How long does it take to get paid?
Distance vs. Time to Pay: This graph shows the mean average time to pay over distance. The blue line is the predicted mean average, and the grey area is the confidence interval for that prediction.
Ever wonder how long it takes other small business owners to get paid? Or whether having a long distance client means you’ll have to wait longer to receive payment? The FreshBooks data team got to the bottom of these questions by looking at a random sample of 460,000 FreshBooks customer-client relationships and over 2.7 million paid invoices that were sent online and by snail mail.* Here is what we found out:
The majority of businesses are located within 50 miles of their clients. As you might expect, since small businesses are so intrinsically connected to their local community, the data shows that 57% of the businesses are located within 50 miles of their clients. What was more interesting was that the remaining 43% of small businesses were broadly distributed in this analysis, invoicing clients from 50 to over 3,000 miles away. We also noted some strong business connections between the east coast and west coast particularly between New York and LA – not surprising given the number of creative professionals (advertising agencies, design firms and freelancers) that are FreshBooks customers.
Time to pay is not significantly affected by having long distance clients. The data revealed that while many of you are doing business all over the US, even very long distance clients are paying within the same reasonable payment window of approximately 30 days, and oftentimes, even less. In contrast, there is a surprising trend for small businesses with clients that are less than 50 miles away. Businesses with clients in their immediate region seem to be waiting a little longer to get paid, although it’s promising to observe that the majority of these payments are received well within a 30 day window. Our analysis further indicates that the time to pay an invoice actually decreases slightly as the distance of a client increases indicating that clients who are relatively “close by” are distinctly slower to pay.
Paid on time, from anywhere. In conclusion, the data showed that twenty first-century-style billing with a service like FreshBooks means getting paid on time, no matter where you do business. Better still as a small business owner, you can feel confident that when you work with clients across the country you can get paid as quickly (and actually a little quicker!) than if they were in the same city.
*The invoice distance was calculated using the zip code of the invoice sender and the invoice recipient. The time to pay was calculated by looking at the difference between the invoice date and the payment date. For invoices that were paid online, the payment date would be the online transaction date. For invoices that were paid by check or cash, the payment date would be whenever the FreshBooks customer marked the invoice as “Paid” in FreshBooks.
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