Payment Arrangements

·         The majority of small employers (39%) manage the business’s financial records personally while a quarter of them (26%) delegate it to an employee. About 28 percent of small employers hire an outside accountant or bookkeeper to manage their financials.

·         About half of small employers personally manage billing and collections. Just under 30 percent delegate the task to an employee and 16 percent hire someone outside the company. Delegating these tasks to an employee is more common among larger small businesses than small ones. 

·         Payment methods vary among small employers. About one-in-four small employer businesses collect payment exclusively at the point of sale or and another quarter collect payment exclusively through invoicing. Collecting payments at the time of sale is more common among businesses with 1 – 9 employees compared to businesses with more than 20 employees.

·         Invoicing customers often presents cash flow challenges as it can take anywhere from 1 to 4 weeks before getting paid. About 42 percent of small employers receive payment in 15-30 days after invoicing a customer. Just under one-third (30%) receive most invoice payments in less than 14 days.

·         Adoption of the new technology continues to be somewhat limited among small employers. While about 17 percent of small employers have at least some customers who pay online, the vast majority (83%) do not.

·         Checks are still a frequently used form of payment with about 90 percent of small businesses accepting checks as a form of payment. However, 21 percent of small employers expect the percent of sales paid by check to decline in the next three years.

·         Two-thirds of small employers accept credit and debit cards as a form of payment and for 35 percent of them, payment cards account for over half of total sales. Of those accepting payment cards, 45 percent expect their volume of sales on payment cards will increase over the next three years.

·         The main reason small employers do not accept credit and debit cards as a form of payment is the often high fees and costs associated with payment cards.  Where margins are very thin, fees on the use of payment cards can lower the profit on a transaction or eliminate it.

·         As consumers, small employers also use many different forms of payment to purchase goods and services for their business. About 16 percent of small employers usually or exclusively pre-pay for goods and services for their business. 35 percent of small employers purchase goods and services for their business exclusively or usually at the point of sale while about 53 percent usually or exclusively purchase goods and services for their business by invoice.

·         Thirty percent of small employers report that financial planning and budgeting is their greatest financial concern in operating their business. Even in today’s low rate environment, 20 percent of small employers are concerned about the future path of interest rates, half seriously worried.