One in four freelancers are thinking about ditching self-employment because of problems getting paid on time, according to new research.
In a survey carried out by payment platform WondaPay, 24% of freelancers said they were considering looking for permanent employment because of persistent problems with late payments.
More than half (55%) of the freelancers who took part in the survey said they had to wait a month or more for all their invoices to be paid. One in five said they were used to waiting two months for payments to come through.
As with the tens of thousands of small businesses that are regularly hamstrung by late payments, the issue is causing huge financial strain. For most in the sector, freelance work is their only source of income. It means a majority are constantly living in arrears waiting to get paid while ordinary living expenses need to be covered.
This puts the personal finances of many freelancers on a knife edge. It might only take one invoice not being paid when expected, or not being paid at all, to mean household bills can’t be paid.
A quarter of freelancers say the situation is getting worse. Coupled with the looming cost of living crisis triggered by high energy and food inflation, millions of freelancers could find themselves in dire straits.
Holding back economic recovery
This comes against a backdrop of the number of self-employed freelance workers falling for two consecutive years over the course of the pandemic, having previously risen year on year for 12 consecutive years between 2008 and 2019. The irony is that more and more businesses are seeing the value in outsourcing work to freelancers on a project or piecework basis.
According to freelancer marketplace PeoplePerHour, 84% of businesses now believe freelancers can make a positive difference to their business. As companies look to restructure in the wake of the pandemic, the flexibility of freelancers suits organisations that are wary of long-term financial commitments. Having experienced professionals available for hire on a freelance basis is also a valuable resource in an environment where many businesses are struggling to fill positions.
It would be yet another blow to the UK’s fragile economy if we saw the number of freelancers continue to shrink - not because of COVID-19 this time, but because of a disease that has been infecting UK commerce and industry for a lot longer. While we continue to allow the culture of paying invoices late to go unchecked, we keep doing unnecessary long-term damage to ourselves.