Late payments and business owners' mental health

Imagine waiting anxiously for your payslip at the end of each month, not knowing whether or not your wages would be paid on time by your employer...


For business owners, this is a reality being faced day in day out. As the problem of late payments persists across the UK, businesses up and down the country are waiting far longer than they should for money for their products and services to be paid up.


The costs of late payments are extensive, but a major price being paid by business owners is the impact it's having on their mental health.


Although there’s nothing new about late payments, it’s a dilemma that has undoubtedly been made worse by the pandemic. According to statistics from FSB , 62% of small businesses have experienced an increase in late payments or had their payments frozen as a result of Covid-19.


How late is late?

As it stands, if no agreed payment date is set, customers must make owed payment to the company within 30 days of receiving an invoice.


However... on average, it is estimated that at any given time, a small business in the UK is waiting on nine outstanding payments, with 11% of these payments being more than 200 days late.


Back in 2008, The Prompt Payment Code (PPC) was established by the UK government to ensure fair payment terms and good practice for suppliers.


Recently, new reforms were announced by the PPC that slashed expected invoice payment times in half. Previously it gave its signatories a 60 day target to work towards, this has now been reduced to 30 days.


The PPC is also encouraging businesses to charge interest on late invoices, stating that breaches will be investigated by the Code Compliance Board.


Increased stress levels


Stress for entrepreneurs lies at the heart of issues caused by overdue invoices.

For individuals, managing personal cash flow can be incredibly stressful. Escalate this to a business level, and it’s easy to see why late invoice payments are becoming a serious mental health problem for business owners up and down the country.


Pay.UK conducted research that looked into the mental health impact of late payments, exposing some disheartening results:

  • Two thirds of business owners state that late payments makes running a business less enjoyable.

  • Over one quarter of business owners take late payment stress home, with 16% worrying about the issue every day.

  • 1 in 10 business owners have considered seeking professional support to help with late payment stress.

What’s more, more recent data shows that since the pandemic, 78% of business owners have reported worsened mental health. For many, the stress caused by invoice debts has spiralled so far that they have considered suicide.


With late payments costing UK SMEs over £23.4 billion, it’s hardly a surprise that overdue invoices and cash flow pressures are cited as one of the top three fears for small business owners. Spending weeks upon weeks chasing for payments is bound to take its toll...


Combating late payments

Despite new reforms being created to increase awareness and address late payment culture, the problem persists.


There’s still a long way to go, but as a business owner you can take steps to mitigate late payments and protect your business from getting into further debt:

  • Choose to work with reliable clients that have signed up for the Prompt Payment Code, and before agreeing to provide your services, do some research to ensure company legitimacy.

  • Set up a contract in which you outline payment terms, deadlines, and state the legal steps that you will take if payment is not made.

  • Work with invoice factoring companies like Penny to sell your invoices in advance. This helps to avoid the risk of late or non-payment and works to improve regular cash flow with immediate payment.

  • Ask for an upfront payment or deposit. This not only helps with increasing your business’s working capital, but helps to ensure your client is serious about making payment.

Mental health support for entrepreneurs


Entrepreneurship comes with its stresses, but collecting money that’s owed shouldn’t be one of them.


There have been a lot of steps taken to ensure the mental health and wellbeing of employees, and it’s important that entrepreneurs have the same access. If you are a business owner feeling overwhelmed, make sure you seek the help you need.


Talk to the Penny team

The whole reason Penny exists is to support small businesses by easing slow cash flow.

Get in touch with the team to discuss instant on demand invoice funding.

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