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Reducing the Impact of Late Payments on your Mental Health

When you run your own business, late payments can be a huge stressor. How do you go about changing that?

This week is Mental Health Awareness Week. For many, mental health is something we don’t talk about, or only do something when things are bad - reacting to poor mental health, rather than proactively looking to maintain and positively improve our wellbeing.

When you’re self-employed, your mental health is affected by a huge range of factors - from physical health, to whether you have income right now, from motivating clients to chasing late payments, and we all know the scale of this last issue.

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.

You might just chalk this up to part of being a small business - a frustration rather than a mental health issue, yet the impact of late paid invoices can be dramatic.

Leapers data shows us that 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) - which prevents you from getting your work done, leading to further stress.

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), and in our recent guide to Dealing with Late Payments, we've looked at the emotional challenges of dealing with the issue - including avoiding conflict and being gaslit by clients with unacceptable excuses.

And in the most extreme of circumstances, where late payment causes severe cashflow issues, people experiencing financial difficulties are more likely to feel anxious, depressed and stressed. 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)

It doesn’t paint a positive picture - which is why we encourage anyone who is running a small business to get proactive. Rather than waiting for late payments to become an issue, get ahead of the issue.

Leapers's tips for reducing the impact of late payments

1. Have a defined process in place for starting work with a new client, and dealing with invoicing, reminders, and remittance - so you can reduce the mental load of going through the process each time.

2. Have a clear scope of work and get the work signed off, so there’s no debate whether you delivered or not. Don’t let disagreement around whether the work was completed be the reason for late payments.

3. Get your invoices clear and correct - make sure all of the essential information is on the invoice, follow up as soon as you’ve sent it to ensure there’s receipt and they’re clear on how to pay you, and on the agreed terms.

4. Invest in automation - use technology to save you the time and hassle of following up, sending reminders, and dealing with overdue payments. Many accounting tools have this built in, such as FreeAgent or Xero, and software like itsettled take it even further, and follow a proven and tested approach to getting you paid, so you can focus on doing work, rather than chasing debt.

5. Know your rights - you’re entitled to be paid on time, and charge surcharges and interest for late payments. Get up to speed on your rights, and don’t be afraid of demanding what is fair. As a small business owner, you deserve no less respect than any other supplier.

6. Don’t just put up with it - report offences to the Small Business Commissioner, and ask for their advice and support. Repeat offenders, especially large companies, need to be held to account.

7. Don’t underestimate the emotional impact of getting into conflict over money - make sure you have a good support network that you can talk to if you’re struggling, whether that be a support group like Leapers, or the Money Advice Service.

Matthew Knight is Chief Freelance Officer at Leapers - supporting the mental health of the self-employed: a peer-support community that curates and creates resources that help small business owners to work well. Come say hello at

Our guide to dealing with the impact of late payments is available to read at:

Matthew Knight

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