In its latest report Late Payments: The Cost to Business and Our Health, Hitachi Capital UK finds that there is an urgent need to alleviate the emotional and financial burden of the issue.
Freelancers now spend an average of 77 minutes every day chasing clients, but most do not know what preventative measures are available to them; over a third (35 per cent) are unaware that interest can be claimed on late payments, and only 15 per cent know that late payers can be taken to the Small Claims Court.
Robert Gordon, CEO of Hitachi Capital UK, said: “It is high time that we hold poor payers to account for failing to pay on time and in full, acknowledging the effect that cashflow shortages can have on the wider health of the economy.”
In addition to highlighting the harmful effects of late payments, Hitachi Capital UK’s research outlines the prevalence of late-paying clients for freelance businesses. Two-thirds (65 per cent) of respondents have experienced at least one instance where a client has failed to pay within an agreed payment period.
Hitachi Capital UK’s research has already found that that late payments are costing almost a third of SMEs at least £10,000 a year, with 40 per cent of SMEs having used their own money to close cashflow gaps in their business.
An overwhelming majority of these respondents (80 per cent) invested their own savings to cover operational costs and keep their businesses afloat.
Simon Blake, chief executive of Mental Health First Aid England, said: “Being self-employed or working in an SME can present a number of challenges to our health and wellbeing – including the pressure of managing a consistent cashflow. The link between late payments and mental health issues is a worrying trend and requires quick action to ensure that people are not left to suffer in silence.
“This is one of the many reasons why we are working towards a future where people in every type of community have the training and resources to support their own and others’ mental health. People from all walks of life – whether working as freelancers, in SMEs or in larger businesses – should be empowered to seek and offer support if they are struggling with their mental health.”