Why tackling late payments is an issue that improves everyone's health - financially and mentally.
When people think of activities to improve their mental health - thoughts often turn to exercise, sleep, eating well, gratitude, doing things you enjoy, and they're all really powerful approaches to look after your emotional wellbeing - however, our mental health is affected not just by the things inside of our control - but also external influences, and for the self-employed, a significant influence over your mental health at work, is the role that your relationships with your clients play.
We all know the systemic issue of late payments - FreeAgent data tells us that only 54% of all invoices sent by UK freelancers & small businesses in 2019-2020 were paid on time, and the Small Business Commissioner / Underpinned research tells us that invoices are paid on average 23 days past contractual terms. It seems like a frustration rather than a problem. Yet the impact of late paid invoices are dramatic.
75% of the self-employed say late payments have caused them concern, with 45% saying it creates significant stress or worry and 65% say that having to chase those late payments causes additional stress.
Chasing late payments takes up an average of 20 days a year for freelancers (IPSE, 2019). 26% of SME business owners stress about late payments even when they are not at work (Pay UK 2019) with 21% of freelancers spending time while on holiday chasing late payment (IPSE 2019).
17% say that payment delays undermine their own confidence in their ability to run a business and 16% worry about the issue every working day. 66% report that late payments make running a business less enjoyable with one in ten business owners considering professional support to help with their anxieties over being paid late. (Pay UK)
People experiencing financial difficulties are more likely to feel anxious, depressed and stressed, while those with an existing mental health problem find themselves more likely to get into debt. Of those who are currently in some form of debt, 38% have felt anxious and 34% have suffered from stress, depression or mood swings as a result. (Money Advice Service, 2017)
That's why we encourage all of the self-employed not to accept late payments, and to stand up for demanding fair payment terms and payment on time - because if we accept even one late payment, it makes it harder for everyone else.
But why would businesses care about our mental health?
Clients might not worry about the occasionally late paid invoice - but when FSB data tells us that 50,000 SMEs go out of business every year as a result of late payments, at a cost of £2.5bn to the economy, and the average invoice to creative SMEs is worth £38,137, meaning that late payments leave the industry £1.1bn out of pocket at any given time (Market Finance, 2019) - allowing late payments directly leads to a drain on our creative talent pool, directly leads to fewer brilliant individuals we have access to work with, and fewer individuals we're able to include in our teams on demand.
If we want to maintain our ability to access freelance talent when we need it, the industry needs to step up and stop paying invoices late - and as an additional benefit, you'll be helping to look after the mental health of your freelancers at zero additional cost to you.
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