Can I really charge interest on a late invoice?

Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, business-to-business debts carry statutory interest at 8% above the Bank of England base rate — currently 11.75%, with base at 3.75% — plus a fixed contribution to recovery costs of £40 for debts under £1,000, £70 for debts from £1,000 to £9,999.99, and £100 for debts of £10,000 or more. It applies automatically unless your contract provides a substantial alternative remedy, and you do not need the client's agreement to it. You can charge it on the outstanding amount and raise a fresh invoice. Most freelancers never do, which is a fair commercial call — but knowing the figure gives you something concrete to waive in return for prompt settlement.

What payment terms should I set?

Shorter than you probably think, and set by you rather than inherited from the client's system. Fourteen days is entirely normal for freelance work, and there is nothing stopping you using due on receipt for smaller jobs. Thirty days is the common default, but it is a default rather than a standard. What matters most is agreeing terms before the work starts, in writing, alongside the scope and the fee — negotiating them at the moment you are waiting to be paid is the weakest possible position. If you agree nothing at all, the law steps in and treats payment as late 30 days after the client receives the invoice or the work, whichever falls later.

What do I do when a client just stops responding?

Change the channel and change who you are talking to. Email is easy to ignore; a phone call to whoever processes payments, asking when the next payment run is and whether your invoice is on it, is much harder to leave unanswered. It also tends to surface the real problem, which is very often that the invoice was never entered into the system or is missing a purchase order number. If that fails, send a written notice referring to your terms and stating the statutory interest and recovery costs now accruing. Keep every message factual and dated. At 60 days with no engagement at all, you are managing a debt rather than chasing a payment.

Should I ask for a deposit?

For anything substantial, yes. A deposit moves cash to the start of the job rather than the end, which is exactly where freelance cashflow hurts, and it acts as a filter — a client who objects to a modest deposit on a large project is giving you information you should use. A third up front, a third at an agreed midpoint and a third on delivery is a common structure and is easier to justify than it feels, because it simply matches payment to work actually done. On longer engagements, staged payments roughly halve your average exposure and give you early warning if payment behaviour is going to be a problem.

How do I tell whether my payment problem is getting worse?

Track debtor days: outstanding invoices divided by annual turnover, multiplied by 365. On £60,000 of turnover with £9,000 outstanding, that is 55 days. Compare it against your actual terms — if you invoice on 30 days and your debtor days are 55, the average client is paying nearly a month late and roughly £4,100 of your money is sitting in other people's businesses at any moment. Measure it quarterly and watch the direction rather than the absolute number. Debtor days tend to move before anything else in a freelance business does, so a rise is usually the first sign that a client is struggling or that your own invoicing has slipped.

Freelancer invoicing: getting paid on time

Ask most freelancers what the hardest part of the job is and it is rarely the work. It is not knowing when the money lands. A busy month means very little if the invoices from it sit unpaid for another two. Most of that is fixable, and almost all of the fix happens well before you ever have to chase anyone.

You have more leverage than you think

Start here, because most freelancers do not know it. Under the Late Payment of Commercial Debts (Interest) Act 1998, when another business pays you late you are entitled to charge statutory interest at 8% above the Bank of England base rate — with base at 3.75%, that is 11.75% — plus a fixed sum towards the cost of recovering the debt:

£40 where the debt is under £1,000
£70 where the debt is £1,000 to £9,999.99
£100 where the debt is £10,000 or more

This applies automatically between businesses unless your contract provides a substantial alternative remedy. And if you never agreed payment terms at all, the law treats payment as late 30 days after the customer receives the invoice or receives the goods or service, whichever is later.

A worked example

Illustrative. You invoice £4,800 on 30-day terms and are paid 45 days after the due date.

Statutory interest: £4,800 × 11.75% = £564 a year, or £1.55 a day. Across 45 days: £69.53
Fixed recovery cost, debt between £1,000 and £9,999.99: £70
Total you are entitled to charge: £139.53

Whether you charge it is a commercial judgement, and plenty of freelancers would rather keep the client. But knowing the number changes the conversation. “There is £139.53 of statutory interest and recovery costs on this invoice, which I will waive if it is settled this week” is a considerably stronger position than a fourth apologetic email — and it is a position the law has already given you.

The invoice itself

A vague or late invoice is the easiest way to delay your own payment. Send it the moment the work is delivered, not when you get round to it — every day it sits unsent is a day added to the wait, and it is the one part of the delay entirely within your control.

Then make it impossible to query: what the work was, the amount, VAT if you are registered, the due date written as an actual date rather than “30 days”, a purchase order number if the client uses them, and how to pay. Most invoices sitting in an inbox are not being resisted. They are waiting on a question nobody has got round to asking.

Agree the terms before the work starts, not when the invoice goes out. Due on receipt, 14 days, 30 days — whatever suits the size and length of the job. Setting your own terms as standard, rather than accepting whatever the client's system defaults to, is one of the few levers that costs you nothing.

Chasing without the awkwardness

Most freelancers dread chasing, which is exactly why so many leave it too long. The fix is to make it a process rather than a decision each time, so it stops being a personal conversation:

Three days before the due date — a short “this falls due on Friday, details again below” note. Catches the invoices that were never entered into a payment run.
The day after the due date — a factual reminder. Most late payments clear right here, because they were genuinely just missed.
Seven days late — a phone call rather than an email, asking specifically who processes payments and when the next run is. This is the step that actually moves things.
Fourteen days late — a written notice referring to your terms, and to the statutory interest and recovery costs now accruing.
Thirty days late — pause any work in progress and decide whether this has become a collections matter rather than a chasing one.

What makes this bearable is that it is identical every time, for every client, so nobody is being singled out and you are never deciding in the moment whether to seem difficult.

Deposits, and the clients you should not take

For anything substantial, a deposit does two useful things: it moves cash to the start of the job rather than the end, and it filters out clients who were never going to pay reliably. A client who objects to a modest deposit on a large project is telling you something worth listening to.

Staged payments on longer engagements do the same job. Being paid at three points across a two-month project rather than once at the end roughly halves your average exposure, and gives you an early signal if payment behaviour is going to be a problem while you can still do something about it.

The number to watch: debtor days

Getting paid on time is half of it. Knowing where you stand is the other half. Debtor days tells you, on average, how long your money spends sitting inside other people's businesses:

Debtor days = (outstanding invoices ÷ annual turnover) × 365

On £60,000 of turnover with £9,000 outstanding at any given moment: (9,000 ÷ 60,000) × 365 = 55 days. If your terms are 30 days, 55 means the average invoice is being paid nearly a month late, and around £4,100 of your money is permanently on loan to your clients. Pull it back to 35 days and roughly £3,300 of cash returns to you once and stays back.

Track it quarterly and watch the direction rather than the absolute number. It is the earliest warning you get that a client's payment behaviour has changed, and it moves before anything else in the business does.

Where software and an accountant help

Almost all of the above is easier automated than remembered. Invoices that go out the moment work is marked complete, reminders that send themselves on your schedule, and a live view of what is outstanding and for how long take both the friction and the awkwardness out of getting paid. That is built into every package for the freelancers we work with, along with someone watching debtor days and flagging the drift before it turns into a cashflow problem.

If you are also weighing up whether your setup is still right, sole trader or limited company covers when switching starts to make sense, and how to price for profit deals with the other half of the cashflow equation. Or just get in touch and we will talk through what a tighter process would look like.