In a tough economy, businesses do everything to survive. And one of the strategies they employ is keeping a tight rein on their expenses. Unfortunately, such measures push some companies to delay their payments, contradicting standard industry practices.
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| Image source: telegraph.co.uk |
At the height of the 2008 financial crisis, small businesses saw big companies scaling down their payments. But even with the economy picking up, commercial customers continue to pay their bills past due dates. Small businesses report that payments, especially from larger customers, stretch from 30 days to 60 days and even 90 days after an invoice has been issued. A 2012 survey meanwhile noted that businesses paid their bills an average of seven days past due.
Such practice puts small vendors at a difficult financial standing. Some have to dip into a line of credit just to keep their businesses running. Others have to write off uncollectible debts, eventually declaring them as expenses. Some small businesses have to turn away companies that continuously delay their payments, straining relations. Worse, some even have to close shop.
Delays in account receivable collections hurt businesses, especially small and medium enterprises that rely on such payments to continue operating. Although stalling payments to vendors may be a way to improve cash flow, commercial customers have to remember that part of doing good business is meeting their financial obligations to small firms that promptly delivered their requested products or services.
Brennan & Clark LLC’s mission goes beyond collections. The company works with clients in finding receivable support solutions that will best fit their needs. Learn more about the Better Business Bureau-accredited firm here.
