If you’re self-employed then you’ll probably already be familiar with the scourge of invoices being paid late, and the challenges that presents both to you and your business. This is not a new issue, the problem of late payments has been around for years and is the reason why the government instigated the Small Business Commissioner and Prompt Payment Code.
However, late payment problems seem to be increasing as firms tighten their belts in the face of looming recession. Latest data from accountancy software company Intuit QuickBooks has found that the average amount owed to small businesses with at least one overdue invoice has risen 6% year on year in May 2022.
Of course, late payment issues are particularly brutal for self-employed people who, unlike employees, do not get paid if clients and customers don’t pay their bills. For self-employed people this is personal, not business!
Not only that, for the first time since last year cash flow deteriorated, with the number of small businesses reporting negative cash flow rising nine percentage points compared to January 2022. The decline in cash flow appears to stem from less ‘money in’ for these businesses, coupled with increased costs. So it seems that some businesses are tightening their belts in the wake of likely recession, but not paying their suppliers on time is not the answer.
If you’re self-employed then be aware that you could be the next business that your client decides to pay late, even if it’s a regular client who is normally a good payer. As financial pressures are starting to mount, you need to follow up on your invoices promptly to ensure you are paid on time, and chase late payers regularly until you receive your cash. Don’t just hope for the best! You need to be tough, you are a business after all.
For more ideas on how to deal with late payment, listen to our podcast with the brilliant Helen Arney of HJA Solutions.
