Debt And Mental Health

If you run your own business, you may already know just how stressful it can be. Depending on the type of work you do, that stress can range from being a fairly normal level of work stress (which is still quite high), right up to being the cause of anxiety and depression. There are a lot of factors that can impact the mental health of business owners, but the biggest one by far is cash flow. Making sure their business stays viable, and they can keep doing what they love. This is made worse when you’ve invoiced for work done, but your invoices are repeatedly paid late, or payments become overdue and becomes a debt. But with high profile personalities opening up about their own struggles, and campaigns like Mental Health Awareness Week, the barriers and stigma are starting to wear away, and more is being done for those who need support. And for many business owners, knowing their payments are in safe hands is a big part of that.

How Debt Can Impact Mental Health

Financial issues have always been very strongly linked to mental health. It’s a bit of a cycle – worrying about money makes you mental health worse, and poor mental health means that managing and making money is a harder job. While most of us will be familiar with this feeling in our personal lives to one degree or another, it also appears around your business finance. Anxiety and depression in business owners are often linked to cash flow, and making sure their business stays not only afloat, but profitable as well. This can all be made worse if they are waiting for money to come in, but serial late payers are throwing their cashflow projections.

Not being able to accurately plan your cashflow is bad for business. Without accurate cashflow plans you can’t plan for growth, there is less stability in jobs and you can’t invest in new technologies and services that could benefit your business. The constant worry about when, or if, the money for services and goods supplied will be available takes a huge toll on business owners. The impact of this on mental health should not be underestimated – and is so significant that the Federation of Small Businesses have actually been campaigning for the government to take further action on the issue of invoices being paid late, particularly by larger companies to smaller suppliers.

The Stats

Of course, it’s all too easy to simply say debt is having an impact on the mental health of business owners. But is there any proof of that? Well yes, there is. Research done by Pay.Uk found that:

• 26% of SME business owners stress about late payments when they are not at work
• 16% worry about late payments every day
• 66% reported that late payments make running a business less enjoyable
• 1 in 10 business owners have considered seeking professional support for anxieties about late payments
• 24% have cut their own salaries to keep cash in their business
• 12% admitted to difficulties paying their staff
• 13% are struggling to pay their business bills
• 35% are relying on their overdrafts

They also pointed out that:

‘Late payments are extremely stressful for any business owner. Not receiving payments on time can lead to serious cash flow issues and the closure of businesses. Here at My Debt Recovery, we pride ourselves on taking that stress element away from business owners so they can focus on what is important, running their business.’

Preserving Client Relationships

One of the big causes for late payments, and another big stressor in itself, is the fact that many business owners are reluctant to chase overdue payments for fear of damaging their relationship with the customer, or the prospect of future work with them. But this doesn’t have to be the case at all – and actually in most cases it isn’t! With the right techniques in place, you can ensure prompt payment of all your invoices, and even chasing late ones will become a simple, pain-free experience. No more awkward conversations, and no more worrying about money in the bank (or not). We’ve gone into detail in the past about how to chase payments without damaging these critical relationships, so if you want to know more and read out top tips, click here.

At Debtcol, we have years of experience and an established reputation in honest and transparent practices when it comes to both credit control services and debt recovery. We tailor our services to meet the individual needs of the company and understand that no two cases are the same. We white label our credit control and work with you to ensure that your invoices are paid when due, or that your debts recovered in as timely a manner as possible, without damaging your reputation or your client relationships. If you would like to find out more, just get in touch with the team today.