Small Business Cash Flow - Collect Early or Don’t Collect at All
Did you know that the longer you allow your small business accounts receivables to age the less likely you are to get paid? After a while, the money your clients owe you can start to seem like a bad dream: tragic, but something that happened a long time ago. Like you, your clients probably have pressing issues to handle on a daily basis, like firefighting, and don’t have the time or cash to settle old debts.
Waiting is Bad for Small Business Cash Flow
According to the Commercial Agency Section of the Commercial Law League of America, the chances of your small business getting paid decrease dramatically the longer you wait to get paid. Here’s the breakdown of your probability of getting paid (I’ve rounded the number to make them easier to read):
When due: 98%
1 month late: 94%
2 months late: 85%
3 months late: 74%
6 months late: 58%
9 months late: 43%
12 months late: 27%
24 months late: 14%
Are you starting to get the picture? Waiting is bad, bad, bad for your small business cash flow. The moral of this story is: get paid early or don’t get paid at all.
Need Cash Flow Help for Your Small Business?
In the coming posts I’m going to feature some unusual ways that some small business owners are using to improve their cash flow. But before you dive into these solutions that are a little out in left field, consider some of the more traditional ways to plus the cash flow leaks in your small business by reading these recent blog posts:
3 Ways to Beat the Small Business Cash Flow Crunch
3 More Ways to Beat the Small Business Cash Flow Crunch
4 Ways to Decrease Small Business Overhead and Increase Cash
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