Here's how clients get away with paying freelancers later

Realising that you might have to chase a client to get paid for work you’ve done is one of the more jarring lessons a new freelancer learns, particularly if they’ve just come from a long stint as a salaried employee.

On the face of it, it’s a simple issue; if an invoice isn’t paid on time, it becomes late and potentially breaches a contract. But who decides when the clock starts ticking once you’ve sent an invoice? And does moving the goalposts for paying on time harm freelancers, or make life easier?

Are late payments a problem for freelancers?

Though late payments are less common than they used to be, it remains a significant issue for a big chunk of the freelance sector.

Data from IPSE’s most recent Freelancer Confidence Index survey, covering Q1 2024, found that 32% of freelancers had experienced a delay in payment from a client in the preceding 12 months. This isn’t much of an improvement from our 2022 late payment survey, which found that 35% of freelancers had at least one invoice paid late in the preceding 12 months.

Being able to set your own day rate is an attractive benefit of freelancing, but this can be undermined by clients who pay late. In 2022, IPSE research found that freelancers were owed more than £5,000 in outstanding invoices on average.

Aside from the obvious financial implications, the most frequently reported emotional impacts include stress, anxiety, difficulty concentrating on work and lower productivity.

Why clients pay late

When agreeing terms with a client, a typical payment clause might specify the number of days an invoice should be settled within once it’s been received. But freelancers and their clients might have different perspectives of when an invoice has been ‘received’.

To use a hypothetical example: Harriet is a freelancer; her current contract is with a fairly large organisation, but she mostly deals with the person who approached her for the role. She sends her first invoice to her contact – has the countdown begun? Quite possibly not. Harriet’s contact isn’t in charge of approving payments; they’ll need to forward it to a finance department when they find the time.

So does the clock start once that’s done? Not necessarily; the company’s policy states that all requests for payment need to be validated through a rigorous approval process (we’ve heard of some companies that have a twenty-point process). It only takes a couple of people to be on annual leave or to simply miss an email for the delay to stretch into weeks.

And even once the invoice is finally approved and with Accounts Payable , Harriet will need to wait for her client’s next payment run, which only happens once every fortnight.

You can see the issue here. Unfortunately, a straightforward 30 day payment term can become something different in the wrong circumstances.

Where possible, understanding how your client pays their invoices up front and copying finance teams into emailed invoices are some simple strategies to mitigate against this.

However, we think government’s official guidelines for commercial payments should be tightened up, to help underline the obvious – that the clock should have started right back at step one.

Don’t miss deadlines – move them

Public scrutiny of company payment practices is at an all-time high, thanks to legislation that forces firms to publish their payment records, as well as the efforts of campaigners to highlight good and bad payers. It’s helped make being a ‘late payer’ bad for brands.

For firms with cashflow issues, or otherwise struggling to meet payment deadlines, the easy solution is to make those deadlines easier to meet. In principle, terms are mutually agreed between freelancers and clients – but in reality, freelancers need flexible expectations to win work with larger, financially powerful firms.

This is a tactic that 23% of respondents to our latest FCI survey have encountered before – more than half of whom encountered it in just the last 12 months.

Companies have a duty to be prudent wish cashflow, and accepting longer deadlines can be a price worth paying to guarantee payment. But examples of patently unreasonable terms – as long as 90, 180 or even 365 days – are not difficult to find.

Just ask the Small Business Commissioner, the government’s dedicated prompt payment champion, who will be joining us on National Freelancers Day 2024 for a panel discussion on how the next government can help freelancers.

IPSE has called on government to adopt the Belgian approach. A 2022 reform in Belgium means that payment terms longer than 60 days will, in the eyes of the law, become ‘unwritten’ – effectively becoming null and void, defaulting to the statutory unwritten payment term of 30 days.

This would, in our view, be an effective means of stopping obscenely long and unfair payment terms being imposed on freelancers and small suppliers. But it could be argued that an effective 60-day maximum would end up creating a standard that’s worse than what a lot of freelancers already have; but when ‘good’ payment terms are habitually stretched, a longer standard might just be a dose of honesty.

We’ll be reiterating this call in our upcoming manifesto ahead of a general election later this year. Do you think this measure would do enough to help freelancers? Should government be doing more, or is the onus on freelancers and clients to work through these issues together?