Tips and advice on how to approach the arduous task of pursuing unpaid invoices and late payments.
Not getting paid is a common issue for many artists. Chasing late payments is an awkward job for any freelancer; it can be stressful, time-consuming and a significant distraction from your working day. If you're struggling and feeling fed up with dealing with late payers, here are our top tips to help you get paid and paid on time. It can feel personal but try to remember lack of payment in most circumstances is a workload issue, some form of bureaucratic malfunction, simple delay or ineffectiveness - it is seldom intentional. If you find yourself in the unfortunate situation of chasing payment, this action sheet offers tips and advice on how to approach the arduous task of having to pursue and settle that unpaid invoice.
Some things to try to ensure that you are paid on time.
- Submit invoices as promptly as possible - have it prepared in advance so that it can be sent as soon as the work has been completed. If you leave it a few months down the line, your contact may have left their job, budgets recalibrated/allocated elsewhere, people forget…
- Set an alert to submit invoices, bills and expenses claims regularly on the 1st, 15th or 30th of the month or a date that makes it easier for you to remember. If you are juggling a lot of freelance work, it can be easy to forget.
- Always request a contract for any work that you undertake. Verbal contracts are very easy to misinterpret or for the other party not to honour. An email constitutes an agreement in writing but always make sure there is a legal and watertight agreement in place that states how much you will be paid, what you are being paid for, what is expected of you, a timeline of the work, and what is expected of your employer along with when you can expect payment for the work you carry out.
- Always state clearly on every invoice the deadline for payment. This can be a timeframe of your choice; payment on receipt, payment within 7 days, 10 days etc, but be aware that there is no obligation for your client/contractor to pay within a shorter timeframe than the one which you have stated on your invoice.
- Keep good paperwork. This means holding onto receipts and invoices for expenses incurred. Be aware that your fee and your expenses might come out of different budgets and may have different people dealing with and administrating those funds. Always ask who to address an invoice to before you submit.
So, you have done all of the above, the work is complete, you invoiced but the payment timeframe has passed, and you are still waiting for payment. What should you do next?
Firstly, don't feel awkward.
It's never easy to ask for money but remember that you are absolutely entitled to be paid for the work you have done just as much as you are entitled to query why you haven’t been paid on time. It’s not rude to ask where your money is or when you will be paid. No one should be in the position of having to work in credit and nor should you have to. Also, you don’t have to justify why you need to be paid. Try refrain from saying you need to pay your bills or cover your expenses; it’s no one’s business what you do with your money and remember it is your money.
Keep up the correspondence.
It takes a lot of time and effort to call and email for your payment but it is important that you maintain regular contact to ensure your payment is made. Be firm but always keep your contact on the other end of the exchange on your side. If there is a problem with payment, they may be your only means of understanding the problem. You can save yourself time by having some prepared drafts or you can use these templates:
“This is a reminder that the invoice I submitted on…………………for………………..is due for payment. Please let me know if there is any further information you need from me to process this payment. I would appreciate if you could settle this at your earliest opportunity.”
If a firm but friendly approach doesn’t lead to payment then it's time to remind your client, contractor or employer of the terms you originally set out:
"It has been………..days since I submitted my invoice and I still haven’t received payment. I sent a second/third/fourth reminder on………………… I have attached another copy of the invoice with my payment details and my terms of payment. If payment is not received by………, I reserve the right to add late payment charges to your account, as detailed in my terms. Please settle this as soon as possible.”
Get on the phone.
If you've emailed several times with increasing firmness and you still haven't been paid – pick up the phone and call. Quote the payment terms of your contract, if you have one. It can be helpful to also follow up each phone call with an email so that you have a trail of your correspondence. Sometimes having a chat is all it takes, and this will usually do the trick. It is much easier to ignore an email than a person on the end of a phone. Often the more direct approach can be more immediate and quicker in resolving issues.
Enlist a trusted representative.
If you really can't face the task of calling, enlist the help of a friend, loved one, or close colleague to do the chasing for you. Sometimes having someone else do the chasing gets the other party worried. ‘Hi, I am calling on behalf of………….. who is awaiting a payment for………….’. They don’t have to know your relationship to the person and often another person can add more authority to your business.
Hire a robot.
If you don’t have the time to send out email reminders, there are plenty of online services (free and paid for) that will send out automated invoice reminders for you. There are plenty of services out there, here is a small selection:
Boomerang is a handy free Gmail extension that schedules recurring email reminders from your inbox.
Free Agent is more pricey but looks a bit more fancy and allows you to write your unpaid invoice reminder email, then you can set it to automatically send when an invoice becomes overdue.
Right In Box enables you to schedule, set reminders and send recurring emails and is free for 10 emails per month or there is a small fee for unlimited yearly use.
Automated emails won't necessarily ensure payment but they are a good way to keep up the pressure with minimal effort. Time is money after all.
Consider setting your own payment terms.
The inclusion of delayed payment charges into the terms of your invoicing can be a useful way to discourage late payments. Some freelancers charge a small percentage - 2% after 30 days and 3% extra after 60 days. Alternatively you could add a 5% 'delayed payment charge' after 30 days have elapsed and that 5% is added to each recurring 30 day period until the payment is received. You might pay for expenses on a credit card and incur your own charges so you may want to set a percentage based on your own credit – however you do it is completely up to you!
Make sure you state these terms from the outset. It is highly unlikely that you would be able to charge for a delayed payment if the terms were not set prior to the work beginning and clearly outlined in your contract and invoice. This is best done at the contracting stage when you are negotiating your fee, discussing details and the other terms of the work or at the latest when you are submitting an invoice. It also acts as an incentive to paying you on time.
According to late payment legislation, the government states that you can charge another business ‘statutory interest’ if they are late paying for goods or services. The statutory interest rate is 8% plus the Bank of England base rate for business-to-business transactions is currently 0.1% (the lowest ever in UK history) - this means statutory interest for a debt today would be 8.1%.
When there’s nothing else for it.
If you have exhausted all of the above and have tried everything to settle the dispute, there is no payment, no solution, a breakdown in communication, a dispute in what you are owed, and/or a conflict arising from lack of payment you may have to raise a ‘Simple Procedure’. Simple procedure is a court process designed to provide resolution to disputes where the monetary value does not exceed £5,000. A claim is made in the sheriff court and claims of up to £5000 and can be applied for. For claims in excess of £5000, you will need to raise a court procedure called ordinary cause. If a case exceeds £5000 or is too complicated for small claims and summary cause, it'll be dealt with under ordinary cause. If you are looking for more information on recovering bad debts, get in touch with the union’s lawyer Thomsons for free legal advice included with your membership.
If you work for an employer or client who is notorious for late payments or who has asked you to do more work before paying for work already completed, the question is do you want to continue to do business with them? If you are going to have to fight for your money every time you complete a project, you may find it's not worth continuing with the relationship. Sometimes it's best to be the one to walk away from a troublesome client and put your energy into finding other constructive professional relationships elsewhere.
Time is money!
If you need support or would like any further advice about resolving a payment that is owed to you please contact us on [email protected] or call 0141 559 4999.