Nearly 50% of small business owners have had to stop paying themselves as a result of poor debtor practices.
According to a survey from engineering trade bodies ECA and BESA, 75% of owners and MDs have had to make sacrifices, including 37% having reduced their own pay. Over 36% (1 in 3) have struggled to pay business taxes due to payment issues and delays from their debtors. Even more concerning, is that almost 1 in 10 of employers were forced to pay their staff late as a result, something which has a serious affect on employees personally.
The impact of unfair or late payment practices also had a further domino effect on businesses. Nearly 1 in 3 said it caused staff morale to drop, while almost 1 in 6 said it led to a fall in productivity with 1 in 5 unable to replace broken computer equipment and machinery. 92% said their business had faced payment issues with 65% being paid late regularly.
“These figures are a timely reminder that unfair payment practices place significant and unnecessary burdens on owners of construction SMEs and their employees.”, Debbie Petford, BESA Director of Legal and Commercial Services
The survey also showed that, as a direct result of late and unfair payment, 90% of business owners in the construction industry (to include the manual building, decorating, electrical and plumbing trade as well) are suffering from a range of mental health issues, including anxiety and depression.
“This ground-breaking data shows the truly devastating effects late payment has on the lives of business owners, their staff, their children, and their wellbeing. With a lack of fair payment directly causing widespread mental health issues, abusive payment practices fundamentally remove the capacity for individuals to feel purpose or value in a sector.”, Rob Driscoll, ECA Director of Legal and Business
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