Freelance Payment Terms — How to Get Paid on Time, Every Time

Late payments are the number one reason freelancers fail. Not lack of clients, not bad work — cash flow. A 2024 IPSE survey found that 29% of UK freelancers waited over 30 days past their payment terms to get paid.

Your payment terms are your first line of defence. Here's how to set them up properly.

The non-negotiable rules

Always take a deposit

No exceptions. A deposit proves the client is serious and funds your initial work. Standard rates:

• Small projects (<£1,000): 50% upfront
• Medium projects (£1,000–£5,000): 30–50% upfront
• Large projects (>£5,000): 25% upfront, then milestones

If a client refuses a deposit, walk away. It's the strongest signal of future payment problems.

Set clear due dates

“Payment due on receipt” sounds firm but means nothing. Use specific terms:

• Net 7 — due within 7 days (best for small clients)
• Net 14 — due within 14 days (good default)
• Net 30 — due within 30 days (only for established clients or corporates)

The shorter the better. Every extra day is a day your money isn't in your account.

Charge for late payments

Under the Late Payment of Commercial Debts (Interest) Act 1998, UK freelancers can charge:

• Interest at 8% above the Bank of England base rate (per annum)
• A fixed compensation fee: £40 (debts up to £999.99), £70 (£1,000–£9,999.99), or £100 (£10,000+)

Put this in your contract. You don't have to enforce it every time — but having it there makes clients pay on time.

Payment methods

Make it easy to pay you. Accept:

• Bank transfer — lowest fees, standard for UK B2B
• Stripe/card payment — higher fees (~2.9%) but faster
• PayPal — only if the client insists (fees are high, disputes favour buyers)

Include your bank details on every invoice. The fewer steps between “I should pay this” and “I've paid this,” the faster you get paid.

What to do when payment is late

1. Day 1 overdue: Friendly reminder email. “Just a quick reminder that invoice #X was due on [date].”
2. Day 7: Firmer follow-up. Reference your contract terms and late payment fees.
3. Day 14: Final notice. State that work will pause until payment is received.
4. Day 21: Pause all work. Send a formal letter referencing the Late Payment Act.
5. Day 30+: Consider small claims court (Money Claim Online for England and Wales). It costs £35–£120 and most cases settle before hearing.

Retainer and recurring payment structures

For ongoing work, retainers provide predictable income:

• Fixed retainer: Client pays £X/month for Y hours. Unused hours don't roll over.
• Rolling retainer: Client pays monthly, work is allocated as needed. Minimum commitment of 3–6 months.

Always require retainer payment in advance — not in arrears. If they don't pay, you don't work that month.

Put it all in writing

Your payment terms should be in your contract, on your invoices, and discussed verbally before the project starts. No surprises for either party.