Mental health and the small business owner experience

On World Mental Health Day Liz Barclay looks at some of the figures that add up to mental health problems in small businesses

People who don’t get paid when they are expecting to be paid, or have to wait for so long that they get into financial difficulty, face stress, anxiety and depression. This is the risk small suppliers face when their bigger customers don’t pay fast and fair. This is what you risk doing to your small suppliers if you don’t pay them quickly after the work has been delivered. Don’t make them wait to be paid.

The Money and Mental Health Policy Institute (MMHPI) says financial difficulties are a common cause of stress. Around 20 per cent of the small business owners, sole traders and freelancers who contact the business debt charity Business Debtline say late payment by their customers has caused their debt problems.

Pay.UK, which runs the Bacs Direct Credit and Direct Debit payment services, says more than a quarter (26 per cent) of small business owners stress about late payments, even when they are not at work. The same research suggests that 17 per cent say that payment delays undermine their own confidence in their ability to run a business.

There is still a stigma around debt, despite all the Covid-19 reasons why people are likely to face it. That stigma can mean that those in debt struggle to ask for help and can become isolated, and isolation is something that small business owners grapple with daily.

The impact on people’s mental health can be particularly severe if they resort to cutting back on essentials, such as heating and eating, or if creditors are aggressive or insensitive when collecting debts. Many Business Debtline clients have incurred household debts, as they’ve attempted to keep on paying the business bills.

There are some additional factors to consider too, according to MMHPI:

• Financial difficulty drastically reduces recovery rates for common mental health conditions. People with depression and problem debt are 4.2 times more likely to still have depression 18 months later, compared to people without financial difficulty.
• Four in ten (37 per cent) people who have experienced mental health problems exhibit significant levels of anxiety when dealing with essential services, including symptoms such as a racing heart or trouble breathing.
• Communicating with essential service providers can be a particular issue. Three-quarters (75 per cent) of people who have experienced mental health problems have serious difficulties engaging with at least one common communication channel, such as using the telephone, face-to-face contact or opening post. Telephone calls are the most commonly problematic. More than half (54 per cent) of people who have experienced mental health problems find the telephone difficult or distressing to engage with.

All of this leaves a business owner or freelancer struggling to get back to the point where they can run their business. They need to deliver their skills, talent and know-how to customers who need that expertise, and rely on it to run their own businesses effectively.

The best option for suppliers and customers is to make sure payment processes are set up in such a way that work done is paid for as quickly as possible after it’s delivered. Pay fast and fair and everyone wins, and people’s mental health is safeguarded.