We use cookies to make your experience better. By using xero.com, you accept our cookie notice terms.

Brought to you by

The human cost of late payments

Posted 4 years ago in Small business by Xero
Posted by Xero

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 minimise 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.


July 5, 2019 at 8.53 pm

Life is about compromises. Not all payments are made late but some are due obstacles on the road. It only takes good will, a heart and positivity to help one another on a level where these turmoils will not be constant factor in business life or life in general. Often the times crisis are not real but they are well built in order to die out some and for the more fortunate ones to become stronger. At the end of the day it is down to humanity, good will and positivity. Everybody has up’s and down’s in life, unforeseen situations that turn the life into a spiral of events. So let’s be gentlemen enough to handle it the right way instead of building up wars.

Inaki Gonzalez
July 7, 2019 at 9.17 pm

Late payments, like late wages, are an immoral and unethical sin that should never be tolerated in business.
Your business is in partnership with your employees and values their loyalty and contribution to the success of the business.
So their wages have to be absolutely and reliably paid on time; or even early, but never late.
Otherwise you commit a grievous and damaging breach of trust and goodwill that could be irreparable.
So it is also with your suppliers, upon whom you also rely. Mutual trust and goodwill is an invaluable business lubricant that is immediately eroded by late payments. Late payments are like rust. They can become a tolerated, yet corrosive and pervasive practice that builds growing and often hidden resentment.
You should take great pride in paying all bill when or before they are due and conduct your business honourably and fairly at all times. A good reputation of a business, like that of a person, is built over time through hard work and ethical conduct.
But very easily lost by practices like late payment.

Leave a reply

Your email address will not be published. Required fields are marked *