In 2019 Intuit reported that 2 out of 5 small business owners experienced cash flow issues and 69% of small business owners say they have been kept up at night by ongoing concerns about their cash flow status.
Managing the cash flow is the daily challenge for most small companies and as the Intuit report says 2 out of 5 small business owners experienced cash flow issues and 69% of small business owners say they have been kept up at night by ongoing concerns about their cash flow status.
In any given year, poor management and a weak business plan will invariably lead to poor cashflow which is one of the most common reasons for a business failure. Overlay the coronavirus and 2020 is a cash flow challenge that needs to be priority number one for all businesses.
What’s Driving Cash Flow Problems?
Intuit reports that many small businesses and self-employed workers struggling with cash flow, the problem isn’t that they don’t have funds in the pipeline. It is that they don’t have the funds readily available for real-time expenses.
Getting the billing right is important yet globally 53% of small businesses bill customers for goods/services on a specific date rather than charging customers for goods/services before or at the time of receiving them.
Research commissioned by The Recycler indicates that the average invoice value charged by 40 European remanufacturers has reduced from €487.29 ($578.95) in 2019 to €229.03 ($272.11) in the 10 months of 2020.
The research also highlighted that the average time to settle invoices in 2019 was 43 days, or 13 days beyond terms. In the first 10 months of 2020, the average number of days to settle invoices increased to 81 days. 51 days beyond terms.
