We talk a lot about late payment among companies – from micro-businesses with 1-3 employees, right up to the big brands with 500+ in their workforce.
But what about the very bottom end of the supply chain? What about transactions between individual consumers and sole traders – the plumbers, electricians and handymen that literally keep the nation’s lights on and water running?
Figures from Paym, the Payments Council’s mobile payment app, reveal the extent to which tradesmen and tradeswomen are regularly hit by late payment, especially when working cash in hand.
The research found that 86% of people think it is important to pay small businesses on time, yet 17% of customers regularly pay late – at 103% in total, that suggests that at least 3% of people are living by double standards.
A much larger percentage simply forget to have cash to hand when getting work done by a sole trader, and 44% of people have had to run to an ATM to withdraw the money to pay their bill.
There may be legitimate reasons for this, of course, from expecting to be able to pay by card, to being surprised by how much the final bill comes to.
But it’s harder to argue with the average £208 owed to sole traders at the end of each month by customers who couldn’t actually get the cash on the day to pay their bill, or the 30% who have had to put a stop to supplying goods or services due to non-payment.
Nearly one in four sole traders (23%) have lost out permanently on at least part of their income, having given up hope of ever successfully chasing a payment.
To those people, we would say that if the debt is less than six years old (the statutory limit within which action can be taken) and you have never formally written it off, it might be worth reconsidering.
You could find, with the addition of penalties, recovery costs and statutory interest, the amount you could now reclaim might be much larger than it was to begin with.
If you’re still struggling with late payment from current clients, look to these aged debts as a kind of long-term savings account – even recovering one with interest on top could prove to be a big help in easing your short-term cash flow concerns until your current customers pay up.
If you would like to talk to a member of our team please don’t hesitate to call 0808 149 3275