If you are a small business owner, you probably already realize that it is taking small business owners longer to pay their bills these days. If you find yourself doing the daily dance of stalking the mailman hoping for a pile of paid receivables, you are not alone.
According to the Raleigh-based small-business research firm Sageworks, small businesses across the country are seeing their average accounts-payable days rising. Manufacturing is taking the longest at an average of 40 days, real-estate businesses are at 20 days, and retailers are up to 34 days.
Why is it taking customers longer to pay?
Client payment slowdown. It's the trickle down effect, major corporations that have enough cash flow are taking longer to pay their smaller subcontractors. When big clients take longer to pay, small businesses will tend to pay their vendors much slower.
Poor cash management. When you are a small business, you will have to make collection calls. It is one of those functions that we put off sometimes until it is too late to collect. Many entrepreneurs finding themselves in the position of having to put together credit decisions on the fly that they come to regret later.
Downturn Delay. With the recovery funds not flowing as quickly as small businesses expected, many business owners are scrambling just to keep the doors open day-to-day. As a result, some of the administrative functions of running a business like their billing procedures have fallen to the side. Delayed billing results in delayed payment.
According to the Raleigh-based small-business research firm Sageworks, small businesses across the country are seeing their average accounts-payable days rising. Manufacturing is taking the longest at an average of 40 days, real-estate businesses are at 20 days, and retailers are up to 34 days.
Why is it taking customers longer to pay?
Client payment slowdown. It's the trickle down effect, major corporations that have enough cash flow are taking longer to pay their smaller subcontractors. When big clients take longer to pay, small businesses will tend to pay their vendors much slower.
Poor cash management. When you are a small business, you will have to make collection calls. It is one of those functions that we put off sometimes until it is too late to collect. Many entrepreneurs finding themselves in the position of having to put together credit decisions on the fly that they come to regret later.
Downturn Delay. With the recovery funds not flowing as quickly as small businesses expected, many business owners are scrambling just to keep the doors open day-to-day. As a result, some of the administrative functions of running a business like their billing procedures have fallen to the side. Delayed billing results in delayed payment.
Is your business paying bills slower after the downturn?
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