Magazine article Business Credit

Slow Payments a Big Problem for Small Businesses

Magazine article Business Credit

Slow Payments a Big Problem for Small Businesses

Article excerpt

Most people think that when small-- business owners ring up a sale on their cash register, they are getting their money on the spot. But according to Getting Paid, the latest National Small Business Poll from NFIB and Wells Fargo, getting paid can be a lot more complicated. The study reveals that the average invoiced customer pays in 29 days and the average invoiced third-party pays in 34 days. both well after the payment is usually due. No wonder 45 percent of small-business owners feel that their most significant problem getting paid is slow or late payment. "Getting paid has immediate practical consequences for small business owners, and slow and late payments creates serious problems," said NFIB Senior Research Fellow William Dennis, who authored the study. "If they don't get paid, it's difficult for them to pay their own bills. Small-business owners must recognize the difficulties of invoicing-that they are essentially extending free credit to their customers-and respond accordingly."

The immediate challenge is that the slow payment problem generally grows worse in a poor economy. Sales are fewer and harder to achieve. By extending credit or invoicing, sellers risk late payment or default and that can mean trouble for small businesses in a slow economy. …

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