The Professional Contractors Group (PCG) has been warning of the effect on contractors and freelancers of insolvent trading partners. New insolvency figures made public last months show that one per cent of companies went under during the year ending June 2009. The reality is that when companies go into liquidation, invoices are left unpaid. The PCG have stated that times are tough for contractors at the moment and the extra strain of unpaid invoices is adding additional stress.
The PCG is working to make its members more aware of the warning signs of struggling businesses. They advise that contractors should be on the look out for late payment of invoices, high staff turnover, a request to change the terms of their contract or difficulty getting hold of your contact at the company.
However, many contractors have already been faced with this situation. One technical consultant spoke to The Independent about his experience working for a company in Tanzania. He had looked into the company’s finances before he flew out there but he did not receive any money owed to him. When he challenged this, he still received nothing. He had no choice but to return to the UK.
Of his experience, he said: “I realised the organisation was sinking. My only course of action was to stop providing the service. I got some money back via a debt collection agency but nowhere near all of it.”
Contractors should also be aware of services which can help them to credit check companies before they commence work with them. Barclays Bank offer credit checking free of charge. You can also access information on www.businesslink.org.uk