How to chase late payments effectively

One common problem encountered by freelancers encounter is a lack of a dedicated HR team, whose job it is to ensure money goes into their accounts on the last working day of each month. 

If you're a freelancer and clients don't pay you on time, you're faced with a dilemma. You need the funds to pay the bills - not to mention the fact that you deserve the money - but you don't want to hassle them. Furthermore, you don't want to damage the relationship you have with clients, because you'd very much like more work from them in the future!

Here are some of our tips on how to chase late payments effectively and also some advice you can act on now to prevent such a situation arising again. 

Change your mindset

You're not being rude or aggressive by asking for money. You've done the work on time as promised - and assuming no concerns have been raised, they're clearly happy with what you've produced. You're entitled to get paid - and promptly. If anything, the client is being rude by not paying you. Your clients should know that you're not a bank and that if you don't get the payment, you might not be able to settle your bills. As work volumes can easily fluctuate as a freelancer, you need the funds in your account as soon as possible to cover you in case you have a slow period coming up. 

Furthermore, freelancers often work out cheaper than companies, so you are well within your rights to demand the payment you deserve, seeing as you've done them a favour, essentially. This government document gives further detail into the amended late payment legislation which came into force last year. 

Prepare what you're going to say

Create a template email that you can send to the client with a friendly reminder that the money hasn't been paid. You could ask a friend to proofread it so that the tone comes across in the way you want it to. If you receive no response, then pick up the phone. A call can often speed up the payment process. Rehearse what you're going to say beforehand to avoid an attack of the nerves when you do raise the issue.

Also, make sure that you're speaking to the right person. Your day-to-day contact might not deal with company finances - so cut out the middle man and speak to the individual who can actually put the money in your account. 

Create an 'accounts team'

If you're afraid of damaging the working relationship, why not fabricate an accounts team or a PA? Set up an email address and have this fictional person contact the client asking for the payment. The client never has to know that it's actually you and this way removes a lot of the awkwardness of you chasing up the money - because someone else appears to be doing so! Obviously your accounts team can't make phone calls, but they can certainly send strongly-worded emails if need be.

Set up expectations beforehand

If you don't do so already, why not establish your expectations of the client and the consequences of late payment beforehand? Put a note on the invoice detailing what will happen if the funds are not transferred in time as an extra incentive. 

Check out this guide from the government detailing late charges. It recommends 8.5 per cent - eight per cent plus the Bank of England base rate for business-to-business transactions, which at the time of this article's publication is 0.5 per cent.

Phone the client once you send the invoice

Give the client - preferably the person who can pay you - a phone call as soon as you've sent the invoice. This brings it to their attention, as opposed to it getting lost among other emails. If there's any problems, the client can raise them there and then, and if you do need to chase the payment it should be a less awkward experience as you've already started a conversation about money.