How to Set Payment Terms as a UK Freelancer

Payment Terms Are Not Optional

Many freelancers list payment terms as an afterthought — something buried in the invoice footer that clients ignore. In reality, your payment terms are a legal contract term. Setting them clearly and enforcing them consistently is the single biggest lever you have over your cash flow.

What Payment Terms Should Cover

Your payment terms should address:

1. When payment is due — the number of days after the invoice date
2. Accepted payment methods — bank transfer, PayPal, credit card
3. Late payment consequences — interest, compensation, or suspension of work
4. Deposit requirements — any upfront payment before work begins

These should appear in your contract or engagement letter first, and then be restated on every invoice.

Choosing Your Payment Period

Net 30 (payment due within 30 days) is the UK standard and what most clients expect. However, 30 days is a long time when you are a sole trader managing cash flow. Many freelancers now use:

• Net 14 — reasonable for smaller jobs and digital services
• Net 7 — common for regular clients with a good payment track record
• On receipt — appropriate for one-off work with new or unknown clients

You are legally entitled to set any payment terms you choose. However, the Prompt Payment Code (a voluntary UK government-backed scheme) encourages large businesses to pay SMEs within 30 days, so aligning with this makes sense for most work.

Requiring a Deposit

Asking for a deposit before starting work is standard practice and protects you against clients who disappear after work is delivered. Common arrangements:

• 50% upfront, 50% on delivery — typical for project-based work
• 100% upfront — for new clients, short projects, or repeat clients you trust completely
• Third-third-third — one third at project start, one third at a milestone, one third on delivery

Deposits are particularly valuable for large projects where your time investment is significant. A client who pays a deposit has demonstrated financial commitment to the work.

Putting Terms in Writing Before You Start

Verbal agreements are difficult to enforce. Send a brief engagement email or a formal contract before beginning any work. At minimum, confirm:

• The scope of work
• The total fee (or day/hourly rate and estimate)
• Your payment terms
• Any deposit required

If a client pushes back on payment terms, that is useful information about how they treat suppliers. A large business demanding 90-day payment terms is common in corporate procurement, but you are entitled to negotiate — and the Prompt Payment Code gives you backing.

Enforcing Late Payment

Once you have clear terms in place, enforce them:

• Send a reminder on the due date
• Follow up at 7 days overdue
• Issue a formal demand at 14 days
• Charge statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 — 8% above the Bank of England base rate, plus fixed compensation starting at £40

Do not be embarrassed to enforce your terms. You would not accept a client's work without delivering what you promised; they should not expect to receive your work without paying for it.

Automating Your Reminders

The uncomfortable reality of chasing payments is that most freelancers do it inconsistently — they send one reminder, feel awkward, and wait. Automation removes the emotional friction. Tools like InvoicePulse send payment reminders automatically at your chosen intervals, so every overdue invoice gets followed up without you having to think about it.

Set your terms clearly, put them in writing, and use systems that enforce them automatically. That combination means fewer late payments and more time doing the work you actually want to do.