Mental health cost of late payments

Late payments are hitting the mental health of small business owners, according to research published today (20 January 2020) by Pay.UK, which runs the Bacs Direct Credit and Direct Debit payment services.

More than a quarter (26 per cent) of SME business owners stress about late payments even when they are not at work; 17 per cent say that payment delays undermine their own confidence in their ability to run a business and 16 per cent worry about the issue every working day.

Two thirds (66 per cent) report that late payments make running a business less enjoyable while almost one in ten (nine per cent) of business owners have considered accessing professional support to help with their anxieties over being paid late.

And that’s as more SMEs report being paid late (54 per cent) than at any time since 2015 (55 per cent), with a total late payments bill of £23 billion this year – up from £13 billion in 2018.

Paul Horlock, CEO of Pay.UK, said: “Over the years, the late payment research has become an established barometer of SME financial health, and has offered an invaluable insight into the challenges faced by SMEs. For the first time this year the research has also looked at the human, as well as the business cost of late payments, and we hope that this can contribute to the wider debate regarding this important area.”

Late payment consequences which undermine the emotional wellbeing of SME owners include: paying their own suppliers late (24 per cent), relying on  overdrafts (35 per cent), cutting their own salaries to keep cash in their business (24 per cent), difficulties paying their own staff on time (12 per cent) and struggling to pay business bills (13 per cent).

Comments made during the research by small business owners regarding the emotional impact that delayed payments have include:

“It’s hindering my relationship with my husband who is my business partner as there is more talk about work rather than other things…”

“…it’s never out of your head, it’s always at the back of your mind. You’ve got bills to pay and you can’t because money isn’t coming in quick enough…”

“I’m not as happy in myself as I would be if there weren’t any problems with late payments. Quite cautious of what I spend myself. I tend not to have holidays for that reason…”