$3,500. It might not sound like much to some, but it was (and still is!) a lot to me and my business partner Joe. So when a long-time client stiffed us on a $3,500 invoice, we were pissed off.
Depressingly, it’s a story many small business owners and freelancers are all-too-familiar with. The Freelancers Union estimates the average freelancer is owed $6,000 a year in unpaid invoices! Most would never dare dine-and-dash from their local restaurants or shoplift from mom-and-pop shops, but normally-decent people stiff their vendors at alarming rates. And this theft (let’s call it what it is) has very real consequences: 79% of small business owners surveyed by Fundbox say they can’t pay themselves if they have outstanding invoices.
We’d dealt with unpaid invoices before, but these 3,500 straws broke the camel’s back. We gave this client a sweetheart deal, already completed all of the work, and paid our own expenses, so that $3,500 came directly out of our own pockets as small business owners.
In an effort to get that money, we looked into commercial debt collection agencies (not to be confused with their often sketchy cousins, consumer debt collection agencies). Unsurprisingly, they were all…
Antiquated: most agencies never updated their mid-90s GeoCities sites and still require you to call them to procure their services
Expensive: as a result of their old-school approach, agencies charge anywhere from 30-70% commission on collected funds.
Heavy-handed: their communication style doesn’t fit the relationship we want to have with our clients (even the delinquent ones).
Instead of accepting these inadequacies or chalking up unpaid invoices as the cost of doing business, we’ve decided to build Unpayd: a modern commercial collection agency that helps entrepreneurs get invoices paid while maintaining positive relationships with their clients.
Traditional commercial collection agencies use an old-school, account management approach: your case is worked by a single employee, and all communication with your client is done manually at that individual’s discretion.
We think we can do better. Every entrepreneur deserves to get paid for their hard work, and they shouldn’t have to give up 30–70% just to get what they’re rightfully owed. Unpayd uses automation and data science to improve those recovery rates and lower our costs, and we pass those savings on to you with a 17.9% commission rate.
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