According to the latest research from Pay.uk, (which runs the Bacs Direct Credit and Direct Debit payment services) late payments are affecting the mental health and wellbeing of many small business owners.
355 small and medium-sized businesses with up to 250 employees were surveyed and they found that over a quarter (26%) of small business owners are stressed about late payments even when they are not at work.
The total late payments bill for small businesses comes to £23bn ($30bn) in 2019 ?—this is an increase from £13bn in 2018. More small businesses reported being paid late (54%) in 2019 than at any time since 2015.
A staggering 88% of business owners with fewer than 10 employees said they worry about recovering the money they are already owed.
Late payments are also affecting business owners' daily life with 17% of those surveyed saying that payment delays undermine their own confidence in their ability to run a business.16% worry about the issue every working day and nearly one in 10 (9%) have considered accessing professional support to help with their anxieties over being paid late.
The knock-on effect of these late payments also includes:
These issues are also having a detrimental effect on business owners outside of the workplace. These include relationship problems, heightened worry about personal finances, and constant anxiety.
According to the research, 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.
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.”
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