Getting Paid as a Freelancer

Setting Up Payment Terms Before Starting Work

The single most important thing you can do to protect your cash flow is to establish clear payment terms before you begin any work. Not during the project. Not after delivery. Before.

Your payment terms should be documented in your scope of work or contract and should cover the total project fee, deposit amount, milestone payment schedule, invoice due dates, accepted payment methods, and late payment penalties.

Here is a set of payment terms that works for most freelance projects:

• 50% deposit due before work begins (non-refundable)
• Remaining 50% due upon completion, invoiced with 14-day terms
• Payment by bank transfer (BACS/Faster Payments)
• Late payment interest charged at 8% + Bank of England base rate per annum
• Work paused if any invoice is more than 14 days overdue

That last point is critical. If a client is not paying your invoices, you should not be doing more work. Continuing to work while invoices go unpaid increases your financial exposure and teaches the client that late payment has no consequences.

For larger projects (over £5,000), consider splitting into 3-4 milestone payments rather than a simple 50/50 split. A common structure is 30% deposit, 30% at midpoint, 30% on delivery, and 10% on final sign-off. This keeps cash flowing throughout the project and reduces the amount at risk at any single point.

The payment terms conversation can feel awkward, especially with new clients. It should not. Professional clients expect it. They have budgets, purchase orders, and accounting departments. They are used to negotiating payment terms. If a client reacts badly to your payment terms, that is a red flag — not a sign that you are being unreasonable.

Deposit Invoices: Why to Always Get Paid Upfront

A deposit invoice is the first invoice you send, and it should be sent alongside your signed scope of work. No signed scope, no deposit invoice. No paid deposit, no work. This is non-negotiable.

The deposit serves several purposes. It provides working capital so you are not funding the project yourself. It confirms the client is committed — a client who pays a deposit has skin in the game and is far less likely to ghost mid-project. And it protects you financially if the project is cancelled, since the deposit is non-refundable.

How much should you charge? For projects under £3,000, a 50% deposit is standard and expected. For projects between £3,000 and £10,000, 30-50% is typical. For projects over £10,000, 25-30% is common, often with additional milestone payments before delivery.

Your deposit invoice should clearly state that the amount is a "non-refundable project deposit" and reference the signed scope of work by name or number. Include a due date (ideally "due on receipt" or within 7 days) and your payment details. Do not start work until the payment has cleared in your account.

Some clients, particularly larger companies, will push back on paying a deposit. They may claim their standard payment terms are 60 days. They may say they only pay on completion. Politely but firmly explain that a deposit is required before work begins. If they insist on their terms, you have three options: accept the risk (not recommended), offer to start work on payment of the first invoice on their terms (risky), or walk away.

In most cases, the client will pay the deposit once they understand it is a firm policy. The ones who refuse are often the ones who would have been difficult to collect from anyway.

Progress Payments and Milestones

For any project longer than two weeks, you should be collecting payments throughout the project, not just at the beginning and end. Milestone payments reduce your financial risk and keep the client engaged.

The most common milestone structure for a 4-8 week project looks like this:

Notice that the majority of the fee (55-80%) is collected before or during the project, not at the end. This is by design. The later the payment, the higher the risk of non-payment. Clients who have already paid 75% of the project fee are motivated to pay the final 25% because they want the work completed. Clients who owe 100% at the end have less incentive to pay promptly.

Tie each milestone payment to a specific deliverable. "Phase 2 payment of £2,000 is due upon delivery and approval of wireframes for 5 pages." This makes each invoice concrete and disputable only on the merits of the deliverable, not on vague notions of "we expected more."

Invoice immediately when a milestone is completed. Do not wait until the end of the month or until you remember to do it. The sooner you invoice, the sooner you get paid. Prompt invoicing also signals professionalism — clients notice when freelancers run their business efficiently.

What to Do When Clients Don't Pay

Non-payment is one of the most stressful experiences in freelancing. About 29% of freelancers report having difficulty collecting payment at some point. Here is a systematic approach to dealing with it.

Day 1 past due: Send a friendly reminder. Most late payments are not malicious — they are administrative oversights. A simple email is enough: "Hi [name], just a quick note that invoice #SP-2024-015 for £2,500 was due on 15 March. Could you let me know when I can expect payment? Happy to resend the invoice if needed."

Day 7 past due: Send a firmer follow-up. If the friendly reminder did not work, escalate slightly: "Hi [name], following up on invoice #SP-2024-015 for £2,500, which is now 7 days past due. Per our agreement, late payment interest applies after the due date. Please arrange payment within the next 7 days to avoid additional charges."

Day 14 past due: Pause work and send a formal notice. Stop all work on the project. Send a formal email stating that work has been paused due to the outstanding invoice and that work will resume once payment is received. Reference the payment terms in your scope of work or contract. Copy in any other contacts at the client's company who might have authority over payments.

Day 30 past due: Send a formal demand letter. This is a letter (email is fine but a posted letter carries more weight) stating the amount owed, the original due date, the accumulated late payment interest, the compensation amount under the Late Payment Act, and a final deadline for payment (usually 14 days from the date of the letter). State that if payment is not received by the deadline, you will take further action to recover the debt.

Day 45+ past due: Take formal action. You now have several options depending on the amount and your appetite for conflict. For debts under £10,000 in England and Wales, small claims court (Money Claims Online) is straightforward, costs £35-455 depending on the amount, and does not require a solicitor. You can also use a debt recovery agency, which typically charges 10-15% of the recovered amount. Or you can write off the debt and move on, which sometimes makes financial sense for smaller amounts where the time and stress of chasing outweigh the value.

The best defence against non-payment is prevention. Collect deposits, use milestone payments, include late payment clauses in your contracts, and trust your instincts about clients. If something feels off during the sales process, it usually gets worse once work begins.

Late Payment Fees: What to Charge

In the UK, you have a statutory right to charge interest and compensation on late commercial invoices under the Late Payment of Commercial Debts (Interest) Act 1998. This applies to all business-to-business transactions, which includes freelance work for companies.

The statutory interest rate is 8% per annum plus the Bank of England base rate. As of early 2026, the base rate means the total statutory interest rate is approximately 12.5-13% per annum. You calculate the daily interest by dividing the annual rate by 365 and multiplying by the amount owed and the number of days late.

In addition to interest, you can charge a fixed compensation amount:

• £40 for debts up to £999.99
• £70 for debts between £1,000 and £9,999.99
• £100 for debts of £10,000 or more

You do not need to have these terms in your contract for the statutory right to apply — they apply automatically to all qualifying commercial debts. However, including them in your contract and scope of work makes enforcement easier and sets clear expectations with clients upfront.

Should you actually charge late payment fees? For chronically late payers, absolutely. For a first-time late payment from an otherwise good client, use your judgement. Sometimes mentioning the fee is enough to accelerate payment without actually charging it. But never waive fees for repeat offenders — you are training them to treat your invoices as low priority.

Invoice Reminder Email Templates

Having pre-written templates saves you from composing emotional emails when you are frustrated about a late payment. Here are templates for each stage of the follow-up process.

Friendly Reminder (Day 1-3 Past Due)

Subject: Invoice #[number] — friendly reminder

Hi [name],

Just a quick note that invoice #[number] for £[amount] was due on [date]. I have attached a copy for convenience. Could you let me know when payment will be processed?

If you have already arranged payment, please disregard this message.

Thanks,
[Your name]

Firm Follow-Up (Day 7-10 Past Due)

Subject: Invoice #[number] — 7 days overdue

Hi [name],

Following up on my email from [date]. Invoice #[number] for £[amount] is now [X] days past due. Per our agreed terms, late payment interest of 8% + base rate applies to overdue invoices.

Please arrange payment within the next 7 days. If there is an issue with the invoice, let me know and I will resolve it promptly.

Thanks,
[Your name]

Work Paused Notice (Day 14+ Past Due)

Subject: Invoice #[number] overdue — work paused

Hi [name],

Invoice #[number] for £[amount] is now [X] days overdue. As outlined in our scope of work, I have paused all project work until the outstanding balance is cleared.

The current amount owed including statutory interest is £[total]. I have attached an updated statement.

Work will resume within 24 hours of payment being received. If you are experiencing cash flow difficulties, I am open to discussing a short-term payment plan, but I do need to hear from you by [date].

[Your name]

Payment Methods Compared

The payment method you choose affects your costs, cash flow speed, and the friction your clients experience. Here is how the main options stack up for UK freelancers.

Bank transfer should be your default for UK clients. It is free, fast, and familiar. Include your bank details (sort code and account number) on every invoice. Most clients prefer this method because it integrates with their accounting software and does not require a third-party platform.

Stripe is excellent if you want to accept card payments or automate billing. The fees eat into your margins on small invoices, but the convenience can reduce late payments because clients can pay with one click. Stripe also handles recurring billing well, making it useful for retainer clients. If you use ScopePitch, your invoices can include a Stripe payment link.

PayPal is convenient but expensive. The 2.9% fee on a £5,000 invoice is £145 — money you would rather keep. PayPal also has aggressive buyer protection policies that can be used by dishonest clients to dispute charges. Use it for small international payments where bank transfer is impractical, but avoid it as your primary payment method.

Wise (formerly TransferWise) is the best option for international clients. It offers real exchange rates with transparent, low fees. If you work with US, EU, or Australian clients regularly, set up a Wise multi-currency account. You can give clients local bank details in their currency, making international payments as simple as domestic ones.

GoCardless uses Direct Debit to collect payments automatically. It is ideal for retainer clients on monthly billing because the payment is collected on the due date without the client needing to do anything. The setup requires the client to complete a Direct Debit mandate, which adds friction initially but removes it from every subsequent payment.

Legal Options for Unpaid Invoices

When informal chasing has failed and the client will not pay, you have several formal options available in the UK.

Letter before action. Before taking legal action, you must send a "letter before action" (also called a letter before claim) giving the debtor 14-30 days to pay. This is a legal requirement and demonstrates to a court that you attempted to resolve the dispute before litigation. The letter should state the amount owed, the basis of the debt (reference your scope of work or contract), accumulated interest, and the action you will take if payment is not received.

Small claims court (Money Claims Online). For debts up to £10,000 in England and Wales, you can use Money Claims Online (MCOL) to file a county court claim. Court fees range from £35 (for claims up to £300) to £455 (for claims up to £10,000). You do not need a solicitor. If the defendant does not respond within 14 days, you can request a default judgement. If they dispute the claim, it goes to a small claims hearing, which is informal and designed for people without legal representation.

Mediation. For disputes where the relationship matters or the amount is in a grey area, mediation can be a better path than court. A mediator helps both parties reach a settlement. It is faster and less adversarial than litigation. Many courts now encourage or require mediation before a hearing.

Debt recovery agencies. Professional debt recovery agencies send formal demand letters on their letterhead, make phone calls, and escalate to legal action if needed. They typically charge 10-15% of the recovered amount, with no fee if they fail to collect. For debts over £1,000, this can be cost-effective compared to handling it yourself.

Statutory demand and winding-up petition. For debts over £750, you can serve a statutory demand, which gives the debtor 21 days to pay. If they fail to pay, you can petition the court to wind up their company. This is the nuclear option and is extremely effective because directors take it very seriously. However, it is only appropriate when you are certain the debt is undisputed and the company has assets to pay it.

Before pursuing any legal option, consider the cost-benefit analysis. Chasing a £300 invoice through the courts costs time, energy, and potentially court fees. Sometimes the financially rational decision is to write off the debt, blacklist the client, and focus your energy on billable work. But for larger debts and repeat offenders, formal action sends a clear message that you take your business seriously.