Flexible monthly business insurance
If you're one of the 2 million freelancers in the UK, you'll know all about the numerous benefits of working alone.
On the other hand, working as an individual professional has its downsides – late payments being one of the most common. And if the situation isn't dealt with appropriately it can not only have a major impact on the client relationship, but also your financial wellbeing. It's a sensitive topic, but one you're likely to deal with at some point as a freelancer, so best to be prepared.
Get off on the right foot
Check, double check, triple check
It's better to over-communicate than under-communicate. If you have a contract, make sure you review it carefully, so you have a good understanding of what the client expects from you and question anything that's unclear to you. If you don't have a formal contract in place, ensure all agreements are recorded in writing. It's so easy for either party to forget details or mis-remember if communications are purely verbal, which is only asking for trouble down the line!
Agree payment terms up front
Before starting any work, ensure you send a copy of your terms and conditions for approval - and make sure they're actually approved, confirming this in writing via an email. It's important to communicate the following expectations (if applicable):
- Notice period
- Your preferred method of payment i.e. by bank transfer or PayPal
- When and how you will invoice
- Your payment period
- Late payment fees*
*All companies have the right to charge interest on a late payment under the Late Payment Debts (Interest) Act 1998 and more recently the EU Late Payment Directive 2013. While this isn't advisable for every client who pays a few days late, it's an option where late payment is persistently occurring, as a means of covering your costs and inconvenience. Moreover, part-payment upfront is another way of assuring your costs are at least partly covered.
Invoicing on a consistent and timely basis will help reduce the risk of late payments. Check with your client when is the best time for them, based on their own payment schedules and, for those costumers you're concerned about, look into whether invoicing more regularly will help. If you need a template, we've put together a downloadable invoice template for self-employed professionals.
Have a process in place to deal with late payments
While improved admin and processes should reduce the likelihood of late payments, it's inevitable that it will happen every now and again. When it does, it's important to broach the situation sensitively to prevent damaging your valuable client relationships. That's why it can help to develop a process to fall back on, before the situation arises.
After 30 days of non-payment, here are some simple steps you can take:
- Make a phone call or send an email. A firm but friendly direct reminder is perfectly fair and reasonable.
- Stop working – put all further work for the client on hold until you receive payment.
- If your client is paying because they are struggling to afford it, consider agreeing on a feasible payment plan.
If you've exhausted avenues and your client isn't paying up, we've got an article for that too: find out what to do if a customer refuses to pay.
This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.
We've made buying insurance simple. Get started.
- 03 February 20233 minute read
How does growth affect your scaleup's risk profile?
The transition from Series A to Series B often affects a business' risk profile. David Dickson, Head of SuperscriptQ, shares his insights on what this means for your insurance.
- 01 November 20223 minute read
6 common mistakes when completing a tax return
Need to file a Self Assessment tax return? Here are some of the most common mistakes people make – and what you can do to set them right.
- 07 September 20225 minute read
How to complete your Self Assessment tax return
Many people, including business owners and freelancers, need to complete a Self Assessment tax return. Here are our top tips for making the process less taxing.