How IPSE is tackling the crisis of late payment

Late payments have long been a scourge to self-employed workers. They can have a devastating impact on freelancers’ finances and are arguably more serious than ever during a cost of living crisis, when costs are rising and wages and day rates are failing to keep up with inflation.

In recent years, the government has tried to tackle late payments through a series of positive measures such as creating the Small Business Commissioner role and reforming the Prompt Payment Code - a voluntary code set up to force large companies to pay self-employed workers and small businesses on time.

However, despite these measures, IPSE's latest research now reveals that late payments continue to plague the self-employed. In fact, over a third of self-employed workers (35%) haven’t been paid on time in the last 12 months - with nearly one in five (18%) reporting that they had to wait over three months beyond the agreed payment deadline for a client to send over what they are legally owed.

To tackle the scourge of late payments, IPSE has today launched the Payment Practices Index, a tool to allow you to review your client's payment practices. Since April 2017, large-sized companies and limited liability partnerships have been required to report their payment practices to government on a half-yearly basis. The index uses this data to collate the top 20 and worst 20 payers in the UK whilst allowing you to review the payment practices of 6,454 UK companies.

We hope that the index will be a valuable tool for IPSE members, allowing them to review the payment practices of a potential future client before agreeing to take on a new contract.

IPSE's campaigning on late payment

We are calling on the government to enact further measures to combat the culture of late payments such as calling for the government to make 30 days the UK’s standard commercial payment term. 

By making 30 days the UK’s standard commercial payment term, with new provisions to make it more difficult for large businesses to propose longer terms, government can help minimise a key driver of income volatility for millions of self-employed and other small businesses.

We at IPSE are also looking into new and innovative measures to combat late payments. In our recent submission to Matt Warman’s Future of Work review, we called on the government to commit to building an online dispute platform for small enterprises.

The Online Court Money Claims pilot, a recent proposal from Lawtech UK and the Ministry of Justice, is a promising tool that could potentially reduce legal costs for thousands of freelancers. We believe that this tool or something similar would enable the self-employed and small businesses to negotiate, mediate and settle disputes, all of which will reduce the judicial backlog to late payment claims.

For those struggling with late payments, we have in-depth advice guide which you can access here.