Late payment and nonpayment: Reviewing the prevalence and impact within the self-employed sector

  • Late payments continue to plague freelancers, with the average amount currently owed to freelancers rising to £5,230.
  • Late payments are seriously damaging the financial wellbeing of self-employed workers, with one in five (20%) finding themselves without the money to cover basic living costs.
  • One in five freelancers (18%) are waiting over three months beyond the payment deadline for payment from a client and one in five agency workers (18%) are waiting over three months for payment from an agency.

Despite the government’s support for improvements to company payment practices, including through the Prompt Payment Code, freelancers are still plagued by late payments, with over a third (35%) reporting that they haven’t been paid on time by a client in the last 12 months. Concerningly, the average amount that freelancers are currently owed in late payments has remained relatively stable at £5,230 - up from £5,140 in 2020.

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With inflation rising and the cost-of-living crisis worsening, the failure to get businesses to pay self-employed workers on time is forcing many freelancers to make difficult decisions around their financial wellbeing. One in five self-employed workers (20%) have reported that they found themselves with no money to cover basic living expenses such as rent and bills after an experience of late payment. Moreover, nearly a quarter (23%) have had to use their credit card or overdraft facility and a further one in five freelancers (21%) have used up all or most of their savings as a result of a late payment.

The report found that self-employed workers aren’t just suffering from late payments. They are also suffering from nonpayment for work they’ve completed for their client. In fact, a third of freelancers (31%) reported that they have completed work and not been paid for it, with 16 per cent of these experience an instance of unpaid work in the last 12 months.

Length of delay in payment

When analysing how long self-employed workers are waiting for payments from clients, the research revealed that nearly three in 10 freelancers (28%) have to wait between a month and three months beyond the agreed payment deadline for payment from a client. Concerningly, nearly one in five freelancers (18%) reported that they had to wait over three months for a payment from a client.

For those freelancers working via an agency, the picture is very similar, with almost a third (30%) reporting that they had experienced a delay in payment. Moreover, over a third of agency workers (35%) have stated that they have had to wait between one month and three months beyond the agreed payment deadline for payment.

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The impact of late payments on mental health

Late payments are also impacting on the mental health of self-employed workers. Almost half of freelancers (49%) state that they have felt stressed or anxious as a result of not getting paid on time, whilst almost one in three (31%) indicated that they felt less productive due to an instance of late payment. The report also found that a further three in ten (28%) have lost sleep over worry and that over a fifth (26%) have experienced a lack of confidence as a result of late payment.

Read the full report here


Meet the author

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Joshua Toovey

Senior Research and Policy Officer