An independent contractor refers to a corporation, person or business whose main duty is providing goods or services to a different entity under terms that a contract specifies. A worker can decide to be either fully employed or an autonomous contractor. Each option has several benefits. Your business is free to hire a contractor or employees. The contractor is a freelancer, thus not under the same rules and regulations as the other employees.
Independent contractors need documents that guarantee payments. Otherwise, they would only be providing free services. Failure to get paid often leads to the collapse of businesses. Preparing and sending an independent contractor invoice is one way of ensuring that you get paid for services rendered or work done. Without an accurately prepared and filled invoice, payments tend to get a little messy and delay.
Late or delayed payments often threaten the health of your business. Late payments are quite rampant with four-out-of-ten businesses claiming that they do it a lot. Many businesses are not able to hire new or more employees because clients pay them late. In fact, a third of all businesses feel that their survival is threatened whenever clients send late payments. The situation is more serious for businesses that lack:
- cash reserves
- cash flow
- access to credit
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Businesses that only receive payments after sending invoices are more susceptible to late payments compared to those that don’t. Such businesses cannot continue taking a nonchalant approach to this issue and expect to remain competitive. In fact, “better late than never” is a serious threat to any well-meaning business. All businesses, especially those run by independent contractors, must insist on timely payments by all clients.
Late payments are the result of many factors. For instance, they occur simply because the client is just stubbornly refusing to remit payments on the expected date. Late payments also occur when the person required to sign the check for the invoice sent is probably on vacation or sick. In some situations, delayed payments may accrue when the previous arrangement or system is changed because of any number of reasons.
Independent contractors provide benefits that their clients can never get elsewhere.
These benefits only arise when the contractors receive payments on time.
One way for independent contractors or freelancers to receive money on time, as stated earlier, is by preparing and sending independent contractor invoices on time. Clients only pay when they receive invoices. Only a select group of clients will send money before receiving any kind of invoice. Therefore, it is good practice to send invoices even before clients call you to ask for them.
The following solid reasons show why you should hire a contractor/freelancer for the business:
In reference to Nolo legal encyclopedia, hiring an independent consultant saves you money. Your business doesn't have to hire some independent contractor 365 days a year. It only needs the services of the freelancer for a few days, weeks or months. Consequently, your business doesn't have too many overheads to worry about. Hiring an employee to work for you means paying salaries and other benefits such as medical, insurance, travel and holiday among others.
Freelancers can work from home, thus saving you money spent on equipment and office space.
As a freelancer, your cash flow improves greatly when you send independent contractor invoices and receive payments on time. A steady flow of cash is great news for your business. It enables you to pay your expenses on time. Hard times always beckon to any person running an independent contractor business. Lack of steady cash flow is bad news for contractors as it makes them incapable of weathering the impending financial storms.
Good cash flow is great news as it enables business expansion and growth. You cannot expand or open new branches if clients always send their payments late. In some cases, clients don’t send payments at all, unless you force them to. Cash-strapped businesses and contractors can never grow or expand their businesses. They can’t hire new employees. They can’t invest in new, state-of-the-art equipment that improves production.
Excellent cash flow is a requirement for any business that endeavors to acquire business loans. Positive cash flow makes it more likely for you to get new loans. Positive cash flow is one of the proofs banks look for to ascertain the ability of your business to repay its loans. Apart from this, positive cash flow gives businesses a competitive advantage. It allows businesses to buy whatever they need to be more competitive.
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An independent contractor provides the level of staffing flexibility that your business can't find elsewhere. You can hire and let the outworker go at any time. The contractor is great for a business whose workload keeps fluctuating all the time. Therefore, your business hires the contractor only for a specific task, before letting him/her go when the work is over. This saves you from the legal troubles, expenses, and trauma associated with hiring and firing.
Flexibility within the workplace is crucial, especially for any person operating an independent contractor business. It revolves around instituting the changes required to enable workers to fulfill their responsibilities and those of the business they work for. This level of flexibility requires making numerous changes from time to time, even at unexpected hours. The changes made often refer to:
a) time (when)
b) location (where)
c) manner (how)
Timely payments enable businesses to encourage flexibility within the workplace. Flexibility ensures that contractors become more productive. It also keeps contractors more engaged at the work they do. It also enables contractors to create a better balance between their work and other aspects of life. Workplace or staffing flexibility is good for the mental and physical health of all independent contractors.
Staffing flexibility is hard to create or enforce without payments; hence, the need for a timely invoice. Encouraging workers to be more flexible at work requires a bit of incentivizing and motivating them. There’s no better way for motivating contractors than with money. Flexibility at the workplace enables contractors to lead stress-free lives at work and home. Flexible workers tend to show a higher level of satisfaction with their jobs than the inflexible lot.
Negative spillovers affect independent contractors, just as much as they do people in fulltime employment. These types of spillovers are bad for any freelancer or independent contractor who desires to create the right balance between work-life and home-life. When spillover creates conflict between work and family, it prevents workers from giving their best. Lack of money due to delayed payments or non-payments causes negative spillovers.
Therefore, send invoices on time to keep negative spillovers at bay.
Prevent negative spillover to enhance productivity.
Prevent negative spillover and quality of life will improve greatly. Workers who enjoy an improved quality of life will always do their best at work. Consequently, clients will benefit from improved and better services. The result of this is more clients will seek the independent contractor out for more work. Eventually, this improves the contractor’s financial well-being, attracts more businesses, and makes the business more profitable.
A profitable business is good for everybody – clients, contractors, and workers.
A profitable business is good for the families of all these individuals too.
A business will only be financially secure and more profitable when clients bring in more work and settle their invoices on time. Preparing and sending an independent contractor invoice on time gives clients a good reason for making timely payments. It’s easier for independent contractors to relate well with clients who make timely payments. Timely payments make everybody happy.
Staffing flexibility is one of the best tools for creating the perfect work-family balance for all the concerned individuals. As an independent contractor, it behooves you to create such a balance for yourself. Work hard and smart without ignoring your family. Spend as much quality time as you can with your family. You should allow neither work to interfere with family nor family with work. Each aspect of your life should have its own time free from all other distractions.
Staffing flexibility is a perfect tool for enhancing the physical and mental wellness of everybody who works for you. It’s imperative to note that your own physical and mental health depend on staffing flexibility too. The reason for this is the increased choice and control that you (and your workers) get at work. Without this, you and your workers will be more susceptible to elevated CVD or cardiovascular diseases, which have a negative physical, mental and financial toll.
According to Forbes, you have less likelihood of lawsuits. Federal and state laws give employees certain unalienable rights. Therefore, if your employees feel that you have infringed on these rights, they may take you to court. Your business doesn't want the bad publicity that comes with being a defendant in court. It's better to avoid such situations by hiring freelancing professionals instead of hiring employees to work for your business fulltime.
Spending less time in court gives you more time to focus on the business.
Your business has a higher chance of thriving when you’re present to manage it on a daily basis instead of spending most of your time in court because employees sued you. Do whatever it takes to ensure employees never have a reason for taking you to court. The bad reputation you obtain from this, especially if you’re in the wrong or as guilty as charged, will be hard to recover from. In the freelancing world, only fools ignore reputation.
Employees working for any independent contractor will not hesitate to sue you if they feel that you’re taking advantage of them. Workers sue their employers for various reasons. Employees take their employers to court when they feel that they were never given a valid reason for being fired. Workers won’t hesitate to sue a contractor who fires them for bad performance when all reviews show that they are renowned for only good performance.
Other reasons for suing employers or contractors include:
a) delayed internal investigations regarding complaints raised
b) poor response to Equal Employment Opportunity Commission (EEOC) charges
c) failure to follow contractor’s own policies
Similarly, workers will not hesitate to seek legal redress when they feel that the employer doesn’t pay them as agreed. Failure to stick to the rates the two parties agreed upon is due to many reasons – and one of these is late payments. As previously shown, late payments are the results of many factors. Late submission of independent contractor invoice creates the atmosphere that encourages clients to delay sending their payments for services rendered.
Mistreatment at work gives employees a solid reason for taking the matter to court. Often, mistreatment has an emotional effect on the workers. Mistreatment is also dehumanizing and illegal. Mistreatment comes in many forms. It includes pay cuts, demotions, and unfair performance reviews. Some contractors mistreat their workers essentially to make them quit work voluntarily. Mistreatment is a valid ground for suing contractors.
Mistreatment often convinces some workers to step in and defend their colleagues. This frequently occurs in surroundings where some employees feel helpless. One of the effects of standing up for fellow workers is retaliation from the employer. Workplace retaliation takes on many forms. It ranges from verbal abuse, exclusion from certain activities at work, wrongful termination, lack of promotion and being on the end of the “cold shoulder” treatment.
Nonetheless, you need to understand what the law says about independent contractors. It's worth noting that state and federal agents, as well as agencies, prefer listing all workers as employees and not independent contractors because of financial reasons. More employees translate into more money collected by the government via taxes. Freelancing doesn't provide state and federal governments with the level of taxes they get from employees.
For these reasons, let your business enjoy more benefits by hiring an independent contractor.
An independent contractor invoice can only benefit you if it contains all the appropriate features. It helps if you have registered your business. More importantly, it should feature the right brand name under which your business operates. Remember, all the details appearing on the invoice will be used in all tax documents. Therefore, include only accurate and legal names or details that will give the tax bodies an easier time identifying you.
Otherwise, you may be slapped with a wrong tax codes or bills because of erroneous details.
Also, independent contractors need the right kind of software for preparing accurate invoices. With the right software, independent contractors can overcome almost all invoicing problems they have endured in the past. The software makes it easier for them to be more precise with the information they include on the invoice. Also, the software is the best tool for contractors who demonstrate unmatched attention to details.
The right software enables contractors to create an independent contractor invoice from anywhere. It saves them from doing such work only from their offices. Contractors can now create invoices from anywhere in the world. All that they need is connection or access to high-speed Internet. With the help of such software, contractors can generate invoices at their own leisure and pleasure.
Additionally, the software enables independent contractors to submit multiple invoices all at once. The software is ideal for contractors who multitask a lot. The software saves time by allowing contractors to produce numerous invoices within the shortest time possible. It does all this without compromising the invoice or producing an error-strewn document. The software allows contractors to view all records and details of their clients too.
Invoicing software is one of the most effective tools for reducing paperwork. It saves money and time. It also saves on labor. The software saves all data on the cloud; thus, making it possible for the contractor to access information anytime from any place on the planet. It saves contractors from walking around with tons of files. It reduces the unhealthy dependency on documentation.
Also, the software benefits contractors by organizing and storing data in one place.
Furthermore, the software makes it easier to search for specific data on any client.
Tracking expenses is a common mistake that many independent contractors make. A contractor who desires to go to the next level must keep the cash flow healthy at all times. Keeping the cash flow steady is possible when you are up to date with the expenses too. A business is healthy only when its inflow exceeds the outflow, as this guarantees more profits. Through the software, contractors identify clients who haven’t made any payment.
Lastly, the independent contractor invoice software also helps with managing customer data, receiving timely payments from clients, and organizing billing data. It’s also ideal for automating systems and processes. The software is not only cost-effective but also mandatory for contractors who want to remain competitive and operational in any niche. It serves all contractors well regardless of the niche or industry they operate in.