We have all been there. A new enquiry lands in your inbox, or someone calls you out of the blue with a project that sounds perfect. The scope is interesting, the budget sounds reasonable, and they want to start soon. You are already thinking about how to fit it into your schedule.
But before you send that proposal or shake hands on the deal, it is worth pausing for five minutes. Because according to IPSE research, 54% of freelancers have experienced payment delays at some point in their careers, with the average amount owed reaching £5,230 (2024), and in most cases the warning signs were there from the start -- they just were not checked.
Five minutes of due diligence before you say yes can save you months of chasing invoices, writing emails that go unanswered, and that particular kind of stress that comes from doing good work and not being paid for it.
£5,230
Average amount owed to freelancers through late payments
IPSE, 2024
Here are the five biggest red flags to look for.
1. The company is brand new -- or suspiciously old with no activity
Every UK limited company has an incorporation date listed on Companies House. It is the first thing worth checking, because it tells you how long the company has actually existed as a legal entity.
A company that was incorporated less than 12 months ago has not built a track record. There are no filed accounts to review, no trading history to assess, and no pattern of behaviour to evaluate. That does not automatically make them a bad client -- every company starts somewhere. But it does mean you have less information to work with, and that shifts the risk towards you.
At the other end of the spectrum, watch for dormant companies that suddenly spring back to life. A company that was incorporated five years ago but has filed dormant accounts every year and is now suddenly commissioning work may be a shell being repurposed. That deserves closer scrutiny.
What to do: If the company is under a year old, consider requesting payment upfront or structuring the project around milestone payments. You are not being unreasonable -- you are managing risk, which is exactly what any sensible business does.
2. Their filings are overdue
Every UK limited company is legally required to file annual accounts and a confirmation statement with Companies House. These are not optional. They are legal obligations with penalties for non-compliance.
There are a range of reasons filings can be overdue — a change of accountant, an admin oversight, a particularly busy period. It can also mean the company is struggling financially and avoiding disclosure. The reason matters less than the fact: if the filings are late, you have less information to work with, and that shifts more risk onto you.
Overdue accounts are one of the strongest predictors of payment problems. If a company is not keeping on top of its own filing deadlines, how likely are they to prioritise paying your invoice on time? And a company that is actively avoiding filing may be concealing deteriorating finances.
The scale tells its own story. Companies House issued £220 million in late filing penalties in 2024-25 (Companies House Annual Report). That is a lot of companies not meeting their legal obligations.
What to do: Go to the company's page on Companies House and click on "Filing history." It takes 30 seconds. If you see overdue items flagged in red, treat that as a serious warning sign -- particularly if it is the annual accounts that are late.
3. They have been through directors like a revolving door
Directors come and go for all sorts of legitimate reasons. People retire, partnerships dissolve, companies restructure. But when you see a pattern of frequent director changes -- particularly directors who resign after only a few months, or a series of appointments and resignations in quick succession -- that is a sign of instability.
Pay particular attention to directors who appear across multiple dissolved or failed companies. This is sometimes called "phoenixing": a director runs up debts through one company, lets it fold, and immediately sets up a new company to do the same thing again. The people who get hurt are the suppliers, contractors, and freelancers who were owed money by the company that disappeared.
The authorities take this seriously. The Insolvency Service disqualified 1,036 directors in 2024-25 — people judged unfit to run a company. And HMRC estimates that phoenixing cost £836 million in tax losses in 2022-23. The problem is widespread enough that it has its own dedicated enforcement programme.
You can check this on Companies House by clicking on each director's name, which shows you their other current and previous appointments. If you see a trail of dissolved companies, that tells you something important.
What to do: Spend a minute clicking through the director profiles. If the same person has been a director of three or four companies that have all been dissolved in the last few years, think carefully about whether you want to be a creditor of their latest venture.
4. There are Gazette notices or County Court Judgments
This is where the red flags stop being amber and turn firmly red.
A winding-up petition published in The Gazette means that a creditor has gone to court to force the company into liquidation. That creditor was almost certainly in the same position you are considering putting yourself in -- they did work or supplied goods, they were not paid, and they have run out of patience. If someone is actively trying to wind up the company, you do not want to be adding your name to the list of people owed money.
County Court Judgments are similarly serious. A CCJ means the company was taken to court for not paying a debt, and the court ruled against them. A single CCJ might have an explanation. Multiple CCJs, particularly recent ones, tell you that non-payment is not an accident -- it is a pattern.
The numbers back this up. Registry Trust data shows 173,025 commercial CCJs were registered in 2024 — up 35.5% year-on-year. Meanwhile, there were 23,938 company insolvencies in 2025, roughly 1 in every 190 companies on the register (Insolvency Service). Those are not small numbers.
What to do: Search for the company on thegazette.co.uk, which is free. For CCJs, you can use Trust Online for a small fee of around 2 pounds per search. If you find either a winding-up petition or multiple CCJs, think very carefully before proceeding.
5. Their online presence does not match their claims
This one is less about official records and more about common sense, but it catches more problems than you might expect.
Plenty of legitimate businesses use virtual offices or register at their accountant's address — it is a common and practical choice, especially for small companies that do not need or want a physical office. Many good companies also have modest websites, and there is nothing wrong with that.
The concern is not about virtual offices or simple websites in themselves. It is about the gap between what a company claims and what you can independently verify. If someone describes themselves as a "leading agency" or a "fast-growing team of 50" but their website was registered last month and their LinkedIn page shows three employees, that mismatch is worth questioning. The bigger the gap between claims and verifiable reality, the more cautious you should be.
What to do: Cross-reference their website, LinkedIn profile, and Companies House record. Do the directors listed on Companies House match the leadership team on the website? Does the company's claimed size and history match what you can see in their filing history? If the story does not hold together, ask questions before you commit.
What to do if you spot red flags
Spotting a red flag does not necessarily mean you should walk away from the work. But it does mean you should adjust your approach to protect yourself.
- Request payment upfront. A 50% deposit before work begins is standard practice in many industries. If a client pushes back on this, that itself is informative.
- Use milestone payments. Break the project into stages and invoice at each milestone rather than waiting until the end. This limits your exposure if things go wrong.
- Shorten your payment terms. 14 days instead of 30. The less time between completing work and expecting payment, the better.
- Get everything in writing. A clear contract covering scope, deliverables, payment amounts, and payment dates is non-negotiable. Verbal agreements are worth the paper they are written on.
- Consider credit insurance. For large contracts, credit insurance can protect you against non-payment. The cost is typically a small percentage of the contract value.
One flag is a reason for caution. Three flags together are a reason to decline.
If you are seeing multiple red flags on the same company -- say, a new incorporation date combined with overdue filings and a director with a history of dissolved companies -- that is usually a sign to walk away.
The 5-minute rule
Make it a habit. Before you accept any new client, spend five minutes checking them. Companies House is free. The Gazette is free. A quick search engine query costs nothing but a few minutes of your time. Between those three sources, you can catch the majority of serious problems before they become your problem.
Protecting your time starts before the invoice
Your time is your most valuable asset. Every hour you spend chasing a bad debt is an hour you are not spending on paying work, on growing your business, or on the things that matter outside of work.
The best time to check a client is before you start work. The worst time is when they stop paying. Five minutes now is worth more than five months of frustration later.
Sources
- IPSE freelancer research (2024) — 54% experienced payment delays; £5,230 average owed
- Companies House Annual Report 2024-25 — £220m in late filing penalties
- Insolvency Service (2024-25) — 1,036 directors disqualified
- HMRC (2022-23) — £836m in tax losses from phoenixing
- Registry Trust (2024) — 173,025 commercial CCJs, up 35.5% year-on-year
- Insolvency Service statistics (2025) — 23,938 company insolvencies (1 in 190 companies)