Published by Jessica Weisman-Pitts
Posted on October 14, 2022
4 min readLast updated: February 3, 2026
Add as preferred source on Google
Written by: Lynne Darcey Quigley, Founder of Know-it
Soaring inflation, the rising cost of living, and whispers of a recession on the horizon have all compounded together to create a volatile environment for business owners to navigate.
For freelancers, their experience of the current financial climate will be far more uncomfortable compared to that of a large multi-national corporation. With the mounting financial pressures and an increasingly threatening late payments culture, how can freelancers protect themselves from these growing external threats they now face?
Growing pressure
Approximately 6-out-of-10 European business owners are concerned about the impact late payments will have on their organisation, according to the 2022 European Payment report. This figure, combined with recent ONS stats revealing that UK GDP fell for the second consecutive month in April, will be uncomfortable reading for business owners.
For freelancers, who do not earn a living if their invoices are not paid, the current climate is mounting massive pressure on their livelihoods. Cash flow issues are becoming increasingly common for many freelancers as the economic mood and the dramatic increase in the instances of late payment begin to bite. Without the safety net of an employer and a regular salary coming in at the end of each month, freelancers must take the necessary steps to reduce their exposure to these threats.
Know who you are working with
Freelancers who commit themselves to contracts or projects for several months cannot risk experiencing late (or, in some cases, non-existent) payments for the duration of the job.
When an invoice is not paid on time the next logical step is to begin chasing payment. However, an excellent way to ensure freelancers avoid being burdened with late payments is to begin by credit checking a potential client. If the checks are unsatisfactory and pose too much of a credit risk, a freelancer can side-step a potentially costly partnership before it has commenced.
The legal bit
Whether or not a freelancer has an existing relationship with a potential customer, one aspect of the relationship which cannot be overlooked is the contract.
To ensure freelancers protect themselves against any late or non-payment from a customer, they must take the time to ensure the contracts involved are legally binding. Rushing this process and potentially signing a contract that is legally flawed, and where loopholes could be, can hinder a freelancer’s financial security with their client avoiding payment. Freelancers should take the time to read over and critique any agreement to ensure it is robust enough for them.
Overlooking the importance of legally binding contracts could prove fatal for a freelancer’s business. If customers fail to pay on time, cash flow can quickly become threatened.
Technology to the rescue
The financial pressures facing freelancers today are extremely challenging and those considering switching to the freelance profession may question themselves once they run into cash flow worries due to late payments.
However, technology solutions are out there to help curb the rising threat the economic outlook and late payments on cash flow. Freelancers looking to bolster their cash flow should consider what technology offers. Understandably, capital may be stretched at this time, but the ROI on investing in the right technology and securing business cash flow for the long term is priceless.
With tax going digital later this year, now is the ideal time for freelancers to invest in the necessary accounting software for their business. Adopting technology that automates the credit control process has, for a long time, been exclusively reserved for the deep pockets of multi-national corporations. Today, there is a viable tool that is accessible for freelancers to help implement a reliable credit control process.
Cloud-based technology can now offer a helping hand to freelancers by removing arduous manual processes such as credit control. The power of automation gives freelancers the ability to mitigate credit risk, reduce debtor days, saving time and bolstering cash flow. Freelancers with the right technology can continuously check it, chase it and collect it – ensuring invoices are paid quicker.
These steps, combined with the power of automation, will no doubt help freelancers protect themselves from the scourge of late payments. It is crucial for the broader economy that freelancers can flourish and continue contributing to the UK economy.
Cash flow refers to the total amount of money being transferred into and out of a business, especially concerning its operating activities. It is crucial for maintaining liquidity and ensuring that a business can meet its obligations.
A credit check is a review of an individual's or business's credit history, typically performed by lenders to assess creditworthiness. It helps in determining the likelihood of timely repayment of debts.
Legally binding contracts are agreements that are enforceable by law. They require mutual consent, consideration, and a lawful purpose, ensuring that all parties involved are obligated to fulfill their terms.
Technology in finance, often referred to as FinTech, encompasses the use of software and digital platforms to provide financial services. It includes online banking, payment processing, and investment management solutions.
Late payment culture refers to the common practice of businesses delaying payments to their suppliers or freelancers. This can create cash flow issues and financial strain for those dependent on timely payments.
Explore more articles in the Business category
