What to Do When a Client Won't Pay – A Step-by-Step Guide for Creative Businesses

Late payment is endemic in the UK creative sector. According to industry surveys, the majority of freelancers and small agencies have experienced late or non-payment at least once. It's stressful, it damages cash flow, and many creatives don't know what steps they can legally take – or in what order.

For a complete set of ready-to-use documents, see our creative agency contract templates.

Prevention Is Everything

The best time to deal with non-payment is before it happens. Your contract and commercial processes should be set up to minimise the risk:

• Take deposits or stage payments. For projects, a common pattern is 50% up front and 50% on delivery of the final main deliverable. For retainers, invoice monthly in advance.
• Set clear payment terms. State in your Scope of Work and Terms of Business when invoices are due and what happens if they're late.
• Withhold final files until payment. Your contract should state that you retain IP in the deliverables until paid in full – this is your strongest practical lever.
• Right to pause work. Your terms should allow you to suspend services if an invoice is overdue.

Learn how a clear Scope of Work makes it harder for clients to dispute what they owe.

When Payment Is Late: The Escalation Ladder

If prevention hasn't worked, here is a practical escalation sequence:

1. Friendly reminder (1–3 days after due date) – a polite email or call. Most late payments are administrative, not malicious.
2. Formal reminder (7–14 days overdue) – a firmer written reminder referencing your contract terms, the overdue amount and the late-payment interest that is accruing.
3. Late-payment interest and compensation – under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge interest at 8% per year above the Bank of England base rate on overdue B2B invoices, plus a fixed compensation amount (£40–£100 depending on the debt size).
4. Pause work and withhold files – exercise your contractual right to suspend services and hold deliverables until payment is brought up to date.
5. Letter Before Action – a formal letter giving the client a final deadline (usually 14 days) to pay before you issue court proceedings.
6. County Court claim (Money Claim Online) – for debts up to £100,000 you can issue a claim online without a solicitor.

How Our Templates Set You Up to Recover

For the full contract checklist that builds payment protection in from the start, see our comprehensive guide. Our Consultancy Terms of Business template builds payment protection into the contract with express rights to charge statutory late-payment interest, pause work, withhold files and terminate if payment isn't made.

Related reading

• Contract Checklist For Creatives
• What To Do When Clients Send Their Own Contract