£8.1 Billion Lost in Late Payments Every Year

It’s official…the self employed (including umbrella contractors) are losing out on an estimated £8.1 billion in late payments from customers each year.

Now I don’t know about you, but I didn’t realise this was such a big problem in the world of business, and that chasing up certain customers and getting them to pay is becoming tougher and tougher with each passing year.

Maybe the self employed, freelancers and contractors should always demand payment upfront when working with clients and customers for the first time, and only start accepting delayed payments when trust has been built up between the 2 parties.

Would this help to solve the issue? In part, maybe, but in competitive industries it is the customer who is king, and if you make them jump through too many hoops they will simply go elsewhere. For this reason, I don’t think the late payment problem will go away anytime soon, and in fact, we may even see that figure reach £10 billion by next year or the year after.

Astonishing I know, and unimaginable 20 years ago, but it is a sign of the times we live in and, ultimately, it just means that the self employed and umbrella contractors need to adapt.

Interestingly, it seems that late payments are the biggest problem in the South West, with 37% of sole traders reporting they have decided to give up on payments owed to them by customers and clients after getting fed up of chasing them around.

Fortunately, the West Midlands is better for the self employed, with only 21% saying they have given up on late payments owed.

I suppose one thing many businesses can start to implement is more in the way of digital technology, such as mobile payments and apps in order to avoid losing out on money.

As an example, if they had some kind of system in place where payments were automatically taken out of a clients bank account, or it was so simple to pay that all a customer had to do was tap a button on their mobile phone, then I’m sure we could potentially see the situation get better.

This could definitely help a lot of traders who are traditionally in a cash business, and where many times, a customer will simply never be at home or available to answer the phone.

If they could give them as many different options as possible to pay, then not only will they get paid more, but it also saves time and effort. Something that every self employed person wants to do.

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