Job satisfaction is a big part of becoming a contractor – but getting paid for your work is just as important. It should be as easy as sending an invoice, but unfortunately sometimes you need to have an understanding of contract law, what your rights are and how to go about resolving a dispute.
Fortunately, managing risk is something that we at ContractingWISE can help with. We work with contract lawyers who specialise in contract disputes and will be able to give you useful advice on the rare occasions when things go wrong.
Before entering into a contract, do some due diligence
However large or small your prospective client is, you should check their credentials – identity, address, and documents. After all unless you get paid in advance, you’re effectively giving your client your time and labour on credit, so it’s reasonable to do some sort of credit check.
For identity, make sure you have your client’s company registration number and trading name and that these are included in all your paperwork. For the address, make sure you have it in full, including the postcode – perhaps take a quick look at an online map or Google Street View to see what the premises are like. For documentation, you can now check for free on the Companies House website to see who the directors are and what their latest account filings say.
Dealing with late payers
After the ink has dried on a new contract and the first work has been delivered, you can sit back and look forward to seeing an uptick in your bank balance.
But sometimes managing payments can be hard work. So first, get the basics right – make sure that your terms and conditions include details about compensation, interest rates and any other costs that you might incur through late payment.
When you’ve sent an invoice, check that it has arrived with the right person. If the payment hasn’t arrived by the due date, send a statement which outlines what’s owed. Then chase it up with phone calls and letters or emails. Outline what late payment penalties are being incurred – and at what stage any work you’re doing will stop.
If you have a persistent late payer, or your client is in breach of contract, then you should consider taking legal action. This doesn’t necessarily mean going to court, and you should try to exhaust all other options first – firstly because they are cheaper, and secondly because if you don’t, a judge may ask you to do so.
In a contract dispute, you should first establish the facts of what has happened. Get all your documents together, and identify any people on your side who might be able to give evidence.
Then take a clear and dispassionate look at the situation. What do you want to achieve – to win at all costs, or to keep a previously profitable business relationship going? Your opponent may be spoiling for a fight or they might not even be able to pay your legal fees. And the gains from winning a court case may not even cover the cost of getting there – you may want to look at alternative dispute resolution such as mediation or arbitration where possible.
Dealing with your own sub-contractors
If you’re faced with a choice between two urgent jobs from two great clients, you may want to take on a sub-contractor to help you get the work done. Becoming the client yourself can give you an excellent insight into what the contract process involves. Your contract negotiation with a sub-contractor should result in contract terms that are clear about what is required, that they are not an employee and exactly how long you will be paying them for.
Keep calm and get some good advice
Most contractors never have to hire a lawyer or go to court. But if a situation seems to be getting out of control, get in touch with ContractingWISE – we work with top notch contract lawyers who will be able to help you with all the finer points of consideration contract law.