Tradespeople face haggling and late payments amid cost-of-living squeeze

A new Direct Line Business Insurance survey published in January 2026 shows that more than half of UK tradespeople report an increase in late payments compared with a year earlier; 53% said late payments have risen.

The study finds around 68% of tradespeople are currently chasing at least one overdue invoice and reports an average outstanding amount of £2,023. Respondents also said the typical largest amount they have written off sits around £1,646, and many have moved to protect cashflow by asking for proof of funds for larger jobs or taking deposits before work begins.

Late payments are translating into tangible cash-flow pressure for sole traders and small firms in the trades sector, reducing working capital available for materials, wages and operating costs. Government analyses and related policy documents estimate late payment practices impose multi‑billion‑pound costs on the economy and disproportionately harm small businesses, prompting regulatory attention to improve prompt payment culture.

The phenomenon comes against a backdrop of squeezed household budgets, higher input and energy costs, and tighter financing conditions, which together make customers more likely to dispute invoices or delay payment. In sectors such as construction and property maintenance, these dynamics magnify operational risk and can force tradespeople into price negotiations or absorbing margin pressure to keep work. Policy moves aiming to strengthen payment reporting and enforcement seek to address these structural issues.

Market observers say tradespeople will continue adopting defensive measures: clearer contract terms, larger upfront deposits, stricter credit checks and faster invoicing processes. Industry commentators expect that a combination of business practice changes and government action to curb late payments—such as stronger Small Business Commissioner powers and reporting requirements—could gradually improve cashflow conditions for small suppliers, though meaningful change may take time.