When Should Freelancers Use a Collections Agency

When Should Freelancers Use a Collections AgencyCredit Stephen VanHorn/Shutterstock Freelance work is becoming more common, with many pursuing it as a full-time career. But with the nature of this industry, tzu siche 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 ones 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 youve hit a wall with a non-paying client and have the law on your side, you should wait until you are certain that a collecti ons agency is your only hope. Heres how to know youve reached that point.Editors Note Looking for information on collection agencies? Use the questionnaire below and our vendor partners will contact you to provide you with the information you needYour 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.Youve spent over 90 days waiting for payment.If you feel you are wasting too much time waiting, dont hesitate to seek help, said Files.Specifically, if an unpaid invoice reach es the 90-day mark, act immediately. After that point, the probability of collecting that debt only decreases. Its typically a last straw for most freelancers.The unpaid invoices are worth more than the amount youre paying an agency.Dont fret over an invoice thats only a few hundred dollars. Sure, you shouldnt let it slide any time your clients fail to pay you, but you must weigh your options.According to Investopedia, collection agencies typically dienstgrad 25 to 45 percent of the amount collected. Ask yourself if its worth investing in an agency that will take a percentage of your debt. For large invoices, the answer is probably yes. For smaller ones, you might want to simply move forward and no longer do business with that client.Your client has a history of not paying.If the person youre working with has done this before, consider enlisting the help of an agency. Odds are, theres a pattern to their behavior, and you shouldnt have to continue dealing with it.But, if this is thei r first offense, speak with them about it before seeking outside help. Give them time and hear them out. You dont want to lose business because of a simple miscommunication. Sammi Caramela Sammi Caramela has always loved words. When she isnt working as a Business.com and Business News Daily staff writer, shes writing (and furiously editing) her first novel, reading a YA book with a third cup of coffee, or attending local pop-punk concerts. Sammi loves hearing from readers - so dont hesitate to reach out Check out her short stories in Night Light Haunted Tales of Terror, which is sold on Amazon. Start Your Business Business Ideas Business Plans Startup Basics Startup Funding Franchising Success Stories Entrepreneurs Grow Your Business Sales absatzwirtschaft Finances Your Team Technology Social Media Security Build Your Career Get the Job Get Ahead Office Life Work-Life Balance Home Office Lead Your Team Leadership Women in Business Managing Strategy Personal Growth Find A Solution HR Solutions Financial Solutions Marketing Solutions Security Solutions Retail Solutions SMB Solutions About Us Contact Us lebensgefhrte with Us Copyright Poli cy Terms of Use Privacy Policy Do Not Sell My Personal Information Advertising Disclosure Sitemap 200 Fifth Avenue, Second FloorWaltham, MA 02451infobusinessnewsdaily.com Copyright document.write(new Date().getFullYear()) All Rights Reserved. Company About Us Contact Us Partner with Us Copyright Policy Terms of Use Privacy Policy Do Not Sell My Personal Information Advertising Disclosure Sitemap Network Business .com BuyerZone.com