The FreeAgent Blog
Posted on 6 June 2017 by Adrian Mather - Jump to comments
If you’re a freelancer or a small business owner, then we don’t have to tell you how frustrating late payments can be.
While this is a problem that has been around for some time, the government is now taking steps to try and resolve it. As well as the ongoing recruitment of a Small Business Commissioner to help resolve disputes and provide guidance, last month new legislation came into place forcing big businesses to make reports on their payments to small businesses public. While these changes may be a step in the right direction, the toxic culture of late payments will take a lot more than a little legislation to fix.
So what can you do to protect your business against reluctant payers? Follow these steps to arm yourself as best you can:
Draw up payment terms
First things first: make your payment terms known loud and clear. Your payment terms are the conditions that you impose on your customers to make sure that you receive payment within an acceptable timeframe. Before you start working with a client, draw up a brief summary of these terms, and ask them to sign it. As well as laying down your payment deadline (e.g. 30 days after invoicing), you might want to request a deposit in order to secure some of the cash upfront.
You can also preemptively guard against being paid late by introducing a late payment penalty into your terms. You can legally charge 8% interest plus the Bank of England base rate on invoices that are over 30 days late, and you’re also entitled to claim debt recovery costs of up to £100 for the inconvenience. Having a written agreement in place makes everything clear right from the beginning, and can give you a cast-iron comeback against any flimsy excuses.
Have a watertight invoice
If your invoices are missing information, then you’re giving your clients an opportunity to take advantage. It’s vital that you list your full business details, plus a rundown of the work completed and a clear cost breakdown in your invoices. Be sure to include any late payment penalties, and if you like, you could even include your full payment terms on every invoice.
Do you use services like PayPal, GoCardless or Stripe? Make your invoices even slicker by adding an instant payment link, so making that payment couldn’t be any easier.
For more ways to make sure your invoices are untouchable, check out these tips to make sure it stands up to client questions.
Be firm (but friendly)
Relationships with clients can often be a little tricky, requiring you to constantly toe the line between being friendly, yet professional. However, if you want to keep things sweet between you, then it’s crucial that you be assertive and upfront about your payment terms.
Part of taking a firm hand could be requesting immediate payment for any work done. Our research has shown that small business owners who issue zero-day terms, often get paid far quicker than their more lenient counterparts.
Send a prompt, professional invoice (FreeAgent offers a gallery to choose from, so it's easy to find one that fits your brand) and you’ll be off to a flying start. Once you’ve sent that invoice out, don’t be afraid to chase your client up. Be firm yet friendly, and remember - you’re only asking for something that is rightfully yours! To really take the awkwardness out of repeated invoice reminders, let FreeAgent take care of it by sending automated invoice reminders out for you.
Fight for your rights
If, despite all your best efforts, you still can’t get a client to cough up, you are well within your rights to take legal action. Whether it’s taking your case to small claims court, referring the matter to a debt collection agency or even getting a solicitor involved, you have lots of options to help claim what is rightfully yours. Check out our comprehensive guide on options for UK-based small businesses faced with this situation.
Mind over matter? It definitely was for the FreeAgent team members who took part in the 2017 Edinburgh Marathon Festival last weekend!
A group of us decided to raise money for Mind, the mental health charity, in memory of our much-missed colleague Graeme Mathieson. So on Sunday we took to the streets of Edinburgh to run the marathon in three relay teams, with each runner taking on a distance of either eight or five miles.
Overcoming a number of obstacles on the day, including lost bus drivers, extremely hot weather and injuries, we all finished safely and - just about - smiling!
We were also very proud to see our colleagues Tom, Murray and Donald complete other events at the festival, with Donald acing the half marathon, and Tom and Murray both smashing their first full marathons!
Big thanks to our senior content editor, Jess, for being one of the awesome marshals, and to FreeAgent support accountants Stuart and Ioannis for turning up at the end to cheer us home!
Our fundraising page is still open if you would like to donate.
Posted on 17 May 2017 by Adrian Mather - Jump to comments
As summer draws ever nearer, the thought of working in a stuffy room as the sun beats against the window is far from appealing. Luckily, the days of being chained to hulking Windows 95 desktops are over. Just pop your phone in your pocket and go wherever the wind may take you, safe in the knowledge that you’re not leaving your business behind.
So take a break from your laptop, and find out how FreeAgent Mobile can help you stay on top of your small business on a day away from the desk.
9am ☕ Power Up!
Wherever you’re off to, there’s nothing like treating yourself to a cup of coffee to get your day off to a strong start. If you run into a client and would like to treat them too, make sure to hold onto that receipt. Simply snap a photo of it in FreeAgent Mobile to record the expense. You’ll never have to squirrel away piles of paper receipts for tax time ever again.
10am Are you hearing invoices..? ✏
There’s nothing worse than wasting a sunny day indoors, so continue your stroll outside and top up those vitamin D levels. While you’re out there, use FreeAgent Mobile to catch up on any invoices you haven’t sent out yet. When you have your contacts saved in FreeAgent, creating and sending an HMRC-compliant invoice literally takes seconds. Done!
11am Time = money ⏰
If you’re getting loads of work done on the move, don’t forget to record your time so that you can accurately bill clients without having to rely on memory. Starting a timeslip in FreeAgent Mobile takes mere seconds, so there’s no excuse not to charge accurately for your hard-earned hours ever again. You can even start a timer in FreeAgent Mobile, and stop it on your laptop (or vice versa).
1pm Take a break 🍔
Lunch time! While you’re chillin’, why not use your mobile to check in with colleagues or clients. Or alternatively, you could explore the wonders of FaceApp (no judgement here).
2pm Get into the flow 💰
No-one likes to be out of the loop, especially when it comes to something as important as your cash flow. Luckily, FreeAgent Mobile lets you see your incomings and outgoings at a glance. Just head to ‘Cash flow’ in the ‘Insights’ tab, and you can toggle between the current month, or the last 3 or 6 months.
3pm Tax attacks! 😨
Gulp! Forgotten to check when that looming tax deadline is? With FreeAgent Mobile there’s no need to panic: you can view all your upcoming deadlines at a glance. You can also enable notifications for upcoming tax reminders with ease.
5pm Clocking off time 😴
Phew! What a day. Now that you’ve broken free from your desk and stayed on top of your finances, it’s time to put your feet up for some well deserved rest.
Would you like the option to work on the go? See how FreeAgent Mobile can help you manage your business on the move.
Download the FreeAgent Mobile app here:
Posted on 1 May 2017 by Emily Coltman - Jump to comments
Thinking of taking on your first employee? Congrats! In the milestones of owning your own business, this is a really big one! Getting some help with the day-to-day running can enable you to take on more work and allow you more time to push your business forwards.
Before you start drawing up that job description, it’s important to make sure that you’ve met all the legal requirements to be an employer first. These steps aren’t too onerous, but are vitally important, both in the eyes of HMRC and the law. We’ve assembled some keys tasks to check off your list, so make a start now, and you’ll be a fully fledged employer in no time.
1. Register as an employer
First things first - it’s time to make this official! Keep HMRC in the loop by registering yourself as an employer. This step is fairly painless, but massively important. Be aware that you can’t register more than two months before you start paying staff, but you must be registered before your employee’s first payday. It can take up to two weeks to be approved, so make sure that you set aside enough time.
2. Get Employer’s Liability Insurance
Employers’ Liability Insurance is a legal requirement as soon as you take on even one employee. This can provide protection if one of your employees is injured or taken ill because of something that happens at work. It can also protect you from any compensation claims arising from workplace accidents. You could be fined up to £2,500 a day for failing to get employer’s liability insurance, so make it a priority to invest in some.
3. Decide on a wage
There’s no point in taking on an employee if three months down the line you realise that you can’t afford to pay them and have to let them go. Crunch the numbers and figure out if taking on an employee is going to be feasible for your business. Once you’ve decided on a fair salary for the work you’re asking to be done, be sure to check that it complies with the latest National Minimum Wage, which has just risen as of April 6th 2017. While you’re at it, it’s worth investigating whether your new employee will be eligible for a workplace pension.
4. Set up a payroll system
Once you’ve settled on a wage, next stop payroll! Payroll can seem a little scary, but it’s there to make things easier for you. FreeAgent’s online accounting software offers RTI-compliant monthly payroll functionality, and is a great way of keeping track of who to pay what, and when. FreeAgent files RTI to HMRC automatically whenever you run payroll, meaning you’ll never need to worry about missing a deadline again. Using FreeAgent to manage payroll is also really handy for viewing your cash flow at a glance, as well as being a lifesaver when it comes to filing your personal annual tax return.
5. Create an employment statement and an employment contract
They might sound similar - but these documents are totally separate and really important. The statement of employment particulars must be produced within two months of the employee starting. It summarises the main conditions of employment. The actual employment contract is a more detailed document of the terms and expectations between the two parties. Get in touch with an employment lawyer to make sure your contract checks all the boxes if you’re in doubt.
6. Make sure you do any necessary employee background checks
Some industries, like healthcare and education for example, require their employees to undertake background checks. Any careers involving vulnerable people or security may also warrant a background check. No matter what the industry is, you should make sure that a potential employee has a legal right to work in the UK. HMRC has produced a handy tool to help simplify this process. Find out more about any other employee background checks you might be required to make on HMRC’s website.
7. Get to grips with Employer’s National Insurance
Although as an employee you may have been used to National Insurance being deducted from your payslips automatically, you are now the one responsible for arranging these deductions. Along with this, you will also have to make employer’s National Insurance contributions. As of April 6th 2017 these two rates have been aligned, making the National Insurance process a great deal easier for employers. The change will see both employees and employers now paying National Insurance on weekly earnings above £157. It’s also worth checking out if you qualify for the Employment Allowance, which could potentially see a big reduction to your National Insurance contributions.
8. Know your employment rights
Although you might be taking on an employee primarily to help you with your workload, it’s your responsibility to make sure your employee is happy and well looked after while they are at work. There’s a whole host of employment legislation out there; from holidays and sick pay, to health and safety. ACAS provide a range of guides to help employers stay compliant, as do HMRC. If you have any concerns, get in touch a lawyer that specialises in small businesses.
All of the above rules and legislation might seem a little overwhelming, but once you’ve put them in place, they’ll just become another part of your routine. Check out our comprehensive guide to ‘Becoming an employer: what you need to know’ for more details, as well as HMRC’s online guide to employment legislation. And last of all? Get ready to be a first class boss.
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- Video: VAT accounting schemes explained by HMRC
- Cough up! A practical guide to getting paid on time
- Hello FreeAgent, goodbye bank holiday envy!
- Team FreeAgent runs for Mind
- Business basics: how to price your freelance work