Logging into your internet banking to discover, yet again, that the money you were expecting from a client hasn’t gone into your account. Is there any more stomach-dropping feeling for a freelancer? Late payments are a persistent problem for freelancers, so if you’re facing a client who’s gone cold on you once the invoice is in, know that you’re not alone. Research from IPSE found that 56% of freelancers had experienced late payment in their career, and the problem seems to be worse for younger, lower-paid, and female freelancers.
Most cases of overdue debt are resolved swiftly after a few chaser emails. But if that gets no result, where do you go from there? We’ve put together a suggested escalation strategy for freelancers looking to get paid.
Give your client a call
Does the thought of a phone call fill you with dread, or are they the best way to get business done? Telephoning can be fraught with anxiety – it’s unpredictable and instant. However, it’s also direct and to the point, which is exactly why a phone call is a better option for chasing up an invoice, particularly one that’s long overdue. It’s easy to ignore or forget an email. It’s not so easy to ignore a person that you’re actually talking to on the phone.
On the call, try to keep your tone firm and assertive. You don’t have to be rude, but you do want answers. Ask why your invoice hasn’t been paid yet and try to speak to someone who can action the payment there and then. If not, then request a date by which it will be paid – and let them know you will call back if it’s still outstanding. If you don’t have any success the first time, keep calling. It’s okay to make a nuisance of yourself in this instance.
Consider late fees on your invoice
The fact that a client isn’t paying you is costing you time and money. You may be incurring other fees as you wait for the payment to come through (e.g. overdraft or credit card fees), and you are certainly wasting time that you could otherwise be spent working. Unpaid invoices sent by freelancers count as late commercial payments and, as such, you’re entitled to add interest and debt recovery costs to the amount owed if the payment remains overdue.
A payment is overdue after 30 days or after the agreed-upon payment date passes.
When a payment is late, you can add:
- Statutory interest: This is 8% plus the Bank of England base rate.
- Calculate what the daily interest would be, multiply this by the number of days that the payment is overdue and add this to the amount owed.
- If you add interest, you should send a new invoice detailing the new total amount owed.
- Debt recovery costs: a fixed sum for the costs of recovering a payment.
- You can only charge this once per overdue payment.
- The amount you can charge depends on the amount of debt.
- For payments up to £999.99, you can charge £40.
- For payments £1000 up to £9999.99, you can charge £70.
- For payments of £10,000 or above, you can charge £100.
Sometimes the threat of late fees is enough to finally get yourself paid. If not, send an updated invoice detailing the late fees that you’ve added on, and do this every week until it’s paid.
Look at a debt recovery service
If you’ve exhausted other avenues, your invoice is very overdue, and it’s for a large amount, it may be worth bringing in a debt recovery service. These are legal services that will chase the debt on your behalf – though be aware that they will usually charge a fee, so it may depend on how large the amount outstanding is whether it’s worth your while engaging one of these services. Some work on a no-win, no-fee basis, and will take a percentage of the amount recovered, whereas others have a fixed fee structure for each stage of the legal debt recovery process. However, Dinghy customers are lucky enough to have a debt recovery service included in their Freelancer Assist package – so it won’t cost them anything extra.
Freelancer Assist from Dinghy
We know that unpaid invoices are a huge problem for freelancers. Not having money that you were relying on to pay bills, buy food and keep a roof over your head can be stressful and anxiety-inducing. Then to add insult to injury, you have to expend time and effort chasing the payment, instead of getting on with more work that will bring you much-needed income. That’s why all our policies come with Freelancer Assist. As well as tax, legal and counselling helplines, Freelancer Assist offers a unique invoice-chasing service. For unpaid invoices over £200, when you’ve tried to chase and been unsuccessful, pass the problem over to us and we’ll help you recover the funds. If necessary, we’ll draft in an expert legal team to recover the debt – at no cost to you. We’ll make sure you get paid, and more importantly, we’ll free you up so you can concentrate on other work.
If you haven’t yet set up your freelance business insurance, Dinghy has everything you need covered. Our fully flexible packages can provide professional indemnity, public liability and business equipment policies that are specifically designed to meet the needs of freelancers. And every policy comes with Freelancer Assist, giving you peace of mind that when an unpaid invoice crops up, you don’t have to fight the battle to get it paid on your own. You can get a tailored business insurance quote from our website (and it only takes seconds).