UK freelancers are increasingly struggling with late invoice payments, with around half admitting they considered quitting freelance life because of the continued struggles and worries over continued late payments, according to a recent study from Ormsby Street.
The survey of 1,002 freelancers and sole-traders revealed that 46 per cent are stressing about having enough money to live on with freelancers each owed an average of £5,431 in late payments. Only 19 per cent of respondents say most of their invoices are always paid on time; and like most SMEs 79 per cent say that cash flow is the number one concern for their business(1).
What are the statistics?
- One in ten freelancers have faced difficulties paying their mortgage or rent because of late invoice payment
- 37 per cent have turned to family for help after being left cash poor
- 36 per cent have gone to payday loan companies to cover shortfall bought by late payment
- Freelancers invoices are paid on average 18 and a half days after their due date
- 57 per cent felt awkward and uncomfortable about chasing overdue payments as they were worried clients might not used their services again if they did so(2).
- 40% have taken out a County Court Judgement in the last year to chase a bad debt, with more than half saying late invoice payments are getting worse and not better.
The Office for National Statistics revealed in 2015 that 4.55 million Britons are now their own boss and research by the Association of Independent Professionals and the Self-Employed (IPSE) found three in five businesses agree it would be difficult to operate without hiring any freelancers(3). It continues to be a problem for many freelancers when chasing clients over late payments, partly due to not having the spare but as mentioned before, concerns it may impact future work streams.
Just like any other business, freelancers shouldn’t be wasting their own billable hours to chase payments for work that has been successfully completed with a payment date set. Freelancers can be pro-active and help themselves by becoming more informed over who they work with, asking for payment upfront or choosing not to work with them. With over 49 per cent of freelancers having had to turn down a contract because of concerns over a client’s willingness/ability to pay on time, freelancers should take action in checking their client’s creditworthiness. But how can you decide who is creditworthy enough to work with and who isn’t?
Experian can give you peace of mind for less than a piece of cake with our specially tailored starter package of 99 business credit reports for £99. Our business credit report displays current and historical financial information allowing you to determine the creditworthiness of potential partners in an instant, providing you with the confidence and reassurance needed when deciding whether to supply your goods or services. To get started and get market-leading insight into your customers, click here.