Slow Payments Hurt Businesses

The Wall Street Journal highlights a problem we've seen in our business for years—businesses struggling to make payments due to waiting on their own customers to pay them first.

The article states, "Small businesses are hugely dependent on their cash flow, so they must either cut costs or scramble to find alternative funding if they aren't being paid on time. With money tight and bank loans hard to get, a cash-strapped company can easily be pushed to the brink."

We helped a client who had this very problem. Brenda Neufeld of B.N.M. Piloting Services, Inc. went the traditional route—a bank. She applied for a loan with the bank a few times, waited for a long time, and kept receiving "come back later" responses.

Her business is a professional services business. This means no machinery, big buildings, and lots of land. Brenda didn't have three years of financials to share even though she invested her own money. Her company had reached an exciting point—where it needed to grow.

It was time to grow, but it wouldn't happen without money. The bank wouldn't give them money unless the business grew. Where's the logic in this?

Luckily, Brenda and I had a mutual friend who put us in touch. Since then, we've helped the company overcome its cash flow crunch and it grew exponentially.

Before she came to us, she spent four days a week chasing slow payers. Now, she spends only two hours a week doing this. No typo there—she went from days to hours.

When businesses don't get the help they need, they fall into a cycle of receiving late payments and making late payments. It's hard to break the cycle without some help. You might be able to work with a bank that best meets your needs. Remember there are other places you can work with on cash flow. These financial organizations may have the flexibility you need that banks can't offer.

In looking around for the ideal financial partner, please ask questions so you can make the best decision for your company. We provide a list of questions to ask to save you time. Also, here's an online Cash Flow Calculator.