You Finished the Job, but the Client Hasn’t Paid. What Does That Mean for Your Tax Records?

For freelancers, this is more than an annoying client experience. It can make it difficult to know how much they earned, what they are still owed and how to keep accurate financial records for tax purposes.

If you work remotely for Nigerian or international clients, here is how to handle unpaid invoices and delayed payments.

1. Separate the Work You Have Done From the Money You Have Received

Completing a project does not mean the client has paid you. Yet, when you look back at your month, it is easy to mix up completed jobs, invoices sent and money that actually entered your account.

Imagine you completed three projects in October:

• Project A: ₦150,000, paid in full.
• Project B: ₦200,000, invoiced but unpaid.
• Project C: ₦100,000, with payment expected next month.

You have completed work worth ₦450,000, but you have received only ₦150,000 from these projects so far.

Both figures tell you something useful. The first shows the value of work completed, while the second shows the cash received from those projects. Keeping them separate helps you understand your cash flow and follow up on outstanding payments.

1. Does an Unpaid Invoice Count as Taxable Income?

This is where freelancers need to be careful.

An unpaid invoice does not automatically mean the income should be ignored for tax purposes. The correct treatment depends on the applicable tax rules and how the income is recognised.

Nigeria’s tax framework calculates income from a trade, business, profession or vocation using the applicable basis period and rules for determining assessable profits. The Nigeria Tax Act 2025, which took effect on 1 January 2026, sets out the framework for calculating taxable income and allowable expenses.

For freelancers, the practical lesson is simple: do not assume that money you have not received is automatically tax-free, and do not treat every invoice as cash already in your bank account.

Keep the invoice, the payment terms, evidence that the work was delivered and a record of any amount still outstanding. If a significant invoice remains unpaid, ask a qualified tax professional how it should be treated in your particular circumstances.

1. What If the Client Never Pays?

Sometimes, a delayed payment becomes a bad debt. The client may stop responding, dispute the work or close the business entirely.

Do not simply delete the invoice from your records.

Keep evidence of your attempts to collect the payment, any correspondence with the client, the original agreement and details of the outstanding amount. These documents help you establish what happened and support the way you account for the transaction.

The Nigeria Tax Act 2025 contains rules on the treatment of bad and doubtful debts when calculating business profits. Whether a particular unpaid invoice qualifies for a deduction depends on the circumstances and applicable requirements. A missed payment alone does not automatically make the amount deductible.

1. How Freelancers Can Keep Better Records

You do not need an elaborate accounting system to start. You need a consistent process.

For every project, record:

• The client’s name and project description.
• The agreed fee and invoice date.
• The payment due date.
• The amount received and the date it arrived.
• Any outstanding balance and follow-up messages.
• Any relevant payment charges or deductions.

When a client pays in instalments, update the record instead of creating a new income entry for the same invoice. If a payment arrives in foreign currency, record the original amount, the currency and the naira amount received, where applicable.

Review outstanding invoices regularly so you know which clients need reminders and how much money you are waiting on.

Know What You Earned, What You Received and What You Are Owed

Freelance income can be irregular. One month may bring several projects, while the next may be spent chasing payments from previous clients.

Good records help you separate completed work from collected cash, monitor unpaid invoices and prepare more accurate financial information when tax filing comes around.

LessaTax helps freelancers, remote workers and business owners organise their income, expenses and supporting financial documents, so they can spend less time piecing together their finances when tax season approaches.