Invoices, procurement, and the chase

The deposit is the beginning, not the system

Taking 30% to 50% up front is the rule from the first-client lesson and it stands. This lesson is what happens with the rest, particularly when the client is large enough to have a finance department that has never heard of you.

The invoice, and the field that stops it being paid

An invoice needs: your legal or trading name and address; your tax registration number if you have one; a sequential invoice number; the issue date; a specific due date rather than “net 30”; a description tied to the agreed milestone; the amount and currency; your bank details; and (the one people miss) the client’s purchase order number where one exists.

In any company running procurement software, an invoice without a matching purchase order does not get rejected. It sits, unmatched, in a queue, until somebody notices. Your contact assumes it was paid. You assume they are ignoring you. Nine weeks pass.

Get set up as a vendor before you start work

For clients above roughly two hundred people, being paid requires you to exist in their supplier system: a vendor form, bank verification, possibly a tax form for cross-border payments, sometimes proof of insurance. This routinely takes two to six weeks and it is nobody’s priority.

Start it on day one, not when you send the first invoice. Ask your contact directly: ”Who do I speak to about vendor onboarding and a purchase order, so the first invoice does not get stuck?” Asking that question marks you as someone who has done this before, and it removes the most common cause of a two-month delay.

Payment terms are negotiable, and lateness has a price

Net 30 from the invoice date is the common default. Large companies impose net 45, 60 or 90, and often will not move. Small ones will frequently agree to net 14 if you ask before signing.

Several jurisdictions give you a statutory remedy. The EU’s late payment rules entitle a business creditor to interest at a reference rate plus eight percentage points, plus a fixed recovery amount, and the UK has an equivalent regime. Where such a rule exists, put a line in your contract citing it. You will rarely charge it. Mentioning it in a third chase letter changes the conversation, because the person reading it knows it is real.

The chase, as a sequence

Decide this before you need it, because the decisions are harder when you are anxious and owed money.

• Day 1 after due date. Short, neutral, unbothered. “Invoice 0042 was due yesterday. Could you confirm the payment date?” Copy accounts payable if you have the address.
• Day 7. Direct email to your contact and finance, with the invoice attached again and the purchase order number quoted.
• Day 14. Telephone. Ask one question: on what date will this be paid? A date is the thing you want; sympathy is not.
• Day 21. A formal letter referencing the contract terms and any statutory interest, and stating that work is paused until payment. Pause the work.
• Day 30 and beyond. Choose: a formal demand, a small-claims process where the amount qualifies, a collections agency taking a percentage, or writing it off. Choose deliberately rather than drifting.

Escalate on schedule and unemotionally. Most late payment is administrative rather than malicious, and the freelancers who are paid fastest are the ones who follow up predictably without becoming difficult.

Your leverage is unfinished work

The strongest position you will ever hold is before you hand over the final files, credentials, deployment or repository access. Afterwards you have only the contract and the law, and both are slow.

Structure engagements so that something meaningful remains undelivered until the final payment clears. Show the work running, on your machine or in your environment; transfer on payment. This is standard practice, it is not hostile, and stating it in the proposal prevents it from feeling like one later.

Bad debt, and the clients who cause it

Budget one to three per cent of revenue as bad debt. Treating it as a cost of business rather than a personal failure means you make better decisions when it happens.

The warning signs are visible before you start, and they repeat: no written agreement; refusal of any deposit; a very small company insisting “our process does not allow deposits”; urgency combined with vagueness about the outcome; and a first milestone paid late. That last one is the strongest predictor there is. A client who pays the first milestone eleven days late will not improve, and the correct response is to pause and get the terms fixed while the amount at risk is still small.

Across borders

Everything above is harder internationally. Payment takes longer, conversion costs money, and litigation is usually impractical: the cost of pursuing a €4,000 debt in another country exceeds the debt.

So the structure has to do the work instead: a larger deposit for a first international client, smaller milestones, staged handover, and payment through a platform or escrow for the first engagement. Once somebody has paid you twice, you can relax the terms. Not before.