Tradespeople increasingly offering payment plans amid cost of living crisis

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A quarter of tradespeople are now offering customers the opportunity to pay for work in instalments amid the cost of living crisis, new research has revealed.

Led by IronmongeryDirect, the survey of 500 tradespeople found there is increasing demand for staggered payments with two in five (39%) of tradespeople being asked if they offer it.

Younger workers are more than twice as likely to accept payments in instalments than the older generations. A third of millennial (25-34) tradespeople allow instalments (33%), compared to just 14% of over 55s.

Certain trades are also more likely than others to offer such schemes. More than two-thirds (67%) of roofers allow clients to pay on finance, ahead of bricklayers (57%) and locksmiths (50%).

The UK tradespeople most likely to offer payment plans to customers are:

#  Trade  % 
1  Roofer  67% 
2  Bricklayer  57% 
3  Locksmith  50% 
4  Window Fabricator  40% 
5  Joiner  36% 
6  Builder  35% 
7  Building Surveyor  26% 
8  Electrician  22% 
9  Caretaker/Maintenance  21% 
10  Landscaper  21% 
11  Painter Decorator  18% 
12  Plasterer  15% 
13  Carpenter  15% 
14  Scaffolder  10% 
15  Plumber  9% 
More than a fifth (21%) of tradespeople surveyed believe that payment plans help attract more business, but IronmongeryDirect warned that precautions need to be taken to ensure financial security.
To help tradespeople who are thinking of allowing staggered payments, the firm has partnered with Rick Smith, MD at Forbes Burton, to share advice on how to stay protected:
1) Financial feasibility: “Tradespeople should assess the financial viability of offering payment plans and ensure that it won’t negatively impact the business’ cash flow.”
2) Legal compliance: “The payment plan needs to be compliant with all applicable laws and regulations, including consumer protection laws, truth-in-lending laws, and debt collection laws, as well as considering if the offering falls under the remit of the Financial Conduct Authority.”

3) Terms and conditions: “Ensure you define the terms and conditions of the payment plan, including the amount to be paid, the payment schedule, the interest rate (if any), and any late payment fees.”

4) Processing and tracking: “Establish a system for processing and tracking payments, including a method for monitoring income, handling delinquent accounts, and reporting to credit bureaus.”

“A good debt collection system is crucial. Make sure you can collect what you are owed and understand how to take things to court if necessary.”

Dominick Sandford, MD at IronmongeryDirect, said, “The cost of living crisis means many Brits are more cautious about big money purchases, and that includes home improvements. As a result, tradespeople are having to adapt to maintain their workflow, and offering payment plans is one way of doing this.

“However, you should take extreme care if you decide to go down this route, as there is always the danger that you could miss out on the full amount, either due to awkward customers or simply through paperwork errors. That’s why we’ve partnered with Forbes Burton to create a thorough guide for those considering this option.”

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