REVEALED: The shocking impact of poor payment practices
The shocking impact that poor payment practices have on small business owners has been revealed in new survey findings from engineering services trade bodies ECA and BESA.
According to the research, over nine in 10 respondents (92%) said their business had faced payment issues. Almost two-thirds (65%) said they were paid late frequently or very frequently.
Unfair payment practices include late payment and inappropriately using retentions money owed to smaller businesses down the supply chain to prop up their cash flow.
The data shows the shocking impact this has on the lives of business owners, their staff and their wellbeing. Overall, three-quarters of business owners said they had made sacrifices due to the impact of unfair payment practices by their buyers.
Here we look at some of the key findings from the research.
According to the results, nearly half of small business owners and managing directors (47%) had to stop their pay, while 37% said they reduced their salary as a direct result of poor payment practices.
Business performance was damaged by these poor payment practices too. According to the findings, one in four (23%) had to cancel company training and learning activity, one in five were unable to replace broken equipment and one in three (36%) struggled to pay business taxes.
Unfair payment practices negatively impact employee productivity too. Of those questioned, 28% said it caused staff morale to drop and 15% said it led to a fall in productivity.
Staff wages delayed
Alarmingly, 7% of employers were forced to pay their staff late. This can have devastating effects on employees, who may then miss mortgage or rent payments as well as other vital overheads such as utilities and loan repayments.
The survey also revealed that, as a direct result of late and unfair payment, over nine in 10 business owners in construction are suffering from a range of mental health issues, including anxiety and depression.
If your business is being impacted by late payment, we could help. Please contact our award-winning team on 0800 9774848 or request a call back today.