What to Do If a Client Doesn't Pay

Prevention Is Key

The best way to deal with non-paying clients is to avoid the situation entirely. While you can't eliminate risk completely, smart practices significantly reduce your exposure.

Vet new clients: Before accepting work, research the company. Check Companies House for any warning signs — county court judgements, frequent director changes, or recent accounts showing losses. For larger projects, consider running a credit check.

Use contracts: A clear contract specifying payment terms, deliverables, and what happens in disputes provides legal foundation and sets professional expectations. Clients who refuse to sign contracts are often the ones who won't pay.

Request deposits: A 30-50% deposit on project start reduces your financial exposure and confirms client commitment. Clients who won't pay a deposit rarely pay final invoices either.

Milestone billing: For larger projects, invoice at multiple points rather than one large invoice at the end. This keeps cash flowing and limits how much you're ever owed.

Trust your instincts: If something feels wrong during early conversations — unrealistic expectations, reluctance to discuss budget, vague requirements — it's often a sign of trouble ahead.

Document Everything

If a payment dispute escalates, your documentation becomes crucial. From the start of any project, maintain clear records.

What to keep:

• Signed contract or written agreement
• Original quote or proposal (with acceptance confirmation)
• All email communication
• Evidence of work completed (screenshots, files delivered, approval emails)
• All invoices sent with dates
• Payment reminder communications and responses
• Notes from any phone calls (date, time, what was discussed)

How to organise: Create a folder for each client containing all project documents. Use invoicing software that automatically tracks when invoices are sent, viewed, and paid. After phone calls, send a follow-up email summarising what was discussed — this creates a written record.

Why it matters: In small claims court, the party with better documentation usually wins. Judges expect clear evidence. Without it, your claim is just your word against theirs.

Escalation Steps

Follow this systematic process when a client doesn't pay. Each step increases pressure while remaining professional.

At each step, keep records and remain professional. Angry messages may feel satisfying but undermine your position if the matter goes to court.

Mediation Options

Mediation is a structured process where an independent third party helps you and the client reach agreement. It's faster and cheaper than court, and often preserves relationships.

When mediation works:

• The client disputes the quality of work or what was agreed
• There's a genuine misunderstanding about scope or deliverables
• The client has cash flow problems but intends to pay
• You want to preserve the relationship if possible

When mediation won't help:

• The client is deliberately avoiding all communication
• The company has ceased trading or gone into administration
• There's fraud involved
• The client has no intention of paying

UK mediation services:

• CEDR (Centre for Effective Dispute Resolution) — Established business mediation provider
• Small Claims Mediation Service — Free service offered when you file a small claims court case
• ProMediate — Fixed-fee mediation for commercial disputes

Mediation typically costs £100-300 per party for smaller disputes, and sessions usually last half a day. The mediator doesn't make a decision — they facilitate discussion to help you reach your own agreement.

Small Claims Court (UK)

For unpaid invoices up to £10,000, the small claims track in the County Court is designed for individuals and small businesses to pursue claims without needing a solicitor.

Is it worth it?
Consider: the court fee (£35-455 depending on claim value), your time investment, and whether the client has assets to pay if you win. There's no point winning a judgement against a company with no money.

Court fees (as of 2026):

• Claims up to £300: £35
• £300.01 - £500: £50
• £500.01 - £1,000: £70
• £1,000.01 - £1,500: £80
• £1,500.01 - £3,000: £115
• £3,000.01 - £5,000: £205
• £5,000.01 - £10,000: £455

The process:

1. Send Letter Before Action: Give the client 14 days to pay before proceeding. This is required.
2. File claim online: Use Money Claims Online (MCOL) at moneyclaims.service.gov.uk
3. Client responds: They have 14 days to respond, admit, or defend
4. Mediation offered: The court will offer free telephone mediation
5. Hearing (if needed): Usually informal, in a private room, no wigs or gowns
6. Judgement: Judge decides and orders payment if you win
7. Enforcement: If they still don't pay, you may need bailiffs or other enforcement

Writing Off Bad Debt

Sometimes, pursuing payment costs more than it's worth — in time, stress, and money. Knowing when to write off a debt is a business skill.

Consider writing off if:

• The amount is small and court fees would exceed recovery
• The client's company has been dissolved or is insolvent
• The client has disappeared and you can't trace them
• Your documentation is weak and you'd likely lose in court
• The stress is affecting your health or other work

Tax implications:
If you're VAT registered and have already accounted for VAT on the invoice, you can claim VAT bad debt relief if the debt is over 6 months old and you've written it off in your accounts. Consult your accountant about this.

For income tax purposes, you can only claim bad debt deduction if you use accrual accounting. If you use cash basis (most freelancers do), you haven't recorded income you didn't receive, so there's nothing to write off.

Learning from it: Every bad debt teaches you something. What warning signs did you miss? What could you do differently? Update your processes to reduce the chance of it happening again.

Legal Options

Beyond small claims court, several other legal routes exist for recovering unpaid invoices.

Debt collection agencies: They handle the chasing for you, typically taking 10-25% of recovered amounts. This can be effective for clients who are avoiding you but have the means to pay. Choose a reputable agency that's a member of the Credit Services Association.

Statutory demand: For debts over £5,000 (individuals) or £750 (companies), you can serve a statutory demand. If unpaid after 21 days, you can petition for bankruptcy (individuals) or winding up (companies). This is a nuclear option — it can destroy businesses. Use only when confident the debt is undisputed and payable.

Solicitor's letter: A letter on law firm letterhead often prompts payment. Expect to pay £150-300 for this service. Some solicitors offer "no win, no fee" debt collection, taking a percentage of recovered funds.

County Court Judgment (CCJ): If you win in small claims court and the client doesn't pay, you get a CCJ. This damages their credit rating significantly and can affect their ability to get loans, mortgages, or business finance. Often the threat of a CCJ prompts payment.

Bailiff enforcement: If you have a court judgement and the client still won't pay, you can instruct High Court Enforcement Officers to collect. There's an additional fee, but they have powers to seize assets to cover the debt.

Non-payment is unfortunately part of freelance life. Most clients pay on time; a few don't. Build reserves to absorb occasional losses, learn from each experience, and don't let bad clients destroy your confidence in the good ones.