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Late payments to contractors higher than ever

Small business owners in the UK – which include contractors – are now owed something like £67.4 billion. This late payments epidemic needs to end!

Freelancers have absolutely nothing to be happy about, according to the Asset-Based Finance Association. The AFBA has been keeping track of how much money is owed to SMEs throughout the UK, and the news is absolutely abysmal. The organisation reports that things are getting worse, too – 2011’s late payments were only £49.5 billion, indicating a 36 per cent increase over the last few years – and that most invoices, on average, don’t get paid for 72 days straight.

So why are SMEs being hit so hard? Well honestly I’d think it has much to do with the arrogance of larger firms here in the UK. Big companies with massive accountancy departments know exactly how much money they have, how much they can move and when, and when you’ve got a big team of accountants working for you it’s easy to look for loopholes or simply ignore the entreaties of smaller companies – especially contractors, freelancers, and other self-employed Brits that have little to no pull in the business world. Why bother paying these blokes and birds on time and in full when there’s no real consequences for you if you push them off until it’s convenient for you to pay them?

The Government has, of course, been next to useless on this issue. Oh, yes, there’s plenty of “growing concern” being bandied about in Parliament or at Downing Street, but with policymakers more concerned with mollifying these big businesses and keeping them happy instead of allying themselves with the needs of the unwashed masses, these concerned moans coming from MPs and ministers is nothing more than hot air being blown up the nether regions of contractors trying to make a living. Perhaps if these policymakers had to chase down invoices from their clients so they could keep paying their electric bills and keep petrol in their vehicles so they could get down to the shop for milk and bread it would be a different story.

So what’s a contractor to do, besides keep slogging away and earning a living the only way you can? Not much, really. I would say avoiding companies that are notorious when it comes to late payments is your best bet, but the truth is that with the problem so prevalent and widespread in the UK it’s going to be a challenge to find a company that’s actually as keen to manager their outgoings as they are to manage their incomes – or at least a company that has accountants that have more moral and ethical compunctions against giving the little guy a stick in the eye instead of paying an invoice.

 

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