The UK’s smallest microbusinesses and sole traders face £2.5 billion of overdue payments each year – and end up writing off as much as £2.4 billion of that debt, according to research from payments platform WorldPay.
In a survey of more than 1,000 microbusinesses and ‘mobile tradespeople’, WorldPay found 75% have experienced at least one late payment in the past 12 months.
This figure rises to 88% of builders and 90% of plumbers, leading 45% of those who face late payments to experience associated cash flow problems.
David Hobday, managing director of WorldPay UK, says: “Running a small business is hard enough, without people using every excuse under the sun to avoid paying.
“It’s spectacularly unfair how long some sole traders are waiting to get paid for the job they’ve done. Late payments have a huge impact on small business cash flow, and a knock-on effect for everyone.”
Tradespeople in general have to wait 15 weeks for payment, but plumbers sometimes see this almost double to 27 weeks.
And yet, reputation remains a chief concern – so many are worried about chasing payments, and can’t afford to spend the time it takes to do so.
Under modern legislation though, it’s easier to enlist the help of a third-party debt recovery firm to save time while recovering overdue payments.
The EU Late Payments Directive allows the cost of this to be charged to the debtor, along with statutory interest and fixed penalty fees.