It’s tricky being a freelancer when it comes to finances. Quite often, we’ve carved out a little niche for ourselves where we get to do what we love, whether that’s writing, photography, design, app development or even project management. But there does sometimes come a point at which, though we love what we do, we have to remind our clients that we need to be paid for our work. There are all these annoying little expenses in life like RENT and BILLS and TAXES and apparently “I’ll pay you when my client gets round to my invoice” generally isn’t what landlords like to hear.
Most of the time, it all runs smoothly: you issue the invoice, the client pays, everyone is happy. But what happens when it ticks past that invoice due date and you still don’t have payment for your work? If money makes the world go round, some clients can make you feel like you’re stuck standing still.
It’s a horrible situation to be in, but one that’s all too common for freelancers. Research in 2019 found that 41% of clients hiring freelancers consistently pay late. And a staggering 55% of freelancers have done work that they have never been paid for. So it’s almost inevitable that at some point in your freelance career, you’re going to encounter this problem. How should you handle it? You might not want to kick up a fuss, especially if you were hoping to do more work for the client. But, equally, what use to you is a client that doesn’t pay? Here are our top tips for chasing up overdue payments and getting the money you are owed.
Actually, the best way to avoid unpaid invoices is to try to prevent them altogether. Don’t be afraid to talk about payment early on in negotiations with a new client, and always agree payment terms in advance. Have them in your contract so the expectation is clear for both sides. If you are engaging a new client or taking on an unusually big project, consider asking for a down payment in advance. This takes away some of the risk of you ending up with nothing to show for days of hard work. For longer-term projects it’s helpful to agree to split the payments up over several months (this will help with your cashflow too).
Make sure you invoice promptly for work and that your invoices clearly display your bank details and that all-important due date. If an invoice is approaching its due date, but is not yet overdue, a reminder email can sometimes help prevent the payment from spilling over onto your “late” pile.
Send a reminder email
Most of the time when an invoice goes unpaid, it’s not malicious. Perhaps your invoice has fallen through the gaps, perhaps the person who was supposed to deal with it was on annual leave, perhaps it took longer than usual to set you up on their payments system. No big deal! So when first raising the issue of an unpaid bill, a gentle nudging email is usually all that’s required. Remind them of the payment deadline, just check that they received the invoice okay. You can stay really polite at this stage because the likelihood is it’s a genuine mistake and easily solvable if everyone communicates.
If you don’t get any response, or the bill remains unpaid, step it up a notch with a phone call. Again, friendly but firm is the tone here. If they say it will be paid, ask for it to be paid today. If they give an excuse, give them a deadline. You have delivered on your part of the bargain, now you need them to come through with payment. Sometimes talking to someone helps them realise that you’re not going to go away without the money you’re owed!
Freelancers are also entitled to charge late fees on any payments that are overdue. You can charge statutory interest – that’s interest of 8% plus the Bank of England base rate (unless there is a different rate of interest specified in your contract). You can also claim debt recovery fees to cover the cost of reclaiming the payment. The rate you can charge for this depends on the amount you’re owed, and ranges from £40-100.
You do not have to state these fees upfront on your invoices. It’s your legal right to charge them. However, spelling them out clearly on your invoices and on your contract may help demonstrate that you know your rights and can act as a warning to a client not to try to take you for a ride!
Debt recovery services
If you still can’t get your client to cough up, you might want to consider a debt recovery service. This means engaging an expert to chase the debt on your behalf. This is good as it frees up your time to get on with other things, but they will usually take a fee as a percentage of the amount recovered.
Chasing unpaid invoices is dreary and stressful work, and in all honesty most freelancers would rather just be getting on with what they’re good at rather than hounding for payment. But, for Dinghy clients, there’s good news. Every Dinghy freelancer insurance policy comes with Freelancer Assist as standard: a package of help and support including tax assistance, counselling and legal helplines, and best of all, support with chasing unpaid invoices. So if your debt is more than £200 and is overdue, you can hand the case over to us and we’ll do the chasing for you. We’ve got an expert team of legal eagles who will liaise with your clients on your behalf, and recover that unpaid debt for you. This means no legal fees for you, and best of all you won’t lose precious hours where you could otherwise be getting on with other work (hopefully for other clients that actually pay you!). If you could use a business insurance policy with a bit of extra invoice-chasing power on the side, you can get a quick quote online today.