UK freelancers and micro-business owners throughout the UK are being plagued by late-paying clients, according to new research by FreeAgent.
Using data from a sample of over 50,000 customer-base and analysing hundreds of thousands of invoices that were sent in the last year, the firm found across the whole of the UK, nearly half (49%) of the invoices sent by micro-businesses last year weren’t paid on time.
Sheffield is the area worst affected by late payment, with just 24% of invoices sent during the 2015 calendar year paid within three days of their payment deadline.
This was closely followed by Twickenham (27%) and Slough (29%), whilst Manchester is the least affected by late payment, with 75% of invoices sent by micro-businesses in the city in 2015 paid on time.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “We know that late payment is a huge issue for the UK economy, but our research shows just how widespread it is for the freelance and micro-business sector.
“We found that just half of the invoices sent by micro-businesses across the UK get paid late, while there are certain hotspots where the problem is even more prevalent. And this isn’t just clients taking an extra week or two to pay – it also includes the chronic late payers who sit on invoices for months, as well as those who just don’t pay at all.”
The issue of late payment has become so prevalent that the UK government has announced that a special small business commissioner will be appointed to specifically deal with the problem.
A consultation is currently underway into how this commissioner will consider, determine and make recommendations for complaints.
Mr. Molyneux added: “It’s certainly good news that the government recognises the late payment problem and is consulting over the appointment of a small business commissioner to tackle the issue. However, I fear that whoever is appointed will have limited power to actually punish companies who routinely pay late, aside from just naming and shaming them.
“Micro-business owners need to get paid promptly to keep their cash flow healthy and most don’t have the luxury of being able to absorb a late – or non – payment in their accounts. We need to see a complete cultural shift when it comes to paying invoices, so that these types of smaller businesses are not put at risk.”