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Loading...by Inna Kaushan, co-founder of Solna
Freelancers are significant to the UK economy, and in 2017 contributed £271 billion. In the last 12 months, almost three million people have been engaged as freelancers or under self-employed status. Why are more people seeking this type of work? Perhaps because freelancing has many benefits: you work for yourself, select projects which excite you, and in many instances earn more than you did when you were a permanent employee.
That said one of the major challenges freelancers face is fighting to get paid. Recent research reveals that only 19% of freelancers are paid on time, with related invoices being paid on average 18 days after their due date.
Being a freelancer also creates additional administration, requiring individuals to raise their own invoices and manage their own cash flow. This in itself can be quite stressful, creating uncertainty about not getting paid, alongside anxiety for some about having to manage and maintain their own admin and cash flow. This is an increasing problem, with recent data showing that 52% of SME owners blame poor cash flow for impacting their mental health negatively.
However, these issues can be solved by recent advances in cloud technology, which allow freelancers to automate their invoicing, conduct frequent credit checks on clients, and set up reminders for overdue invoices. Cumulatively, this allows freelancers to rest easy, adding efficiencies to their cash collection, as well as helping them avoid the stresses or worries associated with late payments.
Gain Insights via Checking the Credit Status of Customers
Checking and monitoring the credit scores of customers can be an effective way for freelancers to have up to date information on their clients’ ability to pay their bills. A credit score is a numerical indicator of a consumer or business’s ability to service debt. They are based on a number of different factors such as records of servicing credit, County Court Judgements (CCJs) and a history of applications for credit.
These were once the preserve of large businesses, but consumers are increasingly becoming familiar with them due to companies like ClearScore (sold to Experian for £275 million in 2018) giving them the tools to manage their own credit scores in order to make sure that they are able to access a wide range of personal finance products.
This has created an opportunity for freelancers and SMEs to become savvier about how credit scores work, and has resulted in established credit scoring companies offering the service to a wider customer base. These companies allow freelancers and SMEs to check on the financial health of their customers, and subsequently provide them with the insights and indications into how long both new and existing clients will take to pay them. This technology also helps them to identify any adverse changes to their credit activity.
Automated Invoicing Can Help Reduce Your Admin
Processing invoices is cited by freelancers as being one of their top five administrative burdens. 29% of those surveyed by The Association of Independent Professionals and the Self-Employed (IPSE) listed is as being a task which could otherwise be spent on winning or completing new work.
Whilst many freelancers still generate invoices with their own basic Excel or Word templates, there are now a plethora of cloud invoicing tools on the market which can save time around both processing invoices, as well as chasing for associated payments.
Cloud invoicing, either used as a feature within cloud accounting software or as a stand-alone tool, allows freelancers to create invoices on the fly from smart devices, include direct payment options, monitor open rates and set up automatic chasers.
Additionally, the fully customizable features of cloud invoicing allow creative freelancers to imprint their own unique identity on their paperwork.
These services can help freelancers reduce the time they spend on chasing late invoices and also help them better manage their cash flow due to collecting payment faster.
Bring Invoicing and Credit Scores Together for Productivity Gains
Whilst there are a number of options on the market for cloud invoicing and credit score data, utilizing one solution to take care of both of these needs can create further productivity benefits through saved time. Using an all-encompassing product aggregates insights from both invoice and credit score data, which provides enhanced insights into the likelihood of customer behaviour and their ability to make payments. This information can then be used to collect payments faster through a combination of both human intervention, as well as automated reminder.
It’s time to reduce the stress and worry of chasing late payments. Use the technology available and more time will be available for revenue generating work.
Inna Kaushan is co-founder of Solna, a smart invoicing platform powered by credit score data. Solna speeds up the invoicing and payment process for freelancers and small businesses. Through leveraged credit data that is overlaid on the platform’s invoicing and reporting functionality, users get a clear picture of their customer’s financial health and their overall exposure to risk.
The system’s automated credit control functionality automatically chases overdue invoices – freeing up time and ensuring faster payment.
Citations:
Massive rise in number of self-employed mothers, IPSE report shows
Trends in self-employment in the UK
Half of UK freelancers consider quitting due to late payment struggles
How your clients can fight back against late payments
Credit data firm Experian to buy fintech ClearScore for 275 million pounds
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