Tradespeople Losing from Withheld Payments
New research has revealed that UK tradespeople are seeing over £1,000 of payments each year withheld by customers following completed jobs.
The research was conducted by Ironmongery Direct and found that on average, £1,062 is owed to tradespeople throughout the UK, with 33% saying they were waiting for more than £1,000 from customers for completed jobs, with almost one in ten being owed in excess of £3,000.
Nearly two thirds − 61% − of those who took part in the research have had payments withheld by customers, which occurs twice a year on average. More than 10 (12%), however, experience withheld payments more than five times a year.
Just six- per cent of respondents said that the payment issues they have faced are resolved within a week, with more than one in five, 22%, having to wait more than one month to be paid for a job.
Plumbers have been found to be the most likely to have to deal with payment problems, experiencing withheld cash 2.6 times a year on average. Landscapers on the other hand see the fewest issues, with an annual average of just 1.2 times a year.
Trades most likely to have payments withheld (times a year)
- Plumber: 2.6
- Electrician: 2.4
- Builder: 2.3
- Bricklayer: 2.2
- Carpenter: 1.9
- Surveyor: 1.8
- Joiner: 1.7
- Painter & decorator: 1.6
- Plasterer: 1.3
- Landscaper: 1.2
Female tradies were found to receive payment quicker than their male counterparts, experiencing higher rates of payment within a week (8% vs 4%) and within a fortnight (34% vs 20%). However, women were also found to be owed higher sums of money, with an average of £1,168 outstanding, compared to £972 for men.
When it comes to age, millennials (25-34 year olds) are more likely to experience withheld payments than older tradespeople, with an average of 2.5 payment issues per year, compared to 1.6 for 55-64 year olds and 1.7 for over 65s. People in this age group were also more likely to be owed larger sums of money, with millennials owed the most at £1,258 compared to other generations.
Despite this, invoice problems were solved more quickly for younger generations, with 14% of millennials waiting more than a month for payment, compared to half (50%) of 55 =64 year olds.
Alison Werner from the UK’s leading business coach for trades and construction industry, The Trades Coach, said: “Be sure to display your full terms and conditions in the original quote, as well as your website. This should include a full breakdown of costs and a clause for late payments. Regular communication will also help address any misunderstandings as they arise and will also be looked upon favourably in the rare event of legal proceedings.
“There might be a reasonable reason why a customer is late paying, so it’s important not to assume the worst and firstly find out what the issue is. Having a telephone conversation is the best place to start and then follow this up with an email and regular email reminders. If payment is still not received after several months, you should consider hiring a debt recovery company who will take a small commission to recover payment on your behalf.”
Dominick Sandford, Director and Head of Merchandising & Marketing at IronmongeryDirect, said: “Withheld payments are an annoyance that every tradesperson has to deal with at some point or another, but when significant amounts are owed by customers it can become a serious threat to your financial security.
“It’s shocking to see how much tradespeople are waiting on and how long they’re having to wait for their payment following a job. We hope our useful tips help tradies get paid quicker and without any hiccups along the way.”
For more information on how to tackle late payments, IronmongeryDirect have created a blog with some advice.
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