B2B Payments

Intuit Study: A Third Of Small Businesses Grapple With Late Payments

B2B late payments

Cash flow is steady when accounts payable and accounts receivable are well managed. Hiccups in accounts receivable — such as not getting paid on time — mean that business owners can struggle to meet their own financial obligations.

Intuit found through a study that, across the globe, as much as 61 percent of small businesses (SMBs) face difficulties when it comes to managing cash flow. The ripple effect is that they cannot pay their bills, or even themselves, in a timely manner. The survey spanned 3,000 business owners, and included companies in the U.S., the U.K., Australia, India and Canada.

The findings showed that about 69 percent of respondents said they are “kept up at night” with worries over cash flow. Intuit also found that 32 percent are unable to pay vendors on time, and 43 percent have occasionally not been able to pay their employees on time.

When it comes to late payments, 53 percent of small businesses said they invoice, “while 47 percent require payment in advance.” Thirty-one percent of those surveyed said they wait “more than 30 days to get paid by customers,” as noted in Small Business Computing. Furthermore, 33 percent of U.S. small business owners said their companies currently have more than $20,000 in outstanding receivables.

“In some cases, that number is far higher — the average U.S. small business has $53,999 in outstanding receivables,” reported the site.

Two-thirds of respondents noted that the “largest impact” on their companies’ cash flow is the time it takes for the funds to process after receiving a payment. One-third said the greatest impact is not getting paid on time by customers or clients.

“Every day, small business owners fight to deliver amazing products and services for their customers, but — with 50 percent of small businesses going out of business within five years of opening their doors — the odds are stacked against them,” said Alex Chriss, Intuit general manager, in a statement tied to the survey’s findings. “The top reason for failure is the cash flow crunch and lack of flexible options.”

Real-Time Payments And The Fed

In reference to speedy payments, Forbes reported that tech giants Google and Amazon have favored a real-time approach to payments, in an effort led by the Federal Reserve as an alternative to The Clearing House. Google stated that its experience in India shows the demand for real-time offerings, noting that “in India, the use of real-time payments has increased 18x in the past year, and has led to innovations like instant credit at time of purchase.” Amazon, for its part, said that real-time offerings can provide “payments infrastructure to develop innovative products and services for businesses and consumers.”

News focused on individual countries and companies showed that, in Australia, a group of contractors in the city of Whyalla are still waiting on payments totaling hundreds of thousands of dollars from GFG Alliance, a group of businesses. The alliance is owned by British billionaire Sanjeev Gupta.

The late payments come despite government expectations that payments be tendered within 30 days.

Separately, Coles Group, a supermarket firm in Australia, said it will join the Business Council of Australia, and will become the first major retailer in the country to sign up for the Council’s supplier payment code. Under that code, companies embrace paying suppliers (that are also small businesses) within 30 days. The code launched in 2017 and now has 70 signatories, reported The Australian Financial Review.


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.