Late payments prompt health warning for small business bosses
UK exporter confidence is on the rise but concerns continue to exist over current exchange rates, new research has revealed.
Despite uncertainty surrounding Brexit, confidence is strong among exporters in The British Chamber of Commerce’s latest Quarterly International Trade Outlook.
Developed in partnership with DHL, it reveals that sales increased during the first quarter of this year, with manufacturing and services businesses confident they will boost their revenues in the next 12 months.
Late payment issues are causing small business owners to struggle with depression, anxiety and stress, a new report has warned.
The Prompt Payment Directory has revealed that 29% of SME owners have faced these issues as a result of clients missing due payment dates.
It also revealed that 18% of small firms are facing liquidation or bankruptcy as a result of late payments, while 42% had to turn to bank loans to cover what they were owed.
More than one in five said they had struggled to cover the company mortgage or rents as they lacked the cash flow to do so, while 29% said they had found it difficult to pay their business rates.
The workforce has also faced stress and cut backs as a result – 36% of companies had paid their staff late while 10% said they were forced to reduce the number of staff perks that are available.
Close to three in ten SME owners reported that staff recruitment, retention and morale have all been impacted by a lack of available finance.
All of these issues can take their toll mentally and physically, and the impacts are not necessarily restricted to the workplace.
A third of small business owners said that they regularly lose sleep due to concerns over due payments while 7% claim that anxiety has caused hair loss.
Some 36% of owners said they had sacrificed their own salary in order to cover essential bills, while others were forced to sell their property of remortgage their homes.
Hugh Gage, The Prompt Payment Directory’s Managing Director, reported that the repercussions of poor cash flow “destroys people’s health and lives”.
He suggests that the Duty to Report legislation to tackle late payments is limited in what it can achieve, as “late payment isn’t simply an issue between small suppliers and large customers.”
While alternative finance options are available to aid firms facing difficulty, in some cases all avenues can be exhausted and liquidation can end up being the only option.
The key for a business in trouble is to act early, as this increases the number of potential positive outcomes that could be available.
By Phil Smith