Slow Payments Putting Small Businesses at Risk

Leading invoice funding company Charter Capital says more doors on Main Street may soon be shuttered as late payments in the B2B sector surge. As reported by YouGov, around a quarter of small businesses are receiving payments 20-30 days after their due date. As most leverage net 30 payment terms, the average span from completing work or delivering goods to getting paid is about 60 days. Around one-third of those surveyed say the strain is putting their business at risk for closure. Full coverage of the topic is available in "Slow-Paying Clients: 5 Strategies for Dealing with a Difficult Accounts Payable Department," which is now live on charcap.com.

While many business owners felt optimistic about the economy going into 2022, inflation quickly turned the tables. Reduced customer spending across non-essential services and goods as well as rising business costs are making it harder for small businesses to keep up with financial obligations, explains Charter Capital Co-Founder and Executive Manager Gregory Brown.

"It's a vicious cycle," Brown says. "Cash-strapped businesses hold off on paying their invoices to ensure they can buy supplies and cover payroll. Meanwhile, the company they're not paying is doing the same."

Brown notes that there are many ways businesses can improve their cash flow but addressing the root cause of the problem is essential. In this case, small business owners can speed up payments by applying a few tested strategies, such as having written customer credit policies and an airtight collections process.

"Business owners can still offer net 30 payment terms," Brown continues, "but they should be thinking critically about who receives this type of in-house financing too. The same is true when a client can't pay and wants a payment plan. It's ok to be flexible, but the business should ensure the terms benefit the business, not just the customer."

Brown says that invoice factoring is also helpful. Instead of waiting for payment, the business simply sends their B2B invoice to a factoring company for instant payment and the client pays the factoring company when payment is due. 

Those interested in learning more about factoring are encouraged to request a complimentary quote by calling 1-877-960-1818 or visiting charcap.com.

About Charter Capital

Headquartered in Houston, Texas, Charter Capital has been a leading provider of flexible funding solutions for the B2B sector for more than 20 years. Competitive rates, a fast approval process, and same-day funding help businesses across various industries secure the working capital necessary to manage daily needs and grow. To learn more, visit charcap.com or call 1-877-960-1818.