A freelancer’s guide to managing late payments

19th January 2018 Facebook Twitter LinkedIn Google+ Articles

Late payments can be a cause of much frustration for freelancers, who often run their business on limited funds. Not only will a delay in payment affect your profits, but it can also stifle your entrepreneurial plans. New research published by accounting software specialist Sage found that 17% of all payments to UK based SMEs are late. What’s more, small businesses in the UK spend around 15 days per year chasing payments.


Top reasons for payments being late include:


  • Suppliers changing terms and conditions
  • Customers withholding funds to check quality of work
  • Customers demanding a payment discount not agreed at the outset
  • Suppliers withdrawing credit without notice
  • Customers withholding payment to question delivery times


Late payments have a knock-on effect on the daily running of your business. However, there are steps you can take to get your incoming payments back on track. Check out these top tips to make sure get paid, pronto.


1. When following up unpaid invoices, clearly state what you want to happen

A significant factor for payments being late is a lack of clear terms and conditions from the outset. Alert your clients to strict terms and conditions in writing, outlining the timeframe, accepted methods of payment and any late charges. Make it clear that these T’s and C’s must be accepted before any work is carried out.


When chasing outstanding invoices, be frank and make sure the client understands your policy, alerting them to the terms they agreed to. Explain that the payment is now overdue and that you expect to be paid in full by the end of the week. Depending on whether it’s stipulated in your terms and conditions, you can highlight that you are entitled to charge late fees.


2. Keep reiterating the facts

Have your facts straight and state them clearly. If you are vague about the details or give incorrect information, you might lose credibility and become less of a priority. Make sure you have covered yourself for eventuality. Perhaps a client is withholding payment to check the quality of the work? Include a precise timescale in your complaints policy in which clients must report if they are not happy with the service; otherwise, full payment is required.


3. Be persistent

Remain calm and professional, reiterating your goal. Some clients may try to claim your email went into their spam folder or put you on the backburner if they think they can get away with it. Make it clear that you will not back down by making regular phone calls, suggesting meetings and being in touch on a regular basis. Ensure that you keep records of all communication so you can refer back to it at a later date if necessary.


4. If you’re dealing with the accounts department, be personable

A little understanding goes a long way, so find out the person’s name and try to see their point of view. Perhaps the company only pays out on certain days – take this into consideration and never point the finger of blame at an individual. Opportunities to work with this client may arise in the future and nurturing a business relationship based on mutual respect is extremely important.


5. Make direct contact with the person who hired you

If you have built rapport with someone in the company, it is much easier to get the ball rolling when chasing payments. Ask them if they can follow up with the finance department or have a word with their boss.


For more useful tips on taking control of your finances and managing your cash flow, check out Sage’s guide to basic business accounting.

Accounting 101 - Sage