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September 11, 2018

How to get paid as a freelancer

Written by Jack Lewis

You’ve won a fantastic new client, agreed on a price and spent hours working on the project. You raise the invoice and wait. The payment due date passes but there’s no sign of your money. You send a polite email and get no response. You start to feel a little concerned. You need that money to come in soon or you won’t be able to cover your bills next month.

Sound familiar?

Unfortunately, this isn’t an unusual scenario. Whilst most clients will pay on time, many freelancers face situations like the one described above. When it happens, it’s important you understand how to deal with it and what your rights are.

At Dinghy, our aim is to support freelancers and help them build successful businesses. One of the most common problems faced by freelancers is being paid late or not getting paid at all. We’ve put together this comprehensive guide to help you get your money on time. There are five key areas that we will cover:

So let’s get started – here’s our advice on how to get paid as a freelancer.

Set clear terms

Very often, issues with payment arise because the terms and expectations weren’t clearly laid out.

If you want to increase your chances of getting paid on time, ensure you set clear terms from the outset.

Comprehensive proposals

When you are pitching for work, be clear about what your price includes. When will the work be completed? Does the project price include amendments? How many sets of amendments?

If you price by the hour, what will you spend those hours working on and how will this be recorded? Do you charge for time spent on calls and emails to the client? Will you advise the client if work is likely to exceed a set number of hours?

Be clear about exactly what the client is paying for to reduce the chance of misunderstandings later down the line. The more comprehensive the proposal, the better for you and the client.

If you need advice on how to charge for your services, check out our ultimate guide to pricing work as a freelancer.

Do background checks

If you get contacted by a new client whose reputation is not known to you, and you are worried about being paid, do some due diligence. Check them out on Companies House if they are a Limited Company or the Register of Charities if they are a charity. If they are not registered, then visit their website or social media pages. If you have any doubts about their credibility, ask for full payment upfront.

Confirm payment terms

Advise the client of your payment terms in advance. Do you charge a deposit? Can payments be made in instalments? Do you invoice on completion or after amendments? Do you work on 30 or 60-day payment terms?

You also need to check the client’s payment terms and process. Their accounts department may refuse to pay invoices without a purchase order number. Perhaps they have 60-day payment terms whereas you ask for payment in 30 days. Are you (or they) prepared to compromise?

If you know a client does one payment run per month, make sure you get your invoice to them before their cut-off date.

Get signed contracts

As a minimum, you should get the client to agree to your proposal, timescales and payment terms in by email. Ideally, the client should sign a formal contract agreeing your terms and conditions.

There are many templates available online for basic contracts, or you might prefer to get them drawn up by a solicitor, especially if your work is of high value. You can also choose from a vast array of online companies that enable you to get contracts signed electronically. This means you don’t have to post out contracts or wait for clients to print, sign and scan contracts back to you.

A signed contract makes it easier to prove what was agreed should you have to take a client to court over a payment dispute.

Take a deposit

For many freelancers, it is standard practice to take a deposit before starting work on a client project. Most clients will be happy to pay this and if they aren’t, then you need to understand why and decide whether you are prepared to take a risk.

Establish a credit control process

It’s important to have a process for managing invoices and chasing late payments. Invoices can be easily overlooked; it doesn’t always mean that the client is unwilling to pay. They may have deleted your email by accident, moved it into the wrong folder or simply just forgotten about it. Having a set credit control process will make life easier for you.

Check invoice and contact details

Many payments are delayed because the invoice has not been issued to the right place or the details don’t match the purchase order. Take some time to make sure all the details are correct.

Confirm you have the correct email or postal address for your client’s accounts department. If a purchase order number is required, ensure this is included on your invoice. Double check that you have added the correct quantity, description of work and price, so there are no queries over the charges.

Send professional invoices

Many accountancy software packages include professional invoice templates. Alternatively, you can find plenty of templates online. If you want to be taken seriously, then it is in your interest to send professional looking invoices.

Make sure your invoice includes your company details; your full company name and address and any company registration or VAT registration numbers if applicable. Each invoice should have a unique invoice number.

Make sure you include details of your accepted payment methods and any relevant specifics such as BACS details or links to your online payment portal.

If you complete the work at the start of the month, don’t wait until the end of the month to invoice. It could be another 30 days after you bill before you get paid. Can you afford to wait two months or more for payment? Send your invoices weekly or as soon as work is complete.

Use good software

If you aren’t already using software for creating and managing invoices or taking payments, then spend a bit of time researching your options. Ask around other freelancers, suppliers and even clients.

You can choose from a wide variety of accountancy software that allows you to create professional invoices and reconcile payments. Many of them will also send automatic reminders for late payment.

You might also want to consider using software like Go Cardless for Direct Debit payments, or PayPal, which allows you to take online payments. There are also a whole host of other companies that allow you to take payment securely online or through your website.

You will usually have to pay a monthly subscription and/or transaction fees to use these types of software, so do your research before you commit.

Make payment easy

Make it as easy as possible for clients to pay. Include BACS details on invoices, use online software, or offer Direct Debit options for retainer work. The easier it is for clients to pay you, the faster they are likely to pay.

Send reminders

Don’t ignore late payments, make sure you have a process for chasing unpaid invoices. Choose how soon after a due date the first reminder should go out, how frequently, and how many reminders you will send before you take the next step. Often a simple reminder is all it takes if the client has overlooked an invoice or forgotten to pay.

Issue a statement of accounts

A statement of accounts is more formal than a reminder and lists all outstanding invoices. You might also find it beneficial to include wording along the lines of:

I/We understand and will exercise our statutory right to interest and compensation for debt recovery costs under the late payment legislation if we are not paid according to agreed credit terms.

This can often be enough to prompt the client to pay quickly. Nobody wants to incur additional charges, but you are within your rights to apply these in line with government legislation.

Dealing with overdue payments

If you have sent your invoice, issued reminders and still not received payment, then you need to take more direct action. Unfortunately, there are some companies who will hold off paying invoices for as long as they can get away with it. You need to be assertive and proactive in getting paid.

Contact the accounts department

The first step is to contact the accounts department and ask why payment has not been made.

When chasing payment by telephone, be polite but do not end the call without agreeing to a payment date.

If they say they intend to make payment ‘this week’, ask which day and then follow up if payment is not made.

Many freelancers are wary of chasing payment as they don’t want to ‘rock the boat’ with a client. You are entitled to your money and have a right to ask for it, but if you don’t feel comfortable chasing payments, ask someone else to chase on your behalf. This could be delegated to an internal colleague or outsourced to a credit control company, bookkeeper or virtual assistant.

As part of Dinghy’s Freelancer Assist, our experts will help you chase overdue invoices. Freelancer Assist comes as standard with all Dinghy policies.

Charge interest

UK law says that you are within your rights to charge interest and fixed penalties on overdue payments. The amounts you are entitled to charge have been set out in the EU directive. You can find more information about this in the Knowing Your Rights section later in this article.
If you decide to exercise your right to charge interest and a penalty, raise a new invoice for these amounts and send it along with a statement of accounts to the client.

Hire an agency

If the debt is for a substantial amount, then you may decide to hire a debt collection agency who will chase the debt on your behalf. There will be a fee, but you may be able to cover this with the interest you are entitled to charge, depending on the size of the debt.
If you do decide to go down this route, ensure you use a company that has been authorised and regulated by The Financial Conduct Authority (FCA). Use an agency that works on a ‘no collection, no fee’ basis and make sure you understand the fees involved before you agree to work with them.


A mediator acts as an impartial person to help both sides come to a payment arrangement. You can find a registered mediator here.

Mediation will often be cheaper than hiring a solicitor or going to court.

You should consider mediation before taking a debtor to court. The court will see this as evidence that you have made a significant effort to resolve your dispute before taking legal action.

Make a statutory demand

If you are owed money by a limited company, you can issue a statutory demand. The debtor then has 21 days to either pay you or agree to payment terms. If they do not pay, you can apply to make them bankrupt, but this is a costly process.

Make a court claim

Another option is to make a court claim, often referred to as taking someone to small claims court. If the debt is less than £100,000 then you can make a claim online. Your claim will be subject to court fees which vary depending on the claim amount.

Seek legal advice

Hiring a solicitor is usually a last resort as it can be expensive. However, you may choose to go down this route if your claim is for a substantial amount of money and you have exhausted other options. Before you instruct a solicitor to act on your behalf, be sure you understand the fees involved, what the process is and how long it will take.

Payment dispute & writing off debt

In most cases, a client is late paying because they have simply overlooked your invoice, have inadequate accounts processes in place, are experiencing cash flow problems or are just slow at paying.

However, occasionally the client may dispute the value of the service you have provided and refuse outright to pay you.

Dealing with disputes

If the client is disputing your services, then the first step is to understand exactly why they are unhappy. Once you understand why they think the service you provided is unacceptable, you can try and resolve this. It could be a simple misunderstanding on either side, which can be solved with some minor amendments. Alternatively, you may decide to reduce your rate slightly to compensate for something you have missed.

If the client is refusing to accept that you have delivered to expectations, try to prove that you have provided what you said you would. This is where it is extremely beneficial to have evidence of a comprehensive proposal and contract of terms. If you have been clear about what you will deliver and have delivered everything you said you would, then the client should have no grounds for dispute.

When should you write off the debt?

Whilst it is extremely frustrating when clients refuse to pay, sometimes it is in your interests to simply take the hit. If the invoice value is low, the cost of chasing it in terms of your time or money may not be worth it. You need to decide how much of your time and resources you want to spend on pursuing small debts.

You may also decide to write off a debt (or part of it) if you have not provided the agreed services or delivered what was expected.

If you haven’t delivered what you promised, and the client can prove this, you will struggle to win a court case.

It is always best to deliver what you have promised but occasionally things go wrong. Sometimes it can be easier to walk away from a project empty-handed than to keep working on it indefinitely. An apology to the client, an explanation of why you haven’t delivered, a refunded deposit and waiver of fees may be the best option if you want to keep your reputation intact.

Know your rights

At Dinghy, our aim is to support freelancers to grow their business. This article has been written to give you the basic information about how you can get paid as a freelancer. Before you take any formal actions, you should take some time to understand your rights and research your options carefully. If in doubt, seek professional advice.

Late payment interest and compensation

UK law says that for late payments you can charge interest of up to 8 points above the Bank of England base rate and penalty fees starting at £40. You can find details on the government website about when this applies and how to calculate charges correctly:

Commercial payments and interest

Directive 2011/7/EU on combating late payment in commercial transactions: User’s guide to the recast Late Payment Directive

Making a claim

Use the relevant links below to find further details on the government website about how to resolve payment disputes:

Options if you are owed money
Make and serve a Statutory Demand
Make a court claim for money

Key takeaways

  • Set the expectation and make terms clear from the outset
  • Have a professional invoicing and credit control system
  • Try to resolve the issue yourself first
  • Know your rights
  • Sometimes the threat of legal action can be enough
  • Take legal action as a last resort

If you enjoyed this article, check out our ultimate guide to pricing work as a freelancer.

About Jack Lewis

Read more blog posts by Jack Lewis

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