Late payment can be a real headache for freelancers. Here's some tips to ensure you get paid promptly:
How can you avoid payment disputes?
To reduce the likelihood of late payments:
check the payment practices of a business before contracting with them
have a written contract that includes your payment terms and conditions
know your rights and be willing to use them
considering investing in payment software to help with invoicing
Normal payment terms are between 30-60 days, depending on the company size. If a client asks for longer payment terms, perhaps you could ask for a longer notice period to protect your income stream?
Make sure you know who the invoice should be submitted to, whether you need to quote a reference or a purchase order number and what you need to include in your invoice.
What can you do if a client doesn’t pay within the agreed time?
The Small Business Commissioner recommends raising and invoice for late payment charges. You can claim interest at 8% plus Bank of England base rate on the outstanding amount, debt recovery costs and a fixed sum based on the amount owed. The Small Business Commissioner site contains a calculator for these charges here. Often raising an invoice for late payment charges will result in the original bill being paid promptly and is more effective than chasing.
My client still won’t pay, what are my options?
There are lots of great tips for chasing payment on the Small Business Commissioner website, depending on who owes you money. If you get stuck, the Small Business Commissioner will name and shame poor payers (see case studies on site), recover money for small businesses and work with poor payers to change the payment culture.