Late payments = Debt

Freelancers are increasingly leaning on overdraft facilities to navigate cash flow challenges, according to data from the UK Finance Business Finance Review (Q3 2024).

The report highlights that SMEs, including freelancers, are experiencing a rise in cash flow challenges, driven by escalating costs and the persistent issue of late payments. For freelancers, reliance on overdrafts can stem from a need to bridge the gap between outgoing expenses and the delayed or overdue client payments.

When clients don’t pay on time, freelancers are left to shoulder the burden. Overdrafts can temporarily plug these gaps, but they come with their own challenges - as they’re not a long-term solution for ongoing cash flow issues. Interest rates and fees can add up quickly, turning a helpful buffer into a costly burden.

Clients paying invoices late continues to be a major challenge for many freelancers - 52% of invoices for small businesses are paid late (FSB), and 57% of freelancers say cashflow issues negatively affects their mental health (Leapers).

For freelancers, the takeaway is clear: managing cash flow is critical. Negotiating payment terms, asking for deposits upfront, and not being afraid to chase late invoices or charge penalties. Businesses hiring freelancers must also recognise their obligation to pay invoices on time.

For clients, hopefully the message is equally clear: paying your freelancers on time is not only a legal obligation, but a moral responsibility.