By Ian Wood, Director, Association of Independent Professionals and the Self Employed
HAVE you ever stood listening for the postman’s steps waiting for that elusive cheque that’s “in the post” flutter on to your door mat?
Do you surf the net with all the exuberance of a Bondi beach regular to check if funds have been paid into your bank account?
Have you ever suffered 10 minutes of Vivaldi’s Four Seasons waiting for the finance department to check if your overdue invoice has been settled?
No? Well, I’m happy for you. Obviously, you are not one of the 4.8 million self-employed who often have to wait weeks or months for outstanding payment.
It is said one in three freelancers face the scourge of late payments and are fobbed off with the traditional excuses: the cheque is in the post, there was a computer glitch, the finance director has run away with Lady Ga Ga.
You can’t really tell the bank manager, the butcher or the local garage that the cash-flow problem really isn’t your fault. For years this growing sector has had to suffer in silence, but now some powerful voices are starting to be heard in the corridors of power in Westminster and in Holyrood. Chancellor Philip Hammond recently announced in his Spring Budget that big companies will need to review and report on how they’re paying their suppliers in their annual accounts and they’ll need to set up an audit committee led by a non-executive director.
The collapse of Carillion last year put late payment in the spotlight. Whether failing to pay on time or imposing punishing 120-day payment terms on those who supplied work, the construction giant was notorious for its poor payment practice.
This will be little surprise to the self-employed, for whom late payment is a perennial problem. Evidence shows that freelancers spend on average 20 days each year chasing invoices for late payment – time that equates to an estimated £16.5 billion in lost income. Late payment can be crippling for the self-employed, who may not have the reserves to cope when their cashflow is under pressure.
That’s why my organisation IPSE, the largest body representing many of the 4.8m self-employed was pleased that the position of Small Business Commissioner, a post filled by Paul Uppal, the Conservative MP for Wolverhampton, has been created. IPSE had been calling for the creation of this position for a number of years.
The commissioner will be able to name and shame the worst offenders in his report to Parliament every six months. This will be a valuable platform, but we would like to see the commissioner given more powers in order to make an even greater impact, including having the ability to issue fines to culprits.
Here in Scotland the Government reacted quickly to a call that firms should be banned from getting public contracts if they are unacceptably late with payments. A Scottish Government spokesperson said:
“Our work to foster and support fair business practices, such as prompt payment, includes the promotion of the Scottish Business Pledge. Over 590 businesses have already committed to the pledge, and Ministers have written to all Scottish Government suppliers encouraging those who haven’t already to sign up.”
So the dark cloud of late payments that has led to a storm of protest from one of the fastest growing sectors of British industry is now being addressed.
For many pay day is set in stone and people can work their budgets around that certainty. But for many self-employed waiting for pay day is like a child waiting for Christmas Day and fearing it will never come.
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