At the beginning of 2019, I decided to tackle a few dull blogger admin jobs I'd been putting off the previous year. From fixing my glitchy Grammarly plug-in to renewing my blog domain, I wrote myself a to-do list with the aim of making my work life easier for the year ahead.
Four bullet points later I remember writing 'FIND A SOLUTION TO LATE PAYMENTS' yes, in capital letters! I didn't really know how I was going to tackle this problem but I knew I didn't want another blogging year to go by in which I was constantly chasing late invoices to much frustration.
I know I'm certainly not alone in this, it's very much a freelancer problem, but to be honest I have mainly witnessesed a lot of complaining on the matter (rightly so, I should add) but without much solution. I myself could ramble for a good 10 minutes on the matter but I think if you have found yourself reading this post then you know the frustrations and why being paid late or at worst not at all, basically sucks!
So I decided I needed to research the legal side of things to see where I stood as a blogger/influencer/freelancer/whatever you want to call this thing a lot of people make money these days and see if I could make 2019 less of a headache for myself (and now hopefully you too).
Fast forward only 22 days into the year and I've already successfully chased two late payments (with a single email, I should add) and been paid by both. All simply by knowing where I stand legally and implementing it! They say knowledge is power and I think in this case it really is true.
Below you will find all you need to know about late payment law; from how to get a response from companies that owe you money, to how much you can legally charge for outstanding payments.
1. Invoice every client
While I'm pretty sure you will be invoicing every client you work for I thought as it was an important first step I would include it.
Invoice templates can be easily found online for free and can be customised to your needs. In general it's good practice to include the obvious such as a breakdown of all costs and your bank details along with the date, your clients address, a unique invoice number and of course your payment terms.
2. Make sure to set out your payment terms within the invoice
Standard payment terms are 30 days, however if yourself and your client have worked out a longer payment date then this should be included within your invoice. It's also advised that if multiple projects are completed that these should be invoiced separately - incase payment isn't received you are then legally allowed to claim fixed penalties for each project/campaign.
I liked to place my own payment terms (just a simple "payment is due within 30 days") towards the bottom of each invoice and always jot down the date in which the payment is due in a separate document.
The following statement can also be included as small print, however the law still applies without this being mentioned on the invoice (I personally prefer to place this on larger invoices or when I have a sense that the payment terms may be ignored) - "I understand and will exercise my statutory right to interest and compensation for debt recovery costs under the late payment legislation if payment isn't received according to the agreed credit terms".
3. Send an initial reminder email once 30 days have passed
Once the outlined payment deadline has passed you are legally able to include a £40 late fee penalty according to the Late payment of commercial debts interest act 1998. However, you may wish to send out an initial grace period email disclosing the Late Payment of Commercial Debts Act, stating that a late fee with be applied and asking for the payment to be made in full within a certain amount of days.
At this point, you may want to also telephone the company reiterating this point and/or ask for a contact email for the direct accounts department of the company you are dealing with.
4. Send a second reminder email with an update late payment invoice
If your first email is ignored or dismissed (i.e "we have been paid by our client yet either") you will need to issue a new invoice which should include the original work done, plus compensation amount. For debt of less than £1000 the late payment penalty is £40, rising to £70 for debts up to £9,999.99.
Send the email directly to the accounts department outlining the new 15 or 30-day payment term in both your email and invoice.
This is the point where you are likely to receive payment - whoop! This may be for the original amount only or the ideal amount to compensation for your delay; the orginal amount plus late fees. In a lot of cases, the late payment penalty is ignored and isn't paid, however as this penalty legally stands it's up to you if you want to chase it. I personally feel satisfied once the original payment has been made but it's of course up to the individual.
5. After 2nd payment deadline has lapsed re-send late payment invoice plus interest
If payment is delayed beyond this date, interest is payable at a penalty rate, plus compensation for debt recovery costs. In which case you should resend your 2nd invoice plus interest. Interest is payable at 8 per cent over Bank of England base rate. The penalties and interest apply to all businesses regardless of size. Even if it is a couple of pounds it is important to follow through with this.
6. If your payment isn't received without the timescale send a letter giving 14 days notice on your intentions of taking the unpaid debt to court
After the point of several unsuccessful attempts to recover the debt owed all communication should be done in writing only, recording and storing everything sent. This more formal stage should include sending a Royal Mail Signed For letter giving 14 days' notice of your intention to go to court. You may also want research how to navigate taking a case to the small claims court here.
If you discover through the process of trying to recover overdue payment that the company you are dealing with has gone into liquidation then there is sadly not much chance you will be paid. However, you can make sure the liquidator appointed has your details and has acknowledged your out standing payment. You can check the status of all UK companies via Company House obstaining the correct contact details from there.
While this may all sound like a long process I feel sending a 2nd late payment invoice in generally the turning point for most companies that are stalling on payment for whatever reason. I now feel knowledgable about to legal side of late payments and secure that I'm acting accordingly and professionally!
As I mention I've now had two outstanding invoiced successfully paid through this method rather than simply reminding companies that payment is overdue with no incentive for them to act upon it.
Let me know if you found this post helpful, I would love to know!
Fee xo.
