Research by the Prompt Payment Directory has found that small and medium-sized enterprise (SME) owners are both struggling financially and suffering from mental health problems as a result of late payments.
The study revealed that failure to pay on time had left half of the participating SMEs on the verge of bankruptcy or liquidation. That represented a rise of 22 per cent on 2017.
Other worrying statistics published in the Prompt Payment Directory’s report included: (SME owners who said)
- Late payments meant they had not paid themselves for some time – 63 per cent
- Continued late payments would affect the growth of the business – 53 per cent
- Poor cash flow led to panic attacks, anxiety and depression – 52 per cent
- Late payments impacted on staff morale – 42 per cent.
Elsewhere, 35 per cent had faced difficulties paying their business rates, while 19 per cent had postponed plans to grow their families.
The research took in the views of 1,000 small and medium-sized enterprise owners from the UK and found that overall the issues regarding late payments had worsened since 2017.
And the problems are not limited to the owners, with 62 per cent being forced to pay their staff late due to delayed payments. A further 10 per cent had either ceased or reduced staff perks for the same reason.
The Prompt Payment Code recommends payment terms of a maximum of 60 days, or, where a Government body is concerned, 30 days. Fifty-nine per cent of those polled in the survey said that payment terms had gone beyond this.
The managing director of the Prompt Payment Directory, Hugh Gage, said: “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, it’s affecting and even destroying people’s business, health and lives.”