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Tradespeople Slapped With £177m Of Parking Fines In A Year
Tradespeople have been issued with an estimated 3.5 million parking fines costing them approximately £177 million in the past year, according to new...
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Late Payment Drives Trades To Demand Money Upfront
New research from Direct Line business insurance has revealed that tradespeople are currently owed on average £6,984 which is past the due date for payment. Many tradespeople are now asking for part payment in advance.
Late payments are a longstanding issue and many tradespeople have had to write off significant sums. On average, the largest single invoice they have given up chasing on payment comes to £4,757 with nearly a quarter (24 per cent) losing out on payments worth over £2,500.
More than three quarters (78 per cent) have at some point tried to make a legal claim to recover payments. Over half (57 per cent) were either unsuccessful in their claim or still have unresolved claims.
Worrying times
At a time when expenses are rising sharply due to inflationary pressures, late payments are having a significant impact on tradespeople’s personal lives, business operations and mental wellbeing. Almost a quarter (23 per cent) worry about not being able to cover their family or personal expenses and one-in-five (21 per cent) are concerned about how late payments are affecting their mental health.
Nearly one-in-five (19 per cent) worry about the cost of getting legal advice for chasing down late payments, with 20 per cent worrying that the time spent chasing invoices prevents them from getting on with their primary job.
Late payments can also threaten the survival of a business and its owner’s ability to pay salaries. Almost one-fifth (18 per cent) of tradespeople say that late payments could lead to them filing for bankruptcy, with 17 per cent saying that late payments would affect their ability to pay themselves or their staff on time.
Late payments on the rise
Research from The Institute of Chartered Accountants in England and Wales (ICAEW) revealed that late payments cost small business owners £684m each year. The current economic environment may be making the situation worse, with half (51 per cent) of tradespeople stating the ongoing cost-of-living crisis has increased the number of late payments they are receiving.
Upfront payments
To reduce the impact of late payments on their business, many tradespeople are changing the way they bill for their work. Over a quarter (27 per cent) refuse to start work until they receive up-front payment in full, with a quarter (25 per cent) choosing to take payments immediately with a card reader or mobile payment. Nearly a quarter (24 per cent) charge a ‘late payment fee’ to their clients and the same number of tradespeople take half of the payment in advance and then the remainder once work is complete. A fifth (20 per cent) of tradespeople offer discounts to clients for paying quickly.
“Tradespeople are vital to the UK economy, so it’s worrying to see that so many are struggling to get paid on-time. Their time is hugely valuable, so effort spent chasing monies owed could prevent them from taking on more work or completing jobs on time”
– Alison Traboulsi
Product manager, Direct Line business insurance
Tough times
"Times are tough and it is difficult to see so many tradespeople miss out on payments they are legitimately owed due to concerns around legal costs, amongst other reasons,” adds Traboulsi. “Direct Line business insurance policies come with ‘Legal Essentials’, a service that provides tradespeople with unlimited access to a team of DAS legal experts for confidential legal advice and access to a library of legal templates, tools, and guides to help them run their business, including guidance on how to pursue late payments.
“A 24/7 helpline is available to provide advice on the laws of England and Wales. Advice involving other jurisdictions will be referred to specialist advisors, who are available 9am-5pm, Monday-Friday, excluding bank holidays. The service also provides policyholders with access to a Stress Counselling Helpline, which is available 24 hours a day, seven days a week, all year round.”
For more information on Legal Essentials – Click Here
Further information about Direct Line business insurance's tradesperson cover – Click Here
Picture: New research from Direct Line business insurance has revealed that tradespeople are currently owed on average £6,984 which is past the due date for payment. Many are turning to taking payments upfront via POS machines.
Article written by Cathryn Ellis
09th March 2023