Why are freelancers still struggling with bad debt?

8 years ago

Why are freelancers still struggling with bad debt?

Freelancers of the UK are owed an average of £5,431.03 due to late payments – 36% have had to lend from a ‘payday’ loan provider just to cover the missing costs in their cash flow.

It’s been revealed that freelancers are facing an ongoing struggle as missing payments have still not been found. Just under a half of freelancers have admitted that they have considered quitting their role because of the overdue payments whilst 46% are mentally ill because they believe that they do not have enough cash flow to continue.

A study carried out by Ormsby Street has revealed that approximately one-in-ten freelancers really struggled when it came to paying their bills which covered things like; their mortgage or rent all because they have not received an overdue payment. 37% of those surveyed had said that they had to turn to their family for help and 36% have stooped to applying for a payday loan to help them get out of their rut.

Only 19% of freelancers surveyed revealed that they were fortunate enough to always receive their payments on time on average a freelancer’s receive their payments 18.5 days after the due date.

Managing Director of Ormsby, Martin Campbell has commented;

“Every freelancer knows that late invoice payments is one of the biggest frustrations, impacting cash flow and causing much stress, from paying the mortgage to having enough to live on.

For a freelancer to be owed more than £5,000 is clearly unacceptable and threatens the emerging freelance economy in the UK, which brings flexibility and work-life balance to so many.”

The Office for National Statistics exposed that during 2015 4.55 million Britons are now their own bosses, further research carried out by the Association of Independent Professionals and the Self-Employed (also known as; IPSE) discovered that three-in-five businesses believe it would be hard to function without a freelancer.

Ormsby’s research also found that out of 1,002 freelancers 40% have had to take out a CCJ (County Court Judgement) during the past year to follow up their debt. Over half have revealed that they believe overdue payments are getting worse not better.

57% of those who were surveyed have said that they are worried about chasing the client and risking their job with them – two-thirds have said that when it comes to chasing overdue payments they feel uncomfortable and awkward.

Campbell continues;

“Why should a freelancer waste their own billable hours chasing payment for work that has been successfully completed and is already due for payment?

“If customers are not willing to pay within the agreed terms then it’s time for freelancers to become more informed over whom they work with, and either ask for payment upfront or even choose to not work with the company.”