In his latest report Late Payments: The Cost for Business and Our Health, Hitachi Capital UK investigated the impact of late payments on the mental health of SMEs and UK freelancers . The research revealed the urgent need to take action to alleviate the emotional and financial burden of the issue, recognized by the government as a brake on the growth of the British economy.
Out of a sample of 1,000 UK-based SMEs and self-employed, 11% of self-employed respondents were diagnosed with a clinical condition due to clients not paying their bills on time. This figure equates to more than 200,000 self-employed workers in the United Kingdom ₂ with the most common conditions of anxiety (61%), stress (45%), insomnia (41%) and depression (27%).
In addition to highlighting the detrimental effects of late payment, Hitachi Capital UK's research highlights the prevalence of late payment customers for independent businesses. Two-thirds (65%) of the respondents had at least one case in which a client did not pay on time.
Research has highlighted the loss of late payments on productivity and resources among freelancers, who spend an average of 77 minutes per day searching for clients. Nearly half (49%) of freelancers spend 1 to 4 hours per day looking for late payments, losing valuable time in developing their business and serving existing customers.
The majority of freelancers surveyed were unaware of the preventive measures at their disposal, with over one-third (35%) unaware that interest can be claimed for late payments by clients. Similarly, only 15% of freelancers know that late paying customers can be brought to Small Claims Court.
Robert Gordon, CEO of Hitachi Capital UK, said: "The current focus on Brexit has addressed some of the most pressing issues affecting SMEs. It is high time to hold poor non-payers accountable who fail to pay on time and in full, while acknowledging the effects that a shortage of cash can have on the health of the economy in the sense large. "
The extensive research conducted by Hitachi Capital UK has already shown that late payments cost SMEs at least £ 10,000 a year. 40% of SMEs have used their own money to reduce their cash spreads within their company. An overwhelming majority of these respondents (80%) have invested their own savings to cover their operational costs and keep their business afloat.
Commenting on these findings, Simon Blake, Executive Director of Mental Health First Aid England, added: "Being independent or working in an SME can present a number of problems to our health and well-being, including including pressure. manage a constant cash flow. The link between late payments and mental health problems is a worrying trend and requires quick action to ensure that people do not suffer in silence.
"This is one of many reasons why we are working towards a future where members of all types of communities have the training and resources they need to ensure their own mental health and that of others. People from all walks of life – whether they work as freelancers, in SMEs or large companies – should be empowered to seek out and provide support in case of a mental health problem. "