Copyright derryjournal
The comprehensive survey is a collaborative effort between top UK Debt Collection Agencies Federal Management and Frontline Collections. 76% of business owners who participated reported that their mental health has directly suffered as a consequence of chasing unpaid invoices, while 36% said the constant battle to secure payment has created significant problems in their personal lives and relationships. Marc Curtis-Smith, Managing Director of Federal Management said: “In a fragile pre-budget economy, a significant increase in overdue invoices is not just a financial inconvenience but a catalyst for widespread personal and professional distress, threatening the mental health of business owners and the very survival of their enterprises. This mental strain is particularly acute for the businesses with fewer than five employees where the constant worry of non-payment becomes a pervasive and debilitating burden, undermining their ability to plan for the future and manage daily operations effectively. “The repercussions of late payments extend far beyond the numbers on a balance sheet, seeping into the personal lives of business owners with corrosive effects. The chronic stress associated with an uncertain cash flow is manifesting in mental health issues, including persistent stress, insomnia, and depression.” 63% of SME owners have resorted to using their personal funds to keep their businesses solvent including life-altering decisions such as re-mortgaging family homes and prematurely cashing in pension policies. Nearly half (46%) of all business owners surveyed are questioning whether their business will survive another twelve months. Marc Curtis-Smith added: “These findings paint a grim picture of entrepreneurs being forced to sacrifice their personal financial security to plug gaps created by clients who fail to pay on time. The systemic issue of late payments represents a clear and present danger to the wider UK economy. SMEs are the backbone of the nation's commerce, providing millions of jobs and fostering innovation. When these businesses struggle, the ripple effects are felt throughout local communities and national supply chains. “The failure of one small business alone can lead to job losses, reduced spending, and a chain reaction of financial instability for its own suppliers.” Despite various government initiatives aimed at tackling this problem of overdue invoices, the number of businesses entering insolvency continues to climb. Recent analysis by the accounting software firm FreeAgent, sourced from its extensive database of 200,000 customers, corroborates the scale of the issue. Their data revealed that 62% of invoices sent by their customers are not settled by their due date. Marc Curtis-Smith said: “The current economic climate, characterised by high inflation, rising energy costs, and increased operational expenses, creates a perfect storm where a late payment can be the final straw that forces a viable business to close its doors.” Tackling the late payment crisis is a matter of urgent national importance. The problem is pervasive, affecting both business-to-business (B2B) transactions and payments owed by private consumers to service providers. “For many business owners, the process of chasing overdue invoices is a time-consuming, frustrating, and often fruitless endeavour. It diverts critical time and resources away from core business activities like growth, customer service, and innovation, leaving many feeling helpless and unsupported.” This culture of late payment has become so entrenched that it is costing the UK economy an estimated £11 billion every year. In response to this growing crisis, new government measures are being actively discussed to introduce stricter regulations and penalties to deter late payers and provide greater protection for small businesses. Marc Curtis-Smith explained the situation Federal Management’s Commercial Debt Collection teams witness daily. He said: "Every single day we get calls from frustrated business owners who are suffering due to late payment. They have provided services and goods in good faith, only to then have to chase customers for payment. We understand the sense of injustice they feel. The media usually focuses on the issues of those in debt, but it rarely considers the other end of the spectrum, the people and businesses who are owed money and are suffering the direct consequences. This is why we are so passionate about helping people recover what is rightfully theirs as swiftly as possible.” For businesses trapped in this cycle, Marc recommends seeking a professional, regulated debt recovery service which can be a transformative step. He added: “Prevention is better than a cure, however prevention is not always possible and this is where professional and regulated Debt Collection services can help. The existence of such specialised services underscores the necessity of professional intervention to combat a problem that individual businesses can no longer afford to fight alone.”
