B2B Payments

US Entrepreneurs Speak Out On Late Invoice Payments Experiences

U.S. small business (SMB) owners and freelancers are speaking out about their late B2B payments experiences in a new report by the Associated Press published Wednesday (Nov. 1).

Reporters spoke with entrepreneurs to highlight the challenges they face in managing cash flow and staying in business, as more freelancers and small business owners must wait to see their invoices paid.

One entrepreneur, Sandy Sloane, told the publication that it took 11 months before a client paid an invoice in full, despite a 30-day payment term stipulated in the client’s business contract. During that time, Sloane said, she had to hold off from paying her own suppliers.

“I had to threaten legal action before he started making payments, since repeated invoices and late fees did nothing,” Sloane told the AP, adding that she has updated her business contracts to require half an invoice payment upfront, with the rest paid within 30 days of a project being completed.

Another professional, photographer and videographer Tom Hoebbel, said he had seen several invoices go unpaid before he implemented B2B payment terms which require clients pay within 30 days or face a 1.5 percent fee. He told the publication that some clients are particularly difficult when it comes to collecting payment.

“They told me, ‘We don’t have the money.’ It’s understandable for a nonprofit arts company, but I need the checks to come in so I can stay in business, too,” he said. “I rely on payments from clients to pay my vendors and hopefully a bit of salary for myself … in lean months, this can be a real problem.”

Jaimyn Chang, an SEO expert, said requiring clients to provide a credit card number has helped, but still struggles with late payments, which impedes cash flow.

“Those who are tight on cash and have limited knowledge about the services they’re asking me to provide are usually the ones who find ways to not pay,” Chang told the AP.

Their stories provide faces to the data that suggests small businesses and members of the gig economy often struggle to see their B2B invoices paid, a problem seen across the globe. Research released last week by Bibby Financial Services found that, compared to other jurisdictions, B2B payment times in the U.S. are relatively quick. On average, U.S. small businesses see invoices paid in 23 days, compared to 45 days for Singapore SMBs.

Still, more than a quarter of U.S. SMBs surveyed said they wait longer than 30 days to have their invoices paid, and more than 40 percent said collecting business invoice payments presents the largest problem to their cash flow.


Featured PYMNTS Study: 

With eyes on lowering costs to improving cash flow, 85 percent of U.S. firms plan to make real-time payments integral to their operations within three years. However, some firms still feel technical barriers stand in the way. In the January 2020 Making Real-Time Payments A Reality Study, PYMNTS surveyed more than 500 financial executives to examine what it will take to channel RTP interest into real-world adoption. Here’s what we learned.