The Human Cost of Late Payments – Payroll Services Dubai
We talk a lot about how late payments affect businesses from a financial and operational perspective. It’s an issue that’s close to our hearts here at Xero, and it’s a conversation that matters.
But another conversation, one that’s often lost amid all the talk about lost revenues, invoice-chasing and the rest is the human cost of late payments. Because when businesses aren’t paid on time, it doesn’t just affect the bottom line – it affects people.
We teamed up with PayPal to find out more about how late payments affect, not just British businesses – but their owners too. 500 SMB owners shared how they dealt with this ongoing issue.
Here’s what we found out.
Impact on personal finances
Businesses are comprised of people – and people need to be paid on time if they’re going to avoid stress and enjoy their work. It goes for entrepreneurs just as much as employees.
Overall, 35% of SMB owners claimed late payments meant an increased risk of debt – and 52% said they’d used their own money, or that of their friends and family, just to keep going.
Late payments can stop entrepreneurs from tending to relationships and their wellbeing. If you’re not getting paid on time, you might not be at your best.
So, it’s no surprise that 73% feel much more optimistic about their business when they have positive cash flow. The more reliable and regular your income, the better!
Impact on personal wellbeing
Running a business is an act of love, but it can also place a strain on entrepreneurs – particularly if they don’t know when the money they’re owed is coming in. Late payments can affect:
- Mental health. More than two-fifths of SMB owners claim that late payments have affected their mental health.
- Sleep. 43% say they’ve been kept up worrying about their business’ cash flow.
- Self-esteem. Some 45% of business owners feel they’ve failed their companies when they’re cash-flow negative.
- Outlook and optimism. Overall, 37% of entrepreneurs have considered giving up the ghost because of cash flow issues.
We don’t want SMB owners to give up. They’re essential to the UK economy – they make up 99.9% of registered businesses, after all.
Making late payments history
What if late payments were no longer an issue? What if every entrepreneur was paid on time and in full? We found it would make a real difference to finances, wellbeing, and overall attitude. When asked, business owners said:
- It would make running the business feel ‘worth it’. Over three-quarters of entrepreneurs (76%) think being paid on time would make the work more rewarding.
- They’d feel more optimistic about their businesses. 73% claim it would make them more hopeful about their prospects.
- They’d enjoy better health. 26% say they’d have better physical fitness, and 21% say they’d spend more time on interests and hobbies.
A happier, healthier business owner
Small business owners have enough on their plates. Running a business is hard enough as it is, without losing sleep over a late invoice.
There are things entrepreneurs can do to minimize these issues and bring more positivity into the workplace. Accounting tools such as Xero, supported by PayPal’s “Pay Now” functionality, can make managing invoices simple and straightforward.
But, beyond that, we’d encourage everyone across all links of a supply chain to pay their invoices promptly and without fuss. It’s not just the business that’s affected: it’s the people who work for it. Everyone benefits when everyone is paid on time. Let’s make late payments history.
To see the full report and for tips on how to tackle late payments take a look here.