Half of small business owners struggle to cope with the effects late payments have on their business and have suffered from mental health issues as a result, according to a new study.

A survey conducted by The Prompt Payment Directory has revealed that half of SME owners have been or are currently close to being bankrupt as a result of late payments, up 23 per cent on last year.

Additionally, 52 per cent of these business owners blame late payments for a range of mental health issues including panic attacks, anxiety and depression.

The study also revealed that 63 per cent of owners have not paid themselves as a result of late payments, while 42 per cent have not been able to pay bonuses and 17 per cent have reduced their own salary.

Commenting on the results of the study, Hugh Gage, managing director of The Prompt Payment Directory, concluded that late payments are becoming a serious issue for small business owners and need to be addressed.

"Our latest research reveals that the impact of late payments has got even worse since last year," he said. "Business owners need to arm themselves against some of the most common late payment issues and fight back against these poor practices."