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10 tips to reduce the risk of unpaid invoices when freelancing

There is no bane of a freelancer’s life greater than the terror of unpaid invoices.

Computer updates, fussy clients, requests to work for free, sure they’re annoying, but they are nothing in comparison to those customers who just will not pay! 

Here, we share some of the top ways that freelancers and the self-employed can ensure they get their fees with the minimum amount of fuss – and it starts way before you send that invoice…

1. Make sure your payment terms are clear

Be upfront about money in early discussions with clients. Let them know when you expect to be paid and how much. Don’t shy away from these topics out of awkwardness. Asking them what address they would like the invoice to be sent to, when the time comes, will speed things up later on and demonstrates that you’re efficient when it comes to payment.

2. Agree payment dates with your client in advance

Negotiate with your client about payment dates, and get these written into the contract before the work starts. You may decide to invoice monthly, on the completion of projects, or at different milestones in the delivery of a larger project. If your client is reserving your time – for example, to photograph their wedding or to be a sound engineer at their festival – it’s usual to ask for a chunk of the money upfront as a deposit. You might also want to agree cancellation or kill fees at this point. Again, make sure these are written into the contract so you have something to refer back to if your client later claims amnesia about your conversations.

3. Make sure your invoice template is clear

Invoices don’t need to be complicated, but they do need to contain certain bits of information which will speed up the processing of your payments. Always make sure to include your correct bank details, even if you’ve worked for the client before, and ensure your contact details are up-to-date. It’s important not to fill an invoice with too much information – you want the receiver to be able to scan it quickly and understand what action needs to be taken. You might also want to include some small print about your right to charge late fees (see tip 8 for more details!).

4. Ensure you update what needs changing on each invoice

If you use a template invoice, make sure you update all the relevant details each time you send a new bill out. Double check that you’ve got the right price, dates, and that the invoice clearly states what work is being billed for. If you don’t use automated software – check your maths too! It looks very unprofessional if you give an incorrect total and it’s likely to delay your payment while the error is corrected.

5. Consider asking for a portion of the money up front

You probably don’t need to do this for regular clients but, if you’re dealing with someone new or it’s a larger project, asking for a down payment before work commences is a good idea. That way, you’re not left with nothing if they do not pay their final bill, and it means you’ve already had the experience of going through their accounts processing and have a rough idea of payment times and the people you need to liaise with.

6. Get a signed contract

We’ve mentioned contracts a few times in this list – and if you’re not using them, you should be. A signed contract lays out clearly the responsibilities of both parties – namely the work you have agreed to do and the amount that the client has agreed to pay you for it! This is also a good way to introduce your payment terms and late fees, and get them in writing with the client’s signed agreement. You can then refer back to this document if there are any issues that crop up later.

7. Keep on top of your invoices

The client can’t pay you your money if you haven’t let them know what’s owed, so invoicing promptly for any work is essential. Don’t let your bills stack up; send them as soon as the work is completed or according to the payment schedule you’ve agreed with the client. This will reduce any confusion and delay over payments.

8. Make sure you have the correct contact

At the start of your work, and as you’re preparing the invoice, it’s a good idea to ask the client to confirm to whom the invoice should be addressed and their contact details (email and direct telephone line). Do you need to cc in their accounts department? The procedure will vary from client to client, but making sure your invoices are going to the right place should minimise any delay in payment. As a final safety net, always ask for confirmation that the invoice has been received. This should reduce the chances of clients pretending that it never arrived!

9. Remind the client of your right to charge late fees

Setting out your policy for late payments is another good way to declare to clients your intention to get paid on time! Insert these into your contract and include them on your invoice too as a reminder. In the UK, the law gives you the right to claim late fees. If a client hasn’t paid 30 days after receiving your invoice, or by another date agreed-upon by both parties, you can claim statutory interest of 8% plus the Bank of England base rate on the outstanding amount. You can also charge a one-off debt recovery cost for each outstanding payment. The fee that you can charge depends on the amount outstanding: it’s £40 for a debt of up to £999.99.

10. Follow up

If you hear nothing after sending your invoice, it’s a good idea to follow up via an email a few days later, just to check it’s arrived. If you still don’t hear anything, a phone call might be an extra nudge to spur people into action. You can also send out reminders a week before a payment is due if the amount is still outstanding.

Once an invoice is overdue, it can seem like a daunting task trying to reclaim the money you’re owed. There are only so many polite emails and awkward phone calls that a freelancer can handle! That’s where Dinghy can help. If you have a Dinghy freelance business insurance policy, it comes bundled free with Freelancer Assist, which includes our specialist invoice-chasing service. If you are owed a debt of more than £200, and haven’t been able to get the client to pay, our legal team can take over and recover the debt on your behalf. It’s just one of the ways we like to look after our freelancers. To get your professional indemnity insurance for freelancers or public liability insurance for freelancers set up, and benefit from all the perks of Freelancer Assist and our debt recovery services, sign up to Dinghy today via our website.

How to supplement your income using your Dinghy referral page

Heart hands

The electricity bill is through the roof, it feels like you need to sell a kidney to fill up the car and don’t even get us started on the price of pasta. The cost-of-living crisis is really starting to bite and freelancers can be particularly vulnerable to inflated prices. Your income can fluctuate from month to month as clients may start to tighten their purse strings, causing you to win less work.

With all of this happening, it might be good to hear that if you have Dinghy insurance, you can supplement your income using our Refer A Friend scheme. For each freelancer friend who signs up to Dinghy insurance using your unique referral link, you and your friend will each receive a £25 voucher.

Whether you use this to help you when times are tight, to save up for occasions like birthdays or Christmas, or perhaps to chance to treat yourself, guilt-free, it’s a big perk of Dinghy’s policies that many of our customers are missing out on. In this guide, we’ll show you how to set up and share your Refer A Friend link so that you can start earning those rewards!

How does the Dinghy Refer A Friend scheme work?

Where can I spend my voucher?

VEX vouchers can be used at over 150 brands and retailers, including supermarkets, high street names, days out and attractions, hotels and holidays, eating out and gig tickets. For full details of participating brands, visit the VEX website.

How do I set up Refer A Friend in the Dinghy app?

The simplest way to set up your Refer a Friend is to use the Dinghy app – available for both iPhone and Android. It’s also handy to have as this is where you can access your dashboard to change your details, pause your cover or see how much your next bill will be.

Step 1 – enable your Referral page

By default this setting is turned off so the first step is to go into the app and turn it on. You do this by selecting the “More” tab at the top of the page, then sliding the switch next to My Dinghy to “on”. Now your My Dinghy landing page is live! As well as being a hub to send your referrals too, this page is also really useful for proving to clients and prospective customers that you are fully insured – a safe pair of hands.

Step 2 – head to your Referrals Dashboard

Once you’ve activated My Dinghy, you’ll now see a link to your own personalised page, which can be shared with colleagues and friends. Underneath, there will be a link to your Referrals Dashboard. Clicking this will take you to a page that shows all your active referrals. You’ll be able to see the value of any rewards you earn and keep track of any friends who have recently joined us under your “Crew Members Recruited” heading!

Any referrals you have made will be organised under four categories:

Leads: Interesting…People who have got a quote for freelancer insurance via your page, but not yet gone through with the purchase.

New customers: Hooray! These are people who have taken out Dinghy insurance using your link. They’ve not yet met the third bill threshold for releasing your vouchers, but hopefully they will soon and you’ll both be rewarded.

Eligible customers: Whoop whoop, this means it’s voucher time! These are people who have met the conditions for the offer – getting signed up and paying their first three bills. This should now show in the total owed to you.

No longer eligible: Aw shucks. These are people who did take out a policy but have cancelled it before they reached their third bill payment.

Step 3 – Share your link!

Your personalised referral URL will now appear on your dashboard. Just click “copy this link” and you can share it far and wide. You can also share to Facebook, Twitter and LinkedIn directly through your referrals dashboard.

Finding friends

Now that you’re all set up, it’s time to share that link far and wide! There are lots of ways to get your freelancing friends signed up to Dinghy, and it doesn’t always have to be the hard sell. If you know your friends or family are working without insurance, or are looking to switch, you can send them your link.

Here are some creative ways of getting more referrals through your link:

If you would like to get insured and boost your income at the same time, come on board with Dinghy. We offer flexible professional indemnity, public liability, business equipment and cyber liability cover, designed specifically with the needs of modern freelancers in mind. You can dial down your policies when you’re not working, and all our freelancers get access to Freelancer Assist, which will help you chase down unpaid invoices. Find out more and get a quick quote on our website.