How to Get Paid as a Freelancer or Small Business

Financial uncertainty is perhaps the biggest headache for freelancers. Not only are we constantly seeking new clients and revenue streams, but also there’s a fear we won’t get paid for that big project. Managing cashflow becomes an art form and our wellbeing can suffer.

Having freelanced for the last 20 years, I’ve developed some tactics for reducing the risk of non-payment.

1. Be clear on your payment terms

When taking on a new client, explain your payment terms in writing. Ideally, you’ll have a least a brief contract, but an email will suffice. The standard is usually 30 days for companies. Some will only make payment runs once a month, so there’s no chance you’ll get paid any quicker.

If you’re working with individuals, it’s reasonable to request faster payment. After all, they should have the funds when they booked you. I stipulate 10 days, although most people pay me within 24 hours.

2. Charge interest on late payments

Thanks to the Late Payment of Commercial Debts (Interest) Act 1998, you can actually levy a financial penalty for tardy clients. This is 8%, plus the Bank of England base rate (currently 0.75%). Here’s how it would work if you’re owed £1,000:

  • the annual statutory interest on this would be £87.50 (1,000 x 0.0875 = £87.50)
  • divide £87.50 by 365 to get the daily interest: 24p a day (87.5 / 365 = 0.24)
  • after 50 days this would be £12.00 (50 x 0.24 = 12)

You can also charge a fixed fee to cover the cost of debt recovery. The amount depends on the size of debt:

Amount of debtWhat you can charge
Up to £999.99£40
£1,000 to £9,999.99£70
£10,000 or more£100

Make sure you include both the terms and the penalty on your invoice. To claim the interest and fee, you’d need to issue a new invoice for the adjusted amount.

Here’s the wording I use on my invoices for larger clients:

My payment terms are 30 days. Please be aware that according to the Late Payment of Commercial Debts (Interest) Act 1998, freelancers are entitled to claim a £40.00 late fee upon non-payment of debts after the stated period. At this point, a new invoice will be submitted which includes the fee. If payment of the revised invoice is not received within a further 30 days, additional interest will be added to the overdue account. This is charged at a statutory rate of 8% plus the Bank of England base rate of 0.75%, totalling 8.75%. Parties cannot contract out of the Act’s provisions.” (Based partly on a version generously shared by @mj_sprackland on Twitter.)

This worked a treat on a client a few years ago. They’d always been slow to pay, meaning I had to nudge them repeatedly. The threat of an ever-increasing invoice turned them into reformed characters.

Of course, you need to follow through with the penalty, else this is no more than an idle threat.

3. Get set up on the client’s finance system

If you’re working with large companies, they’ll probably need to set you up on their finance system before you can get paid. I have no idea why, but this seems to take weeks. They’ll need details from you and might also ask you to complete a tax questionnaire (this is to absolve them from any responsibility for your tax affairs). Make sure you’ve done all this before you start work, otherwise it’ll hold up payment of your invoice. Wherever possible, request a purchase order. And find out who’s responsible for you getting paid – this might not be the person who commissioned your services.

4. Check the financial background of your client

If your prospective client is a limited company, they’re legally required to submit accounts to Companies House. You can check online to see whether they’re in financial difficulty. For example, it’s a red flag if their accounts aren’t up-to-date. Struggling companies tend to just keep going until suddenly they don’t have the money for payroll, then the staff scarper. Suppliers aren’t usually a priority.

Consider how much risk you want to take, especially if it’s a big project. You could ask for at least some of the money upfront – a good idea anyway if you need to buy materials or will incur other expenses.

I learned this the hard way. Back in the 90s, I worked like the clappers on a website, including all over Easter weekend. As an urgent project, I was charging a premium and had many plans for how I was going to spend the money. When an envelope came through the door, I thought it was a cheque (this was 20 years ago). Sadly, it was a letter from the liquidators. Instead of £2,000, I’d be receiving just £16. I still feel quite queasy now.

Had I poked about online, I’d have discovered that the business was carrying massive debts and was unlikely to keep going. My contact there – with whom I’d enjoyed a very friendly relationship – gave absolutely no hint. Boo.

So, contemplate the risks of any project, particularly in the current economic climate. A client’s worth precisely nothing if they can’t pay you.

5. Be persistent

Actually, be annoying. This is your livelihood, so don’t make it easy for defaulting clients to ignore you. A company in trouble will try to delay payment as much as possible. They’re also likely to prioritise creditors who keep pestering them. Enforce your terms and be formal. You might use a process like this:

  • Letter 1 – reminder of outstanding debt
  • Letter 2 – reminder of outstanding debt, suspension of services, timeline for applying financial penalties
  • Letter 3 – new invoice, notice of intention to hire debt recovery agency


We’d like to think that we do a good job, then we get paid. Unfortunately, it doesn’t always work that way. I experience problems very occasionally these days, and it’s usually due to cumbersome systems in large organisations. In these situations, I request payment upfront, charge a higher fee, or don’t work with the client again. I’ve dropped a few clients along the way, but this has freed up time to find better clients.

You deserve to work for people who respect your time and expertise. Good luck with getting paid.

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Image © weerapat1003 –

Catherine Pope

I'm a financial coach who loves Victorian novels, technology, and big books about pensions.

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Donna - June 19, 2019

Super helpful – thank you!

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