Armin recently asked, “What percentage do you bill a client for unpaid invoices? And after how many days/months from due date do you start billing interest?”

I saw a couple of responses on Twitter. Victoria Pater charges 3% after 60 days, and Mindy Reznik opts for 1.8% after 30 days.

I stipulate that if the final invoice isn’t paid within 30 days, a 5% “delayed payment” fee is charged. This initial 5% figure is then added upon each recurring 30 day period until the full amount is received.

Thankfully, I’ve yet to add the fee to an invoice, likely because I don’t send files until receiving full payment.

How do you deal with unpaid invoices?

Cole kindly pointed me toward these relevant pages:


August 31, 2011


I do a flat 15% of the invoice if it isn’t paid in full within 30 days. And another 15% if the invoice isn’t paid within a year. I have found that small percentages just don’t cut it. 15% is high enough where most people will think twice about not paying within 30 days.

I stopped with the hassle of xx% after xx days. After a bill is 90 days late, I’ll send them to collections. We’re not a bank.

If they’re two weeks late, we won’t do work until they they get paid up (and prevent getting deeper behind)

It seems delayed payments became part of the game recently… unfortunately.

I started to write my invoices with a 10-day due date for a couple of months now. That puts a little pressure on the client (because in Austria it’s not common to have a due date below 30 days). Works a lot better than before and I get most of my invoices paid within those 10 days.

If not: I don’t charging anything extra for the first 30 days of delay, but send a friendly reminder to the client. After that time it’s 5% per month, like you wrote in your article.

I’m wondering how to enforce these late fees. Has a client ever paid the original amount owing and refused to pay the fees? If so, how do you handle this?

Well, at least you’re not in the category of having to cut your losses anymore. The question becomes: “Which is greater: the value of my time or this 3% late fee on (for example) $1,000 (30 bucks).” You’ll find those 2 lines cross in a hurry.

There does come a time to stand on principle (and I err on this side of the fence faaaar to often myself), but beware of calling bitterness standing on principal. The only people that are bitter, are bitter people.

Talking to self: Just let it go, man…

Well, I always create an overall project cost before we start. Then the client pays 50% of that to get the project started, with agreed payments along the way.

This way we are never waiting for the client, because they don’t get the work until they have paid.

The only time there is a slight delay is on the final payment where we ask for that once all the work has been signed off. But at this point they are used to paying so there is never really an issue.

Hope that’s useful.

Chris Green

Hi David,

I like the way you deal with the delayed payment option – it’s something we struggle with and haven’t been consistent. We usually resort to nagging which generally gets the bills paid (we had one drag for a full year!). We’ve also learned to avoid clients with bad payment history, and if they really want us to work for them again, then they have to pay 100% in full at the beginning of the job, or the full amount before handover. Time to start looking at charging interest!

I use net 14 terms. If a client doesn’t pay within that time they get reminder notices after 21 days then 30 days. On the 30 day notice I ask them to contact me if they need to arrange a payment plan. I also pull a site down after 60 days if I’m hosting it. This has only happened once though.

Never really thought late payment fees would be an incentive. Do those who charge them find payment happens on time because of them? Or a late payers always going to be late payers?

This has been the hardest lesson I’ve had to learn as a freelancer/contractor, but when you get burned a couple of times (and the bank account depends on being paid) you learn to be a lot more assertive at the start of the process. Stipulating terms of service and payment at the start (through contracts/proposals) helps as well as reminding your client of payment terms and late payment fees when submitting invoices seems to work too. I use a 3% late payment fee after 60 days (so far I haven’t had to use this). I’ve found that being persistent but calm when dealing with clients who have unpaid invoices helps too. I’d like to move toward a 3% late payment fee after 30days but as I’m a new business (8 months old) it’s not so easy taking a hard line while I’m building the business and finding new clients

Friendly e-mail reminders every 30 days until six months overdue. Then I notify them that my lawyer will contact them. My lawyer sends a formal certified letter requesting payment. If they still don’t pay, then depending on the amount, it will go to court. I’ve only had to go to court once (and won).

This is always a tough subject to deal with. You need to be paid and have your time covered, but at the same time you don’t want to ruin a client relationship chasing for money. But then again, do you want to work with someone that doesn’t pay? It’s tricky.

I think a bit of reasoning needs to be paid on both sides. In principle a late fee can be appllied if an invoice due date is missed, but how many people actually get that extra fee? Surely the additional fee is there as a scare tactic which you’d ignore if they paid the initial invoice once it was drawn to their attention?

It would be interesting to know how everyone deals with this as we’ve all been there…


I have a question about something I’ve been confused about. From what I have seen from a lot of designers, they charge a % for a deposit, and then say the remaining balance is due upon delivery of the final artwork. But then it will say something like balance is due 15 days from final invoice, or something similar. So how does that work? Do you have the client pay you when you deliver the final artwork, or do they have 15 days (or whatever the terms are) to pay you the remaining balance?

Of course in an ideal world you slap a client with a late payment fee or refuse to work with them again. However in reality the client might make a significant contribution to your turnover (despite always paying late) and so you want to retain a good relationship with them.

In a situation where you’re ‘part way’ through a project or have other ongoing jobs with the client it’s often more effective to put a hold on that work until payment is received. Not an unreasonable approach, zero cost to enforce and often causes the client more pain than a late payment fee would.

Obviously this fails miserably if you’ve completed the job and handed over all the work so we make sure we break jobs up into stages which are aligned with progress. :)

I don’t charge a late fee, but have a simple structure:

Invoices are due in 30 days, once an invoice is past due I do not do any new work until it is paid.

Invoices not paid within 60 days means I don’t do any future work for this client. Very few get to this point, some I’ll write off , some “I’ll keep on them” until I get it.

Clients who pay quickly get a quicker turnaround on work. Clients who are regularly late on their payments get slower turnaround and a lower priority in their requests.

I’m fairly new to freelancing and so haven’t yet had a nonpayment issue, but I have something similar to your 5% method in my contracts.

I feel like the 1.8% or 3% is too low to be a proper deterrent/penalty. 5% I think is high enough that the client will want to avoid being charged it in the first place, but not so high as to seem absurd.

On subsequent months do you charge the 5% on the original invoice amount, or on the invoice amount + previous late fees?

I don’t charge a penalty (because the accounting paperwork is not worth it) but I have found that if the client doesn’t pay in 90 days, you are most likely never going to get paid. Between 30 and 90 days, I have a series of letters that get sent. I usually don’t waste time chasing it down after that (unless it is a large sum) but take a tax write off for the loss.

I usually require 50% up front and 25% midway through project. Also, I take down the client website if they don’t pay in 90 days. That makes them very eager to pay. I have only done this once. Also, clients do not get their source files or account passwords until final payment is received.

Something I have been considering instead of a penalty is a discounted price for early payment or prepayment in full. Everybody loves a discount.

I’ve been doing some research in to the problem of late-payments to freelancers as part of my MBA. I hope the commenters here don’t mind if I tweet them for a follow-up discussion?

@David, I haven’t had to go the collections route yet. I had a bad experience last year that made me make that our new policy. I’ll probably check with my accountant if he has any sources, altho I see there are many collection agencies you can hire online (and they take a big % for the fee, if collected)

@Susan I’d be careful of taking down client’s websites, especially if its not a server you control/own. If they’re paying for the hosting and you remove something on their server instance, you’re getting into a fuzzy legal territory there

@Susan, I’ll second Eric, it is quite illegal to take down a clients site once you have posted it. At that point you are deliberately harming their business, which is illegal in most countries, even if they do owe you money.

The better option is to not post it until you have received final payment (& make sure this stipulation is in your contract).

@Nathan it doesn’t make any sense to continue business with a client who is chronically late paying their invoices ( as in over 60 days ) unless there is a good reason. There are too many good paying customers out there. Chances are their late payment is a result of much more systemic dysfunctional issues, the same type of client to make a high number of revisions and regularly request ASAP RUSH requests. Paying their bill late is usually only one of a number of issues/red flags

@James Agreed, if they are ‘Chronically late’ every time then there’s little point continuing… you hit the nail on the head with ‘systematic dysfunction’ too. ;)

Hi David,

.. here in the Netherlands it’s quite normal to ask 6 or 7% ‘Administration’ costs when a client hasn’t paid her/his bill on time.

Usually they first get a written reminder and the client gets some extra time to pay and the warning that extra costs will be added when not completing the payment on time (again).

If still no payment after that period, then the final reminder drops on the doormat with the extra 6-7% administration costs and the consequences as written down in your Terms and Conditions if the client refuses to pay.

And still there are some ..#$%@*& who just won’t pay! But maybe that’s a subject for a new Article? Thanks for sharing, cheers & ciao ..

I updated the post with a few resources. Thanks Cole (and Bernadette — you got there just afterward with the CreativeMornings link).

Grant, Susan, it was interesting to read what Eric and James said about pulling a site due to late payment. I don’t know about the legalities there, so it’s definitely worth looking into.

Tracey, keeping calm’s important. There have been a couple of times in the past when my working relationship with a client broke down (partly due to my inexperience). Not good for anyone.

James, I’m sure your court story would make an intriguing read.

Nicole, I also thought those figures were too low. I wonder where the 1.8% came from.

After 10 years in business there have only been a very few instances where I’ve not been able to collect. While I agree with a % of the invoice amount being added as a late fee, in my experience it hasn’t been effective, especially in smaller invoices (like under $1,000). Here is what I’d done;
1. be clear on payment terms up front
2. clients who typically pay past 30 days (I have a few) do not receive any discounted pricing
3. in Canada an option we have is small claims court. However, even if the court determines you are in the right, there is no guarantee you’ll be paid.
What I’ve found works for me is;
1. accept credit card payment
2. when all seems lost, no hope of collecting try and negotiate enough of a payment to take your spouse out for a nice dinner.

I charge 2% after 30 days, but I also have a problem with some clients that will pay the original amount eventually, and completely ignore the interest fee.

I have had a few instances in dealing with delayed payments from clients. So far my approach has been to send “friendly email reminders.” That said, I am now gearing towards including a charge or penalty fee.. Is it best to state this in fine print on the invoice? How does everyone go about this.. Thanks for any advice :)

If it’s illegal to pull down a website once it has been posted, that’s something I guess I’d have to defend if it came to it.

I buy the domain name and provide the hosting. My contract states that everything belongs to me until final payment has been made. If I pull a client’s site down, then they still get to keep the domain name, and hosting is still working, meaning they’re still receiving emails and the like. They just get a white screen on their site, i.e. they don’t get to use the design they didn’t pay for.

As I said, I’ve only had to do that once though. I learnt a lot about how to stop that happening in future (i.e. not posting a site until final payment has been made). So while I’m defending my position, it’s not something I even need to do in future.

I just keep the site on my own domain, live and fully useable, and don’t transfer it to the client domain until full payment is made. Something I should have been doing all along.

I’ve never really had this problem. Like Chris, the client gets the goods when I receive the payment, much as the transaction would take place in a shop.

Basically, once everything is agreed, it’s 50% in advance and 50% upon delivery. I’ve had one client try it on, but he changed his tune once he discovered I studied law.


if you paid for the hosting and its in your name, and the client hasn’t paid yet its one thing. If you post it up on their godaddy or mediaTemple account and then try to take it down… well, that’s like breaking into someone’s house to take back a refrigerator they didn’t pay for.

I freelanced for two years and ran the business on the basis of a 90-day turnaround for payment (based on the fact that most of the agencies and consultancies I did work for charged their clients on a 90-day basis).

However, the statement at the bottom of every invoice read “Payment strictly within 60 days”.

There were only a couple of times when payment was made late but I had factored in a period of an extra 30 days to chase the client up. Usually when I reminded them that I hadn’t recieved my fees, the payment was made straight away. I noticed that the clients who were the happiest with the work they recieved were also the quickest payers.

What I find compounds the frustration of late payment is in some cases the initial project is Rush! If a project requires that I drop other work to meet a deadline I will without doubt add a min of 20% to my price and make sure that’s approved before proceeding. Knowing I’ve done a quick turnaround and not getting payment immediately is somewhat compensated knowing I’m getting a more than fair price at the end of the day.

I don’t like the idea of late fees largely because most likely if they don’t pay the amount due they’re not going to pay the late fees or they’ll give you a really hard time. I think late fees only work if you have the ability and time to enforce the rule (ex: credit card companies).

After a few situations, I learned from my mistakes and now make it a point to keep control of the creation files until final payment is received. It’s also stated in my contract that usage/copyrights are not transferred until final payment has been received in full so usage before payment would be considered infringement. For Graphic Designers, you could try applying a watermark so they’d be able to review the work and provide feedback but wouldn’t be able to use the designs for production. For Web Designers, you could get a few tester domains and upload projects for client review. Once final payment is received you could then transfer the files to the client’s domain.

Might be a bit strict but as long as clients hold up their end of the deal it’s not something they’d have to worry about.

It’s the same old approach, statement, interest, phone call, collection agency. In these economic times sometimes just a call and asking if there’s something you can do to help out, and arrange something works as well. This was the approach when I was consulting.

Now with online clients, I make sure I get payment (or partial payment) up front. Never want to get stuck for money for work performed!

I have “PAYMENT DUE UPON RECEIPT” written at the bottom of my invoice adding that late fees will be assessed every two weeks. . . though I don’t indicate what that late payment fee will be, so yeah it’s kind of stupid ;) I think I’ll add a 5% fee of total bill every 30 days, though it is rather tough to enforce when the U.S. generally grants businesses a 90 grace period to pay invoices.

That being said, I generally don’t struggle with payments anymore. As most of you I charge a deposit and collect the remaining fee C.O.D. so if they want their files they have to pay me the remaining amount. I have run into problems with people claiming they were in more of a rush then they actually were and waiting to collect their project files until they could afford to pay me, which sucks, but . . . Other than that the only time I tend to struggle is with the occasional rush job where I don’t collect a deposit in hopes of expediting the process (stupid, I know) or when I shoot myself by trying to work with someone else’s budget. The later being an issue because clients with lower budgets tend to be able to make a deposit payment, but always seem to have some excuse/need to rally money when it comes time for the C.O.D.

An interesting post David – we struggled with this for years. We then had to pay someone to chase invoices and do debt collection.

We now charge up front – so now there is no problem.

Not ideal for every company, but certainly solved the problem for us.

We charge 25% to initiate the project; 50% is due mid-way through the project and then the remaining 25% is due upon completion. The client does not receive the deliverables until we receive final payment. (However, they have seen the final deliverables so know they exist!)

We do not begin work until we have the deposit; we do not continue work until we have the mid-way payment; and do not send the final product until we have the final payment.

1) Always provide excellent service, communication, and show your progress throughout the project.
2) Budget your project so that if you only receive 75% of the total, in the end you are still handsomely compensated.*
3) Make sure your payment schedule is very clear to the client, in writing and in your proposal, before they become your client.

* We’ve never had someone not pay the final invoice, so we’re very lucky!

I run a software development and sales company, so I can put my other hat on; as a designer’s client.

It frustrates me to read many of the experiences many have had.

I’m currently working with designers who are developing a new layout for one of our products.

They work on the basis of 50% initial and then 50% upon completion.

I can honestly say that, (because I trust them) I would accept 100% straight off if they requested it.

I guess the only worry in this case is they could come up with something I hate, and I’ve got no leverage to ask them to go back and change until I’m happy with it.

It’s a hard one but I would say to those worrying about putting in too many ‘clauses’ and therefore scaring off customers – don’t worry about it.

In-fact it shows your serious about your work and it shows that your time is valued.

Would a client trust a designer that said ‘pay when you like’…? I don’t know if I would. I’d probably assume they were too relaxed.

Many in our industry do the ‘late’ increase % but I feel it’s rather worthless — most folks whom are slower to pay an invoice are going to be less persuaded by an increase vs. a decrease. An offer to decrease the invoice by 10% if paid within 3 days of the first late notice probably has a more soothing effect — particularly for long-term clients.

I realize that’s less feasible in the service industry where the work has already been done. In ours all of the invoices are due prior to service being afforded.

An interesting topic which I have recent experience of. I had (unfortunately past tense) a client for almost two years who provided me with a regular flow of work however, the frequency of the work began to slow down and payments began to get later and later.

Then came the excuses and unanswered phone calls and emails. I was owed quite a large amount from the client which became over four months overdue. Finally, I decided to send the client and email stating that if they were experiencing financial difficulty, to conatct me to discuss a payment plan. This seemed to shame the client into responding (which as it turns out, was another excuse) but it was short lived and the responses dried up again.

I came across the governments Money Claim Online site which for a small fee (in my case £70) they will take the client to the small claims court. I did this and within 3 weeks the client was forced to pay the full amount plus interest and the £70 court fee.

It was fortunate that I did this as the client had moved premises and obviously had no intention of paying.

So, based on my experience, I would urge freelancers to watch for the signs and don’t wait for ever as the longer you leave it the worse it could be to get your money.

Oh, I’m glad you commented, Rob. That’s a good find.

If anyone’s subscribed to replies, sorry I never got around to acknowledging you. Great thread, thank you all.

You know, I so very rarely get beyond 30 days with clients – perhaps two invoices a year maybe this happens with.

I think the chances of this happening very often can be massively reduced if you ensure to provide clear quotations prior to commencement of work – clear quotations that very specifically lay out the project specifics and also terms and conditions and expectations for payment.

Ensure there is no room for argument or confusion – and where there is no argument in their mind that they should be paying their final invoice, you tend to get no problem with payment.

In addition to this it is vital to take a minimum of 50% up front for every single project (never work without up front payment EVER). This also massively reduces your chances of working with the sort of client who pays late. For small projects with new clients that total say £200 or less I charge full up front payment.

Adhering to these sorts of practices pretty much cancels out invoice payment issues.

Hi David,
I enjoy reading you articles. Some of them really helped me along the way to become a better designer.
But i would like to see how you deal with the management part.

Can you please do an article about all the documents involved between you and a client? Something like a “roadmap” at what steps are sent the documents. Also i would love to see some templates of the documents you use.

All the best,

In my experience the longer an invoice remains unpaid the less likely you are to get paid. Also that people struggling to pay your bills are certainly not going to pay extras on top.

Consequently my approach had always been steady and increasing pressure combined with drip feed. ie if they can’t/won’t pay all the bill they often will pay half. Like the old bird in the hand saying. Get what you can in at least it reduces your overall exposure.

In the UK there is legislation about late payment of debts (Late Payment of Commercial Debts (Interest) Act 1998 amended and supplemented to incorporate the features of European Directive 2000/35/EC) which means you can claim 8 per cent plus Bank of England base:

You still have to chase the outstanding debt yourself (or via debt collectors).

We’ve had this on our T&Cs since 2002 and never used it. A friendly reminder or phone call is usually enough to get clients to pay.

A friend of mine used to offer a discount for early payment. Clients always took the discount but paid late. Hard to do anything about it afterwards.

Trust your instincts: usually you can sense if a client ‘doesn’t feel right’. And you can always charge a percentage upfront fee.

I’m facing the same issue. A lot of my clients are past due on their invoices and my friendly reminders barely help the situation. I’m thinking of assessing 5% fee after an invoice is past due 30 days.

Why are you going to charge someone 1.8 percent or even 5 percent? Say the bill was only a couple thousand dollars. Your only going to impose a small $0-100 penalty in interest per month for them now paying?? That’s weak. I am imposing a 5% per day on the total balance if not paid for. How the heck else are you going to get them to pay? In a few months you have doubled the charge and they will pay you.

Thank you for hosting this discussion! It is incredibly helpful. But my question is, what’s legal? Is it legal to charge someone 5% of the total invoice? I am in Canada and I can’t seem to find any legislation on this.

Since my original comment back in 2011 I have only had one payment go past due. Although you may pay in the range of 3%, accepting credit card payment is #1solution from me. But the upside is payment in your bank account within 24 hours of submitting. I would estimate 70% of my billing is from clients using their credit card.

Well since my original comment above back in 2011, I decided to try and build something to tackle this problem.

So here is Satago: a place where freelancers and SMEs can anonymously share data, direct from their accounting software, about when their business customers pay them (late or early) vs agreed terms.

I’m looking for more beta-testers at the moment, so if you use SageOne, Xero or Freeagent please get in touch. If you know others that have problems with late-payers, please share Satago with them. It will only make a difference if we all work together to share data!

I’ll reach out to some of you directly on Twitter. Hope you don’t mind! :)

(N.B. I got David’s permission to add this comment.)

Is it legally possible to require a credit/debit card number on file? I was thinking of requesting payment by credit/debit card charges, and if the client prefers to pay by check, they may, as long as it’s received by my due dates. Anything not received by outlined due dates will be automatically charged to their credit/debit card.

I would have them sign a credit/debit card authorization form outlining their payment schedule so there are no surprises.

Thoughts on potential issues? Does anyone foresee clients refusing to supply me with credit/debit card information for any reason? Do all clients have a credit/debit card for their business? If they did not, could I require a personal card?

Good stuff David, I’ve just updated my invoices in MYOB to reflect the changes. I worded it like so…

Please note: Any overdue accounts will attract a 5% of total admin & late payment fee.

I used to have a $33 monthly admin fee only.

Cheers for everyone’s comments also. :)

5% per week past due date. Having to try it out for the first time at the moment. Failing that it’s name and shame in blog format and share that out through social media.

There is nothing illegal about posing the question “Is firm x insolvent? Or is there another reason why they can’t pay their bills?” Just have to stick to facts regarding your case and they will have no legal recourse against your posting and sharing. Be careful NOT to tell them that you will remove it if they pay (plus interest of course). That would be blackmail.

Of course it would be pointless to leave it up if the matter is settled.

I’d rather lose a client than work for a client for free. Late payment as an institutionalised practice needs to be stamped out, and I’m willing to do my bit to make it a practice that hurts companies if they don’t deal with me fairly. I deal with all my clients equally, openly and fairly. I expect the same in return.

About the payment strategy, I use 30%-50%-20%. After the project’s finished, I send an invoice to the client and if client doesn’t pay, delays for 2 weeks, and doesn’t provide clarity or news at all then I let it go. The client’s too late to make payment so I refer to that as debt. I just dont want to increase the payment. Because for me it isn’t appropriate.

30 days terms on invoice and a weekly email reminder if late to pay after 30 days. After x3 email reminders (with the original invoice attached for the clients records) a quick call usually does the trick and after that a small claims court letter works 99% of the time.

If the amount due is under £500 I’ve considered letting it go and claiming it in my accounts as a bad debt.

Sometimes if a website design/dev/hosting invoice is unpaid after all the options above are exhausted they’ve been known to suffer from a “mystery bug” which wont be fixed until the invoice is paid.

If the client wants to play games its only fair to join in and in any case I wouldn’t be working with them again.

Find an aggressive collector who will not just go to their business, but meet them at their car, or at the front door of their home.

What would it cost if someone quit paying for a year till her son notices because the domain goes to redemption and wants to get it back because his e-mail is using the domain? How much would that cost?

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