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Health Costs of Late Payment Revealed

May 14 2018

Small business owners are suffering health issues as a result of late payments from customers, reports the Prompt Payment Directory.

The online directory commissioned research in 2017 and repeated it in 2018. The results show a marked increase in business owners reporting depression, anxiety, increased stress, loss of sleep and other mental health issues.

Impact on SME and Personal Life of Owner 2018 2017
Is the business on the brink of bankruptcy or liquidation as a result of late payment, or will be soon if more payments are made late? 50% 28%
Not paid self for period of time 63% 36%
Caused loss of sleep 68% 34%
Caused depression, anxiety, increased stress of other mental health related illness 52% 29%
Put pressure on marriage/relationship with partner 22% 12%

The survey polled 1,000 UK small to mid-sized company owners who suffer from poor cashflow due to outstanding invoice payments, asking about the personal, financial and business impact of late payments on owner. Issues had worsened significantly across most of the areas of concern.

More than half of SME owners reported mental health issues as a result of cash flow problems with issues including: 44% suffering from stress, 40% with insomnia, 19% having experienced depression and 17% with anxiety and panic attacks. Other problems reported include ‘extreme anger’, suicidal feelings, self-harm, eating problems and paranoia.

More than half of SME owners said they were victim to long payment terms well beyond those recommended in the Prompt Payment Code. Nearly a third said they had been on the receiving end of mid contract changes to payment terms, 14% had been asked for retrospective discounting and 10% had been asked to ‘pay to stay’, or face supplier delisting.

Hugh Gage, Managing Director of The Prompt Payment Directory, said

"Recent high profile cases such as Carillion have made many more people aware of the cost of late or non-payment and how it can affect small businesses, but in reality this has been going on for years. Our latest research reveals that the impact of late payments has got even worse since last year and is having even deeper repercussions on businesses nationwide."

Responding to the findings, Samantha White, CEO of My Credit Controllers, said

"Late payment doesn't just stress business cash flows. As this research demonstrates, small business owners care deeply about the their life's work and when late payments create cash flow problems and put it all at risk, they are suffering as a result, with real harm being done to their personal health and family life."

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