over the operation of the financial data proposition of BCSG, Ormsby Street is developing the next generation of financial data services for small businesses. Its team of high-performing product innovators and software engineers are quietly taking sophisticated financial information and turning it into a next-generation digital tool to help businesses make good decisions about customers, suppliers and themselves.

Play our Business Match game this Valentine’s Day!

With Valentine’s Day just around the corner, do you know who’s your perfect match when it comes to running your business?

Could Paws for Thought be your perfect business match?

Check out our new Business Match game and sign up to CreditHQ this February for only £15 per month PLUS, we’re giving all new Standard subscribers a box of chocolates plus entering all new subscribers into a draw to win a meal for two at the fabulous Resident of Paradise Row in east London (or if you can’t make it to the big smoke, we’ll give you the equivalent in vouchers for a great national restaurant).

So head over to www.credithq.co.uk/businessmatch  to take advantage of this great offer and make sure you’ve found the perfect business to trade with. And good luck!

New CreditHQ partnership with The Formations Company, aims to address the growing problem of late payment to small businesses

Small business founders registering their business with The Formations Company, will now be offered access to CreditHQ when they form their new companies, allowing them to check the financial health of the suppliers and customers they invoice, and know whether those trading partners are likely to pay on time.

“Late invoice payment is one of the biggest reasons for the cash-flow issues that many small businesses are facing in 2015,” said Martin Campbell, Managing Director, Ormsby Street. “But most small businesses don’t think to check on the financial health of a customer or supplier. Making CreditHQ available to customers of The Formations Company not only provides an easy way to check this but will also recommend whether a company is likely to pay on time or not.”

The Formations Company is the most cost-effective way for a new business to form and has helped more than 100,000 UK small businesses form since its launch in 2009. It offers a range of extra services from a free consultation with an accountant or web developer to £25 free credit for business cards and stationary. The addition of CreditHQ to this suite of services looks to protect small businesses from late invoice payment and the cash-flow issues that can bring.

CreditHQ uses data from seven million company records to check credit status and general financial health, and uses a traffic light system to advise small businesses whether a company is likely to pay them on time. It also provides regular updates on credit ratings, so a small business will be kept abreast of any changes in a customer’s ability to pay. 

“Forming a business can be bewildering, so we want to provide our customers with the very best services and tools to help them as they start their business journey,” said Piers Chead, CEO, The Formations Company. “CreditHQ absolutely falls into that category. Late payment of invoices is a major issue for SMEs, so a free tool that enables them to check the financial health of potential clients before beginning work with them will be invaluable.”

For more information, or if you’re ready to set up your limited company: https://www.theformationscompany.com/

Late payments force small business directors to take pay cuts

Today’s report in The Times, outlines the increased importance of checking out the financial health of the companies you’re trading with: http://www.thetimes.co.uk/tto/business/workinglife/article4354941.ece

The latest figures from this story, report that the average UK small business is now owed £32,000, resulting in around £677 per month for each company affected – this adds up to over £8.7 billion in late payment costs for the whole of the UK – forcing one in five directors of these companies to be taking salary cuts.

So, if you run a small business – what can you do to ensure that you don’t become one of these statistics? Check, Monitor and Collect…

Check: KNOW who you’re trading with. By registering with CreditHQ, you can check who your suppliers, customers and competitors are for FREE! The simple ‘traffic-light’ payment and credit indicators quickly show you who has a solid credit rating, and who pays their invoices on time- if both of these indicators are red, it might be worth your while having a look for more secure businesses to deal with. If you do want to find out more detailed information about a company, you can upgrade to the Standard subscription to obtain details of net worth, assets, liabilities, sales, and details of adverse credit events.

Monitor: Keep a watchful eye on those you’re doing business with. Add businesses to the Watch List on CreditHQ and receive alerts when that company’s details change – if they’re beginning to struggle financially, make sure you’re the first to know rather than finding out when they get into deep water.

Collect: Chase your invoices before they become due. If a business you’re monitoring is beginning to experience problems, think about re-negotiating your payment terms with them, or reducing the amount of credit you offer to them the next time you trade with them.

Checking out your trading partners need only take a few minutes, but could save you months of chasing payments and juggling cash-flow, simply because you went into business with someone you hadn’t researched. Plus, it’s free to do and could potentially save you from a pay cut later in the year! www.credithq.co.uk

 

 

 

Groundhog Day: Is it time to spring-clean your business finances?

https://credithqnews.files.wordpress.com/2015/02/igyb.mp3

Groundhog Day, which is celebrated today (2nd February), predicts the onset of Spring. According to folklore, if it is cloudy when the groundhog emerges from its burrow today, then spring will come early; if it is sunny, then the groundhog will supposedly see its shadow and retreat back into its burrow, and the winter weather will persist for six more weeks.

Whatever the groundhogs think, it’s always a good time to get your finances in order.

In the 1993 movie ‘Groundhog Day’, Bill Murray’s character is forced to relive the day over and over again until he can learn to give up his selfishness and become a better person.

Become a better business and start your Spring clean now, by doing the following five things:

1. Credit check your customers – remember it’s your money which is at risk while you wait for the customer to pay. Check their creditworthiness and how likely they are to stay in business, for free at CreditHQ.

2. Plan ahead – forecast your cash flow by looking at how quickly your existing customers pay you, and for new customers, use CreditHQ (it’s free!) to check when you are likely to get paid.

3. Chase your invoices and collect your debts – got any money outstanding? Send reminders or contact us for a letter before action template, if reminders aren’t getting you anywhere.

4. Tax entitlement – before you submit your accounts, ensure you have claimed everything you are entitled too.

5. Review your business costs:

Insurance – when is it due, how much is your yearly premium? Auto-renewing isn’t always the cheapest option, so check out some comparison sites to see if you can get a better deal.

Phones – look at how many minutes on average you use and what else you get with your package. A quick look on the internet will give you an idea of the best offering for you.
If you work from home, it can be easy to just use the house phone and forget to expense these as business calls. Look at getting a dedicated business line or a separate mobile account.

Broadband – shop around, you might be able to pay less for faster broadband.
If you use your personal broadband for business uses, you may find a business account is better.

Utilities – like at home, business often stay with the same supplier for gas and electricity, because it’s easier. It may not be cheaper though, so look into switching.

Postage – right now a 1st class stamp costs 62p. So the cost of sending out invoices by post adds up. Sending invoices by email is definitely cheaper, so save them as a pdf and attach them – or better still, your accounting software will probably do all this for you.
If your business involves posting or shipping, then shop around for the best courier, here’s an article which may help http://www.moneysavingexpert.com/shopping/cheap-parcel-delivery

Software – review how much your paying for all your software packages, things change so fast in technology, so there may be better, cheaper options out there. Start comparing!

Bank charges – how much are you paying in bank charges and what are you paying for? Do you have an overdraft or loan? Speak to your bank and other banks to make sure you are getting the best deal.

Remember to examine your statements for any mystery charges, or things that you no longer use.

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Whether it’s cloudy or not today, it’s always a good time to get your finances in order, and according to many reports, the groundhogs only get it right 37% of the time anyway!

Use CreditHQ to help you.

How to get the most out of CreditHQ

If you own a small business, then knowing what your competitors, suppliers and partners are up to, and when you will get paid is a must. Here at CreditHQ, we know that this part of the business may not be the most exciting, and usually is quite a struggle and misunderstood. This is why we have made CreditHQ the easiest possible tool for you; simple, smart and focused on the important information you need to run your small business.

So how does that work?

Getting started & searching
Landing on the CreditHQ homepage you can search for a company you would like more information on . Try to be precise with your search terms – there are a lot of companies out there. You can also search by company ID. Once you’ve entered your search criteria, our engine will provide you with a list of companies matching your initial search – just choose from the list to see details. If you already have an account, you can sign in via the top right menu of the page.

Company details & Free account
On the company details page, you have access to general information about the company (such as address, phone, company status etc.). Creating an account with CreditHQ will give you access to credit & payment indicators, credit events and insights on what to do next. CreditHQ doesn’t only give you info about a company, but also helps you make the best choice regarding the credit information that you’re provided. Oh and yes- it’s free!

Creating an account, and why?
To create an account, just follow the “create an account link”. You’ll be asked for the usual credentials and also your company details. You can either search for your company in our database, or manually enter your company details. Creating a free account is that easy.

So why should you create an account? Well, this is where CreditHQ unlocks its true power. Having a free account will give you access to your dashboard, where you can add companies and follow their credit & payment indicator evolution. You will be given meaningful insights on how to act if, for instance, a company has a low payment or credit indicator, and the reasons why that is happening. You will also be given information or your company score and how to increase it and keep it healthy. Basically we will help you and guide you through the process. You can also set up email alerts, to know all the changes of all the companies on your dashboard. All of this won’t cost you a penny.

Upgrading
Once you are fully set up, and want to unlock even more features. just follow the link on the side menu to upgrade to a standard subscription. Standard users will get access to accurate credit and payment indicators, credit events plus recommended credit limits and detailed valuable financial information for each business.

An insight to the future
CreditHQ is still young, and growing every day. New features such as debt management and action letters are on their way to make your life as a small business user, much easier. We aim to be as small businesses are; close to their customers and listening to their needs. We read all our emails thoroughly. If you feel that the product could be using some new features and improvements, we really want to hear your ideas! Use the contact page, and get in touch with us, we don’t bite!

www.credithq.co.uk

 

3 ways to avoid being haunted by scary debt and bad credit this Halloween!

Whether you’re a brand new small business or a more established SME, one of the main worries facing all business owners, has to be building up your credit score and avoiding getting into debt. Here’s a few tips to help you on your way…

1) Know your own credit score. It’s vitally important to be aware of how your company’s financials are reported when potential traders and customers are searching for you. If you don’t like the look of your credit score, are other people going to want to do business with you? If you’re looking for ways to improve your credit rating, take a look at our post on ‘how to get a better credit rating for your small business’

2) Be aware of your payment terms! On sites such as CreditHQ, companies’ payment terms are included as part of each business’s financial insights. Even as a basic free subscriber, people can search for your company and see a green, amber or red indicator as to how good or bad your business is at paying its customers and suppliers on time. If you need some cashflow management tips, check out our post about cash-flow projections

3) On the flip side, when you’re investigating who to trade with, the payment indicators (and more detailed reports if you become a Standard paid-for subscriber), allow you to see which company is likely to pay you on time. If they’re likely to renege on their payment terms, you can ensure you set shorter terms or limit the amount of credit you’re extending to that particular less-than-reliable company. Check out our ‘How can I tell if someone’s going to pay me on time’ blog for some more tips

It’s often bandied around at the moment, but the word ‘transparency’ is of huge significance when it comes to managing cash-flow, credit ratings and debt within any small business – so make sure you’re armed with all the tools you need and aren’t walking zombie-like into debt! Know your customers but most importantly, know your own business!

You can search over 7 million companies and register free by going to www.credithq.co.uk 

 

 

 

Your rights with overdue invoices

You’ve worked hard to win a new customer. You’ve worked hard to deliver a quality product/service for the customer. But now the customer is making you work hard to get your invoice paid. That can’t be right, can it? It isn’t right, but there’s nothing you can do about it is there? Wrong. There is! You have rights and you shouldn’t be afraid to exercise them in order to get paid. You’re (probably) not running a charity. You have bills to pay and employees who have families to support; so getting your money is really important. And the government know this so they’ve put in place mechanisms in order to support you in getting paid.

Payment terms It’s always best to have your own payment terms laid out because these will more accurately reflect the needs of your business and you can set these to be whatever you need. 7 days, 30 days, or 100 days. It’s up to you. However, if you haven’t explicitly given terms to your customer then the default is 30 days and it’s within 30 days that they have to pay you.

Charging interest Once the invoice becomes overdue then you are perfectly entitled to charge interest on the amount owing. This would be either your own rate of interest if you’ve included it within your terms, or it could be the statutory rate of interest, which is 8% PLUS the Bank of England base rate for business to business transactions. Don’t be afraid to do this, because it’s your money that they’re stopping you accessing. You could be gaining interest on that yourself if it was in the bank, or you could be investing it in obtaining further work, and you can’t until they pay you.

Statutory demands If all else fails, anyone who is owed money can make a statutory demand and you don’t need a solicitor to help you. Once the demand is received by the company owing the money, they have 21 days to either pay the debt or reach a payment agreement with you. If this isn’t forthcoming then you can start a winding up order against the company. But hopefully all our customers will pay on time and we don’t need to worry about any of this!