Tradespeople across the UK are grappling with a significant uptick in late payments and persistent price haggling, a direct consequence of the escalating cost of living. A recent survey by the Direct Line Group reveals that over 53% of tradespeople have experienced an increase in late payments compared to a year ago, painting a stark picture of financial strain across the sector.
Mounting Debt and Operational Strain
The survey, which polled 500 tradespeople, underscores a pervasive challenge: 68% of respondents are actively chasing late payments, with a concerning 23% juggling four or more unpaid invoices simultaneously. This administrative burden is not merely an inconvenience; it translates into substantial financial losses. The average amount written off by tradespeople due to unpaid invoices stands at £1,646, while the average amount owed in late payments per tradesperson is £2,023.
Angela Jeffery, office manager at Carmarthenshire-based West Wales Electrical Solutions, exemplifies this growing problem. Her role has evolved to include extensive debt chasing and the negotiation of payment plans for customers struggling to meet their obligations. On two occasions, the firm has resorted to the small claims court to secure payment. “Some customers have lost their jobs or loved ones which makes it hard for them to afford to pay,” Angela noted, highlighting the personal tragedies often underlying payment difficulties. The company, which undertakes agricultural, commercial, and residential electrical work, finds that “bigger jobs” such as rewiring, solar, and green energy systems are particularly prone to payment issues.
The Haggling Headache
Beyond late payments, tradespeople are increasingly encountering price haggling. Dom Meletti, director of Cardiff-based DLM Tree Services, reports that customers question his fixed prices daily. Despite his firm’s monthly outgoings of £10,000 before wages, Meletti maintains his pricing structure. “We’ve never agreed to reduce our prices,” he stated. “They are fixed but fair so when we are asked if it can be done cheaper we explain politely that unfortunately this is the price of the job.” Remarkably, he added that “90% of the time they then agree to the job anyway.” Meletti acknowledges the customer’s perspective, saying, “When people try to haggle the price it doesn’t feel great but on the other hand as a director who lives a personal life as well I understand things are expensive and sometimes you want something done, hoping it can be cheaper.”
Adapting Business Practices
In response to these pressures, many tradespeople are implementing new strategies to safeguard their finances. The Direct Line Group survey found that firms are now taking additional steps such as requesting proof of funds before commencing work. Other protective measures include demanding half the payment upfront, or sending an invoice for the remaining balance before a job is fully completed. Charging late payment fees is also becoming more common.
West Wales Electrical Solutions has introduced policies like payment by the hour to assist customers. Angela Jeffery emphasized the need for flexibility: “It is a difficult times for everybody. The price of everything has gone up so much. We need the work with five electricians on the road, so we try to work with the customer and what they need.” The shift in customer behaviour means that while in the past, estimates were readily accepted, clients now frequently require the full cost upfront before committing to a project.
Broader Economic Impact and Government Response
The financial toll of these issues is significant. More than four in 10 tradespeople (42%) surveyed by Direct Line have been compelled to write off debts exceeding £500 from unpaid invoices, and a fifth (20%) have ceased chasing invoices greater than £1,000. Mark Summerville of Direct Line described the situation as not only financially damaging but also “deeply demoralising.” He added, “Late payments are often cited by tradespeople as their biggest problem. When a client fails to pay on time after work is completed, it can create a highly stressful situation. Payment delays disrupt both personal and business finances, affecting the ability to cover bills and manage cash flow for future projects.”
The wider economic implications are severe, with concerns that over 1,000 small businesses in the UK close every month due to late payments. In response, the UK government recently announced new measures aimed at tackling late payments from larger firms to small businesses.
A Counterpoint: Loyalty and Fair Pricing
While many tradespeople face these challenges, some report more positive experiences. Gavin Shopland, a self-employed plumber in Cardiff since 2009, describes his customers as “good as gold.” He attributes this to a loyal client base and fair pricing. “I think the reason my customers are really good at paying quickly is because they are loyal,” he explained. “I don’t get any back and forth on price. I’m pretty fair with it. The price is what the price is.”
The prevailing sentiment, however, points to a sector under considerable pressure. The increased administrative burden of chasing debts, coupled with the psychological strain of financial uncertainty, demands greater vigilance in payment practices and a deeper understanding of the economic realities faced by both tradespeople and their clients.
