Britain’s freelancers are on average owed £5,432 in late payments at any one time, with 36 per cent forced to borrow from a payday loan company to cover themselves, new research has revealed.
Around half have considered quitting working as freelancers due to the many financial woes that come with not being paid on time.
One-in-ten freelancers admitted to having faced difficulties making mortgage or rental payments, whilst 46 per cent said they were concerned about not having enough cash to live on. Despite more than 35 per cent of freelancers having turned to family and friends for financial help in the past, 40 per cent have taken out a county court judgment (CCJ) in the last 12 months because of unmanageable debt.
Published by fintech startup Ormsby Street, the study of over 1,000 freelancers and sole traders identified the country’s freelance community – amounting to roughly 4.55m workers – as having to withstand a significant proportion of Britain’s endemic late payment problem.
Just 19 per cent of respondent freelancers said they were in the fortunate position of having all their invoices paid on time, with the vast majority having to wait an average of 18.5 days after the date an invoice is due to be paid.
For Ormsby Street managing director Martin Campbell, late payment culture is undermining the valuable contribution freelancers make to the UK economy. He said: “Freelancing has grown in popularity because of the choice and flexibility it gives people over their career, but its success relies on the prompt payment of invoices, which is not happening enough.
“For a freelancer to be owed more than £5,000 is clearly unacceptable and threatens the emerging freelance economy in the UK, which brings flexibility and work-life balance to so many.”
Freelancers have become an increasingly integral part of the workforce in most organisations. Last year, the Association of Independent Professionals and the Self-Employed (IPSE) found that three-in-five UK businesses agreed that it would be difficult to operate without hiring freelancers.
Yet, chasing clients for overdue payment continues to be a big problem for most freelancers. Many fear that it will impact any future work offered to them by clients, while some simply do not have the time. Two-thirds say they feel too awkward chasing late payments, according to the IPSE.
Campbell went on to say: “If customers are not willing to pay within the agreed terms then it’s time for freelancers to become more informed over whom they work with, and either ask for payment upfront or even choose to not work with company.
“Why should a freelancer waste their own billable hours chasing payment for work that has been successfully completed and is already due for payment,” he asked.
It is hoped that the government’s Enterprise Act will work on the side of small business owners and freelancers to help combat the late payment problem. The Act received Royal Assent in May this year and sees the introduction of a number of key measures in response to late payments, including the long-awaited appointment of the small business commissioner.
Read on to find out the top ten worst excuses given by clients for late or non-payment on invoice.
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