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The average tradesperson is owed £6,210 in late payments and is chasing seven outstanding invoices, new research suggests.
Four in five merchants are owed money, according to the Direct Line Business Insurance survey.
A third of those owed money are claiming bills of up to £2,500, while 9 per cent are owed more than £25,000.
Exceptional work: Traders battle overdue invoices worth an average of £6,210
Nearly three-quarters of merchants are chasing multiple outstanding payments, with an average of seven invoices, and one in seven are currently chasing 10 or more payments.
Small businesses have been quietly battling late payments, and the problem has only gotten worse since the cost of living crisis.
Research last year by the trade body Federation of Small Businesses found that if late payments had been made on time, 50,000 business closures could be avoided each year.
Outstanding bills often create cash flow problems for those already stretched thin due to higher energy and labor costs.
The definition of prompt payment for small business suppliers, according to the Prompt Payment Code (PPC), is paying 95 percent of invoices for small businesses with fewer than 50 employees within 30 days.
However, the code is voluntary and FSB research found that in each quarter of 2022, the majority of small businesses experienced late payments.
Many companies are violating current regulations and the problem seems to be getting worse.
Direct Line’s survey found that half of merchants have seen an increase in the number of customers disputing invoices, and another 42 per cent are chasing more late payments than last year.
One in five merchants say they are worried that the time spent making payments will distract them from doing their work, while the same number worry that they will not be able to cover their personal expenses.
Around 15 per cent of traders say it has had a negative impact on their mental health, and a third say it makes them anxious.
Alison Traboulsi, of Direct Line, said: “Late payments can quickly become a big problem for small and independent businesses, leaving them unable to cover personal and business expenses, leading to cash flow problems, stress and Legal headaches.
“Chasing up on late payments is time-consuming and eats up time that could be spent working or with family and friends.”
Industry leaders have long called for more to be done about late payments. The Government recently announced plans to tackle the “scourge” of late payments.
He said he will consult on new laws to hold larger companies accountable, requiring them to include payment reports in their annual reports.
The Department of Business and Trade said it would also step up enforcement of existing reporting rules.
Did you have problems with late payments? Email editor@thisismoney.co.uk with LATE PAYMENTS in the subject line
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