Average tradesperson chasing £6,000 in late payments

New research by Direct Line has found that the average tradesperson is chasing £6,000 in late payments.

The data has shown that 81 per cent of tradespeople are chasing late payments, with the average tradesperson chasing seven outstanding invoices

A fifth (22 per cent) of tradespeople say pursuing late payments is taking time away from work whilst almost one in ten (eight per cent) tradespeople have been forced to write off an invoice of over £10,000

Half of tradespeople say they have seen a rise in the number of customers disputing invoices, and a further 42 per cent say they are chasing more late payments now than they were last year, as the problem is getting worse.

Almost three quarters of tradespeople (73 per cent) are chasing multiple overdue payments, fighting to secure an average of seven late payments. A third of those owed money (32 per cent), are currently chasing outstanding invoices worth £2,500 or more, with nearly one in ten (nine per cent), owed more than £25,000. One in seven (15 per cent), are currently chasing ten or more payments.

Nearly a third (32 per cent) of tradespeople feeling anxious as a result, and over a fifth (22 per cent) feeling annoyed or stressed.

Over a fifth (22 per cent) of tradespeople worry that pursuing late payments takes time away from work. One in five (20 per cent) say that late payments leave them unable to cover their family and personal expenses, while 18 per cent say it causes difficulties running their business. A further 13 per cent of tradespeople worry about the cost of getting legal advice if their clients don’t pay on time.

Over four fifths (84 per cent) of tradespeople surveyed said that they had applied to make a claim for outstanding payments through a small claims court, with just under half (48 per cent) being successful. This is an increase on the third (34 per cent) who confirmed they were successful when asked in 20232.

On average, the largest single invoice tradespeople have given up chasing comes to just nearly £4,500 (£4,390), with almost a quarter (22 per cent) losing out on payments worth over £2,500. Nearly one in ten (eight per cent) have had to give up a payment of over £10,000, with just over one in 20 writing off an invoice of £25,000 or more, significantly impacting finances and the ability to run their business.

In an attempt to counter this, over a third (36 per cent) take half of the payment up front and the remainder once work is complete, over a fifth (21 per cent) send invoices well in advance and chase for the payment nearer the due date, while just under a fifth (19 per cent) charge a ‘late payment fee’ to discourage clients from paying late, as well as 19 per cent offering discounts for paying quickly.

Alison Traboulsi, Product Manager at Direct Line business insurance said “Late payments can quickly become a big problem for small and independent businesses, leaving them unable to cover personal and business expenses, resulting in cash flow problems, stress and legal headaches. Pursuing late payments is time consuming and eats into the time that could be spent working or with family and friends.

“Research from the Office of the Small Business Commissioner shows that late payments cost small business owners £2.5 billion3 each year, and we know it is a major issue for tradespeople. It’s concerning to see the value of invoices tradespeople have had to write off and that many tradespeople are seeing a rise in the number of customers disputing invoices and the number of payments they need to chase.”

How late payments make tradespeople feel

Emotion	Percentage
Anxious	32%
Annoyed	22%
Stressed	22%
Fine	19%
Overwhelmed	17%
Desperate	19%
I don’t let them bother me	8%

Top concerns relating to late payments

Concerns about late payments	Percentage of tradespeople who agree
The time spent chasing payments takes me away from being able to do my core job	22%
Not being able to cover my family / personal expenses	20%
Causing difficulty running the business e.g., paying suppliers	18%
It has a negative impact on my mental health	15%
Potentially needing to let employees go	14%
The cost of getting legal advice if my clients don’t pay me on time	13%
Not being able to cover business expenses	17%
Potentially going into an overdraft to cover expenses and this affecting my credit score	15%
Not being able to pay employees / myself on time each month	13%
I am worried that I will need to file for bankruptcy	13%
N/A – Nothing worries me about late payments	18%