Research from fintech Ormsby Street shows that freelancers in the UK are increasingly struggling with late payments from their clients in the same way that many other businesses face possible insolvency from lack of payment. In fact, around half admit that they have considered quitting self-employment because of money worries and 46% say they are stressed about not having enough cash to live on. Meanwhile, one in ten have struggled to pay their mortgage or rent due to slow-paying clients, and more than a third have resorted to borrowing from their families or expensive payday lenders to bridge a cash flow crisis.
More worryingly, fewer than a fifth stated that most of their invoices were paid on time – in fact, the average was 18 days after the due date. The typical British freelancer is owed more than £5000 in late payments at any time, so it’s little wonder than nearly 80% said that cash flow is their number one worry.
What’s more the freelance sector is growing fast – in 2015, the Office for National Statistics revealed than more than 4.5 million people are now self-employed, whilst separate research showed that around 60% of businesses find it difficult to operate without freelancers. Worst of all, a survey of more than 1000 freelancers and sole traders showed that 40% have taken court action against clients resulting in County Court Judgements – and more than half say that the issue of late payment is getting worse rather than better.
Chasing debts isn’t just maddening – it’s time-consuming too, and most freelancers feel there aren’t enough hours in the day to get everything done. Further, aggressive credit control can damage working relationships, with more than half the freelancers surveyed saying they were afraid clients would not use them again if pursued for payment and two thirds saying that they simply feel uncomfortable doing so.
So what happens if you’re a freelancer and you’re struggling to get paid before you have to meet your own commitments?
When payments aren’t forthcoming, come to Cashsolv
Cashsolv are specialists in business finance, and as an alternative lender we have different criteria from banks. For business-to-business freelancers, we can offer invoice finance – an innovative solution that means you’re paid the instant you issue an invoice.
We’ll allow you to borrow up to 85% of the value of your invoices, with repayment being made when your customers pay you. Opt for factoring and we’ll assign experienced credit control professionals to secure early repayment, thus minimising the interest you pay, whilst with invoice discounting you retain control of your own debtor ledger. So if, like many freelancers, you don’t enjoy chasing debts, you don’t have to – our diplomatic yet determined team will do it for you.