If you run a business of any size, you know that one of the most difficult aspects of dealing with customers is late payments. They jeopardize your business, can impact your customer relationships, and direct your energy away from new business. Studies from around the globe have delved into some of the more precise impacts that late payments have on the business world, and we’ve gathered some of the most startling impacts of late payments below:
- Wasted Time
The Federation of Small Businesses found that Small Businesses spend an average of 1.2 days per month chasing late payments. This, in turn, takes workers away from doing new business, working with existing paying clients, and boosting profits. Being forced to spend more than twenty-four hours each month chasing debt significantly detracts from running a business that’s focused on growth and forward momentum.
- Jeopardized Financing
According to a study done by the European Commission on the European Economy , 47% of small businesses and 35% of big firms identified late payments as a significant barrier to securing financing to grow their companies and revenues. That means that if you don’t have a capable and advanced system to collect debt for your business, you run the risk of running into trouble when seeking additional financing for your company
- Reduced Profits
Graydon, a top credit risk management firm, conducted a study of 500 small businesses, and discovered that 45% of them suffered a reduction in profits due to late payers, proving that debts can dramatically harm businesses.
- Small Business Owners Go Broke
A shocking piece of data uncovered by Fundbox revealed that when small businesses face late payments, 79% of business owners don’t pay themselves in order to compensate for their crippled cash flow.
- Forced to Stay Small
Also uncovered by Fundbox, when companies are struggling with debt and late payments, they’re not properly positioned to hire additional staff and grow their businesses, no matter how much additional staff may benefit company profits in the long run.
TALK TO US: Tell us how late payments have affected your business, and how you’ve worked to combat them. If you’re currently struggling to collect overdue payments and debts, try D2R-Collect free for 30 days to reduce your debtors and collect more money, faster!
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