Late payments are affecting the mental health and wellbeing of small business owners, according to new research by Pay.UK, which runs the Bacs Direct Credit and Direct Debit payment services, has found.
Over a quarter (26%) of small business owners stress about late payments even when they are not at work, according to the research, which surveyed 355 small and medium sized businesses with up to 250 employees.
The total late payments bill for small businesses comes to £23bn ($30bn) in 2019 — up from £13bn in 2018. More small businesses reported being paid late (54%) in 2019 than at any time since 2015, when the figure stood at 55%.
The “human, as well as the business cost” of this can be staggering as late payments are undermining the emotional wellbeing of business owners.
A huge 88% of businesses owners with fewer than 10 employees said they worry about recovering money they are already owed.
Late payments are hitting the mental health of business owners and can affect daily life as 17% say that payment delays undermine their own confidence in their ability to run a business and 16% worry about the issue every working day. Nearly one in 10 (9%) have considered accessing professional support to help with their anxieties over being paid late.
The consequences of late payments which affect the mental health of business owners include paying their suppliers late (24%), relying on overdrafts (35%), cutting their own salaries to keep cash in their business (24%), difficulties paying their staff on time (12%), and struggling to pay business bills (13%).
Business owners also reported relationship problems, heightened worry about personal finances, and constant anxiety.
On top of that is the financial cost — small businesses will have to pay £4.4bn a year, just to collect money owed to them, with 22% of those waiting on funds spending more than £500 a month chasing late payments, according to the research.
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.”