The Late Payment Epidemic
Late payment is the single biggest financial headache for UK freelancers. When a client sits on your invoice for 60, 90, or 120 days, your cash flow suffers, your stress increases, and your business is effectively funding theirs for free.
The good news: there are practical steps you can take to get paid faster - and UK law is firmly on your side when clients don't pay on time.
Set Clear Payment Terms from Day One
The most common invoicing mistake is ambiguity. If your invoice doesn't state payment terms, the legal default is 30 days. But you can - and should - set your own terms.
Recommended Payment Terms
| Client Type | Suggested Terms |
|---|---|
| New clients (untested) | Net 14 or 50% upfront |
| Established clients | Net 30 |
| Large projects (>£5,000) | 25-50% upfront, remainder on completion |
| Retainer work | Monthly in advance |
"Net 14" means payment is due 14 calendar days from the invoice date. Shorter terms mean faster payment - it's that simple.
Pro tip: State your terms before starting work, not just on the invoice. Include them in your proposal, contract, or engagement email. Once work starts, it's harder to negotiate terms.
Anatomy of a Professional Invoice
A well-structured invoice gets paid faster because it's clear, professional, and leaves no room for "I didn't see the payment details" excuses.
Every invoice should include:
- Your business name and address
- Client's name and address
- Unique invoice number (sequential: INV-001, INV-002, etc.)
- Invoice date
- Payment due date (not just "Net 30" - state the actual date)
- Itemised work with clear descriptions
- Total amount (with VAT if applicable)
- Your bank details (sort code, account number, account name)
- Payment terms and late payment policy
TaxMTD's invoicing system generates professional invoices with all these fields automatically, and sends them directly to your clients.
Invoice Promptly
Every day you delay invoicing is a day added to your payment timeline. If you finish work on a Friday but don't invoice until the following Wednesday, you've already lost 5 days.
Best practice:
- Invoice on the day you deliver the work (or the last working day of the month for retainer clients)
- Use invoicing software that lets you generate and send invoices in minutes
- Set up recurring invoices for regular clients to automate the process entirely
Request Upfront Payment
For new clients or large projects, requesting 25-50% upfront is standard practice and protects you in two ways:
- Cash flow - you're not financing the entire project from your own pocket
- Commitment - a client who pays upfront is serious about the engagement
If a client refuses to pay anything upfront, consider that a red flag.
Your Legal Rights: Late Payment Legislation
The Late Payment of Commercial Debts (Interest) Act 1998 gives UK freelancers powerful tools when clients don't pay on time:
Statutory Interest
You can charge interest at 8% per year above the Bank of England base rate on overdue invoices. With the current base rate at 3.75%, that's 11.75% per year.
Fixed Compensation
On top of interest, you can claim a fixed sum for the cost of recovering the debt:
| Debt Amount | Compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 - £9,999.99 | £70 |
| £10,000+ | £100 |
How to Apply It
You don't need the client's agreement to charge statutory interest - it's your legal right under the Act. Include a statement on your invoices such as:
"Under the Late Payment of Commercial Debts (Interest) Act 1998, we reserve the right to charge interest at 8% above the Bank of England base rate on invoices not paid within the agreed terms, plus statutory compensation for debt recovery costs."
This serves as both a deterrent and a legal basis for enforcement.
Chase Professionally and Promptly
Don't wait 60 days to follow up on an unpaid invoice. Set up a structured chasing schedule:
| Day | Action |
|---|---|
| Day 0 | Send invoice |
| Day 7 | Friendly reminder email ("Just checking you received this") |
| Due date | Payment reminder ("This invoice is now due") |
| Due + 7 | Firm follow-up ("This invoice is now overdue") |
| Due + 14 | Final notice ("If not received within 7 days, we will add statutory interest") |
| Due + 21 | Add interest and send updated invoice |
TaxMTD tracks invoice status automatically and highlights overdue invoices in your dashboard, so nothing slips through.
Offer Multiple Payment Methods
Make it as easy as possible for clients to pay:
- Bank transfer (most common for B2B in the UK)
- Card payment via a payment link
- Direct Debit for recurring invoices
The fewer barriers between your invoice and their payment, the faster you'll be paid.
How TaxMTD Improves Your Invoicing
TaxMTD's invoicing features are designed to get you paid faster:
- Professional templates with your branding
- Automatic numbering and sequential tracking
- Payment tracking - see which invoices are paid, pending, or overdue at a glance
- Automatic matching - when payment arrives in your bank feed, it's matched to the invoice automatically
- Recurring invoices for retainer clients
- PDF generation for clients who need a downloadable copy
- Revenue recognition - supports both cash and accruals basis
Common Invoicing Mistakes
- Vague descriptions - "Consulting services: £2,000" invites disputes. Be specific about what was delivered.
- Missing bank details - the client shouldn't have to ask how to pay you
- No payment due date - "Due upon receipt" is meaningless. State a specific date.
- Inconsistent numbering - gaps in invoice numbers look unprofessional and can cause issues with HMRC
- Not following up - silence is not a strategy. Chase promptly and professionally.
The Bottom Line
Getting paid faster isn't about being aggressive - it's about being professional, clear, and consistent. Set terms upfront, invoice immediately, follow up promptly, and know your legal rights.
Start invoicing professionally with TaxMTD and take control of your cash flow.
Further reading: Self Assessment Guide · GDPR for Sole Traders · Compare TaxMTD