IPSE backs plans to criminalise late freelance payments

Friday 3 February 2017

There are many benefits to freelance work, including control of your own hours and projects and a varied workload, but late payments can prove to be a source of great frustration. 

While most businesses ensure they pay independent professionals promptly, late invoices can cause heavy disruption to self-employed staff, leaving them chasing their bills and facing potential debt in the near future. 

With this in mind, the small business minister Margot James has announced plans to make failing to record the time of payments a criminal offence. A study from IPSE, the Association of Independent Professionals and the Self-Employed, found that freelancers spend around 20 days a year chasing invoices for late payment. 

This time equates to around £16.5 billion in lost income, highlighting the significant damage that can be caused by inaccurate reports. 

The Department of Business, Energy and Industrial Strategy explained that large companies and limited partnerships will need to report their payment practices and performance from April 2017. 

IPSE has commented on the plans, with senior policy adviser Adam Waters said “It’s outrageous that the average freelancer spends 20 working days chasing invoices each year. Time chasing invoices is time not working, and for some that could be the work that keeps their business afloat.

“It’s good to see the government finally clamping down on late payment, an issue which has long hampered the income of the UK’s smallest businesses.”

Mr Waters explained that government must ensure the small business commissioner is given the adequate powers to arrange late payments and settle disputes quickly. 

He noted that the rule will improve the UK’s payment culture for the 4.8 million self-employed professionals in the capital. 

If companies are forced to make their payments on time, it can help to improve confidence in the freelance sector and allow professionals to enjoy financial security and use more experimental methods. 

However, legislation also applies to independent professionals, too. Self-employed workers will need to make sure they pay all of the income tax on their earnings, or they could face penalties themselves from the government. 

With this in mind, it could be wise for small businesses to hire a freelance accountant to ensure all of their books are properly kept up to date and free of errors. 

As well as this, freelancers should try to check if there are any loans or tax relief available that could benefit their business, as financial support could allow professionals to try new services and expand their offering. 


By Victoria McDonnell

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