Late payments plague small business…with an asterisk

by John Coates | July 20/2011 | late payments, NFIB, small business, USA today

USA TODAY published an interesting article on how small businesses are getting paid slower year over year, entitled “Late payments plague small business.” The article analyzes the results of a recent survey from the National Federation of Independent Business. The study finds that small businesses are:

receiving payments an average of 48 days after invoicing in 2011. That’s a six-day increase over last year, and 10 days more than in 2006.

When it comes to independent businesses, cashflow is important, and getting paid quickly is essential to running a successful business. In fact, we ran the numbers in FreshBooks to see how long it has been taking for FreshBooks users to get paid.

Not to toot our own horns but, Beep Beep. In 2010, FreshBooks users, on average, got their invoices paid in 26 days! Based on over 2.5 million users, this number was 4 days faster than in 2009 and 6 days faster than in 2008. Since we actually promise to get business owner’s paid faster, we’re all pretty jazzed to see our numbers report well above average for users.

So to quote Rapper and Poet Rakim (of Eric B and Rakim): “Stop smiling, be still, don’t nuthin move but the money,“ we ask you….Are you getting paid faster?

Do you have any great stories of moving money you can share in the comments?

Tyler Clark

I am constantly fighting the problem with getting paid. It’s usually never the smaller businesses that can just cut a check and drop it in the mail or PayPal the amount owed.

It’s the bigger corporations that have accounting departments and slow turnaround times. Even when I have clients use corporate credit cards, there is always some sort of limitation on the amount they can send via PayPal because they cannot associate a bank account.

I’ve looked into getting merchant services, but I don’t think I’m quite there on the amount yet. Even the Freshbooks solution to pay online for $0.10/transaction appears to use bank accounts and not credit cards. Either that or we don’t know how to make it work.

So frustrating to always be 30-40 days behind the ball.
Rod

Freshbooks has definitely been an asset here for me. My clients have consistently paid in an appropriate amount of time – they like being able to see the breakdown of time etc. on an invoice… and you guys make that brain-dead simple to do. My own experience pretty much matches the graph above. Love Freshbooks!
http://www.b2bchex.com Bruno Santia

The reminder feature in Freshbooks is a great tool and everyone should use it.

We still recommend you check out your customer’s paying habits before you jump into a relationship. Better to avoid a problem than fix a problem.
http://fundtimes.wordpress.com Tamar Cloyd

ok, first of all, BEEP BEEP! second, i love the rakim reference. you guys and gals are the truth…
John Sideman

Getting paid faster. Always a great thing.
http://www.freshbooks.com/our-team.php#coates John Coates

Hi Tyler,

Thanks for your comment and we hope we can help. It might be best to call us about online payments options – 1 866 303 6061. We’d be happy to help.
http://www.bluevolcanomedia.com Blue Volcano Media

Funny thing is that I find it’s usually the SMALLER companies that take longer (now much longer than last year) than the bigger companies. The bigger companies typically send their payment in less than 2 weeks after they receive their 1st invoice, versus the smaller companies that have taken anywhere from 3 weeks to 2 months (!!) to send in their payments.

That’s not to say that all small companies are late payers, but in my personal experience they have tended to be the ones to give me cashflow headaches.

Still, I agree with the folks here and the article itself — Freshbooks (especially the reminder options!!) has been a lifesaver in simplifying invoicing and speeding up payment!

Cheers,
Marjorie R. Asturias

Late payments plague small business…with an asterisk

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