How to Charge Late Fees When Clients Don’t Pay on Time

It’s happening again! You agree to take on a freelance gig and when the job is finished, you send them an invoice. But after the due date has past, you still haven’t received your money. You don’t know what the hold up is, but it’s annoying and stressful to not know when, or if, you are getting paid.

Chasing down payment can be one of the worst parts about being a freelancer. But the good news is, there are professional ways to encourage clients to pay on time. One of the easiest things you can do to deter late payments is to start charging late fees.

A step-by-step guide to late fees

1. Start by specifying a late fee in your contracts and on your invoices. The amount doesn’t have to be large. One typical fee is 1.5% of interest per month after the payment due date. Even though the amount sounds small, it’s an incentive for clients to pay up sooner rather than later.
   
   
2. Make sure your invoice clearly states when the payment is due. This is often marked as Net 15, (payment due within 15 days of service), Net 30 or Net 60.
   
   The invoice should also include the present date (for tracking lateness) and all of the information your client needs to pay promptly, such as your full contact information, instructions for sending payment and an itemisation of services.
   
   
3. As soon as your freelance gig is done, send an invoice promptly. Make sure the client receives both a paper and electronic copy.
   
   
4. If you don’t get paid, send another invoice that reflects your “late payment charges”. Include a note on the invoice such as “Second notice – 30 days past due.”
   
   Keep following up until you’ve established a payment plan or received your money.
   
   
5. If you’ve done everything you can and the client still isn’t paying, you may want to take the issue to the next level by hiring a lawyer or collection agency, or going through small claims court.

More tricks to avoid non-paying clients

Many freelancers ask for a certain amount of payment upfront or they offer a discount for early payment in full.

SOURCE: Freelancers Union