Do we need an Insolvency Fund?
WALDEN Publishing went bust in early March, owing £585,000. This won't make the front page of the Financial Times, because liquidation is routine in business life.
If you are one of the freelances who were owed money by Walden, the routine nature of the affair will do little to soothe your frustration. I use the past tense, because once a limited company ceases to exist the major creditors devour whatever assets remain, and the freelance invariably receives nothing.
If you are considering working for a company for the first time, you would be well advised to check their credit status. This obviously applies mainly to smaller companies.
Your first step would be to go to the www.companieshouse.gov.uk website, which will tell you the company's current status and whether its returns are up to date. You can also check the website of the Credit Services Association at www.csa-uk.com. The Freelance and www.londonfreelance.org carry some client alerts. If the client you are considering is on this list, contact the Freelance Office.
Credit insurance is available, but the cost of a premium is probably prohibitive for most freelances. Some people have suggested the NUJ sets up an Insolvency Fund, into which freelances pay a monthly sum to be eligible for a payment if a client goes bust owing them money. And finally: "Beware of all enterprises that require new clothes." (H. D. Thoreau, Walden.)
- An Insolvency Fund would require sufficient members to make it viable. If you are interested, contact the Freelance Office to help us gauge the degree of interest.