Getting Paid

1. 1

   Forty-five (45) percent of small-business owners feel that their most significant problem getting paid is slow or late payment (45%). The next largest group (16%) says theirs is bounced or bad checks. Comparatively few note failure to be paid in full (6%) or bankruptcies (4%). Many appear not to have notable problems getting paid.

2. 2

   Thirty-seven (37) percent of small-business owners say that they receive payment exclusively at the time of sale, delivery, or job completion. Thirty-four (34) percent never get paid at that time.

3. 3

   Twenty-seven (27) percent operate exclusively by invoices that are due upon receipt and another 46 percent sometimes invoice in that manner. However, only about half ever engage in other credit-type arrangements such as special terms or installment credit. Twenty-three (23) percent receive payment from third-party payers, though only 8 percent do so frequently.

4. 4

   The most common (53%) terms for customers receiving credit (including invoicing) is “net 30 days.” The second most common is “due upon receipt” (17%). Only six percent use installment arrangements and virtually none employ revolving charges.

5. 5

   Invoiced customers on average pay in 29 days. However, 11 percent of them average 46 days or more. Invoiced third-party payers on average pay in 34 days.

6. 6

   Sixty-three (63) percent of small-business owners charge neither a late fee nor interest on overdue balances. Moreover, 28 percent never turn over delinquent receivables to a collection agency. Of those who do, the largest share sends them to an agency when their collection capabilities have been exhausted. The second largest group turns them over after 90 days.

7. 7

   About half of all small-business owners accept credit cards for payment. The primary reasons that small-business owners accept them are: their customers expect to be able to pay that way (95%), cards enlarge the market by allowing customers to pay from a distance more easily (79%), and cards improve cash flow (69%). The most common reason for not accepting credit cards is that such transactions are not common to the industry.

8. 8

   Virtually all small-business owners accept checks (95%). However, just seven percent use a check verification service.

9. 9

   Thirty-six (36) have incurred at least one loss in the last five years due to a bankruptcy. Of those who have incurred bankruptcy related losses, 58 percent report they have been impacted by just one or two of them over the last five years. More are impacted by business bankruptcies than personal bankruptcies.

10. 10

    Small-business owners are most likely to maintain the firm’s financial records themselves (49%). Less frequently, these records are maintained by someone outside the firm, e.g., an accountant (20%), an employee (19%) or a family member (11%). Billing and collections typically are included in this responsibility.

Volume 1, Issue 7, 2001
ISSN 1534-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 4Does your business customarily accept credit card payments? Top 100
• 5Do you accept personal checks, business checks, or personal and business checks for payment? Top 100
• 6Over the last five years, have you failed to receive payment due to a personal or business bankruptcy? Top 100
• 1Who is the person primarily responsible for maintaining your business’s financial records? Is it:?
• 1aIs that person also primarily responsible for billing and collections?
• 1bIs that person primarily responsible for most common interactions with your financial institution, such as making deposits or getting change?
• 2A(payment) At the time of sale.
• 2B(payment) By invoices or statements to customers that are due upon receipt.
• 2C(payment) Through third-party payment, such as an insurance company.
• 2D(payment) Through credit-type arrangements or special terms that you extend.
• 2E(payment) At the time of job completion or upon delivery.
• 3When you extend credit or terms, do you extend it to your business customers, individual customers, or both?
• 3aWhat are your customary terms?
• 3bDo you charge a late fee, interest, or both a late fee and interest for late payment?
• 3cHow long before you normally try to collect an overdue bill before you turn it over to a collection agency? Is it:?
• 3dOnce you have invoiced a customer, on average, how many days is it before you get paid?
• 3eOnce you have invoiced a third-party payer, on average, how many days is it before you get paid?
• 4aDo you accept credit cards on your premises, on-line, or both?
• 4Ab(reason credit cards accepted) Customers expect to be able to pay that way.
• 4Bb(reason credit cards accepted) Credit card payments improve cash flow.
• 4Cb(reason credit cards accepted) Credit cards enlarge your market by making payment from a distance easier.
• 4Db(reason credit cards accepted) Credit cards reduce the need to keep large amounts of cash on the premises.
• 4Eb(reason credit cards accepted) Credit cards end up costing less than other forms of payment.
• 4cHow often in the last year have you experienced a credit card payment approval and later had the credit card company refuse payment?
• 4dWhat is the primary reason that you do not take credit cards?
• 5aDo you use a check verification service?
• 6aWas it a personal bankruptcy, business bankruptcy, or both?
• 6bHow many different bankruptcies were involved?
• 7What is the most significant problem you face getting paid? Is it:?