Freelancer options for debt recovery


26th June 2018 Facebook Twitter LinkedIn Google+ Articles



As we’ve talked about before, a freelancer’s worst nightmare is a delayed payment from a client. Not only does this interrupt cash flow, but it takes away time and energy which could otherwise be spent reinvesting in the business.

If you’ve already followed the steps from our previous post on late payments and still haven’t reached a solution, you may need to escalate the situation. Generally, there are generally four options you can take when an invoice is 38 days past its due date. These include:

  1. Mediation

When a third party mediator is involved to help with communication between yourself and your client. This option can be effective in clearing up any misunderstandings and is often cheaper than going down a legal route.

  1. Statutory demand

A formal letter demanding the outstanding amount be paid within 21 days. This action must be taken before a court application can be made to bankrupt (for debts over £5,000) or wind up (for debts over £750) the company that owes you money.

  1. Court action

If the invoice has never been disputed, court action may be an option. For outstanding debts less than £100,000, you can make a claim online through Money Claim Online. Just make sure you have all correspondence with your client documented as you’ll need this for evidence.

  1. Debt collection agency

Usually the last resort as it requires you to sell your debt. Meaning you will only receive a percentage of what you’re owed.

Before taking any of the above steps, try using the process set out in the below guide from Sage on how to recover an unpaid invoice.

SAGE flowchart for process when invoices not paid

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