“State of Small Business Cash Flow” Explores
Small Business and Self-Employed Cash Flow Behaviors and
Attitudes
Intuit Inc. (Nasdaq:INTU) today released “The State of Small
Business Cash Flow”, a global study focused on the behaviors,
attitudes and status of cash flow challenges experienced by small
businesses and the self-employed. The study found that the majority
of small businesses around the world (61%) struggle with cash flow,
and nearly a third (32%) are unable to either pay vendors, pay back
pending loans, or pay themselves or their employees due to cash
flow issues. This is true in spite of recent tax cuts, regulatory
rollbacks and other stimulus policies that have benefitted small
businesses, with 2 out of 5 small business owners (42%) saying
they’ve experienced cash flow issues in the last year. Furthermore,
69% of small business owners say they have been kept up at night by
ongoing concerns about their cash flow status.
“Every day, small business owners fight to deliver amazing
products and services for their customers, but – with 50 percent of
small businesses going out of business within five years of opening
their doors – the odds are stacked against them,” said Alex Chriss,
General Manager, Small Business and Self-Employed at Intuit. “The
top reason for failure is the cash flow crunch and lack of flexible
options. With this survey, we set out to understand the why and how
behind the crunch, and what Intuit QuickBooks can do to help.”
Stunting Business and Economic Growth
Achieving a perfect balance of money in and money out (i.e. cash
flow) – and ensuring expenses don’t become more than revenue or
profits – can be a challenge for small business owners. And the
impact that negative cash flow has on small businesses is profound.
Many small companies are operating on margins so thin that frequent
lost opportunities will put them on the path to closing shop. On
average, U.S. small business owners are losing $43,394 annually by
foregoing a project or sales due to issues created by insufficient
cash flow. Additionally, more than half of U.S. (52%) and UK (51%)
small business owners’ companies have lost $10,000 or more by
foregoing a project or sales specifically due to issues created by
insufficient cash flow. This is also true for half of Australian
small businesses (50%), 41% of Canadian small businesses, 23% of
Indian small businesses.
Additionally, the inability to pay vendors, loans or employees –
a situation encountered by a third of small businesses due to
insufficient cash flow – damages the very relationships that small
businesses and the self-employed depend on to succeed. In fact,
labor costs, like paying employees or contractors, are often the
single largest expense for small businesses, and none can afford to
alienate employees or have high turnover rates. Among those who
have had cash flow issues, more than 2 in 5 (43%) small business
owners frequently have been at risk of not being able to pay their
employees by payday.
What’s Driving Cash Flow Problems for Small Businesses and
the Self-Employed
For many small businesses and self-employed workers who struggle
with cash flow, the problem isn’t that they don’t have funds in the
pipeline – it’s that they don’t have the funds readily available
for real-time expenses. One third (33%) of U.S. small business
owners estimate their company currently has more than $20,000 in
outstanding receivables, and the average U.S. small business has
$53,399 in outstanding receivables.
When examining many small businesses’ billing practices, these
high figures in outstanding receivables begin to make sense. For
example, more than half of small businesses globally (53%) bill
customers for goods/services on a specific date, compared to 47%
that utilize advanced payment – charging customers for
goods/services before or at the time of receiving them.
Furthermore, nearly two thirds (66%) of small business owners
report that the time it takes the money to process after receiving
a payment has the largest impact on their company’s cash flow,
compared to not getting paid by customers or clients within the
terms of the payment system (34%). Finally, nearly a third of small
businesses (31%) estimate it takes more than 30 days to get paid,
by customers, clients, vendors or banks. During this month of lag
businesses still need to cover expenses including overhead and
labor costs – thus creating cash flow woes.
About the Study and QuickBooks
Intuit QuickBooks is committed to solving cash flow issues for
millions of small businesses and self-employed by delivering
services and features that help businesses get money as soon as
possible, which includes everything from payments-enabled
invoicing, same day payroll services and loans up to $100,000 based
on data within QuickBooks.
The State of Small Business Cash Flow was conducted by Wakefield
Research in Fall 2018 and surveyed 3,000 small business owners of
companies with 0-100 employees in the U.S., UK, Australia, Canada
and India. To read more of the survey data, you can download The
State of Small Business Cash Flow here.
Customer Stories
“As a small business owner, you deal with the stress of cash
flow every day. For us, staying at the top of the market means
continually investing in new product development, but this requires
cash. Delays in payments -- for example, having to wait to receive
a check via mail and then deposit it into our accountant -- can
result is us not having the cash we need for days or even weeks.
The fact that QuickBooks has given us the ability to allow
customers to pay outstanding invoices electronically is huge. Time
is money, and every day that we go without payment is another day
wasted in moving forward with new products.” -- Kyle Scarola, CEO
of GOSCOPE
“Cash flow, at least in the printing business, is very
difficult. You have to finance projects, payroll, materials,
utilities, fixed overhead yourself in order to get the job. And of
course, there's a credit risk. Anytime you offer somebody credit,
there's a chance they might not pay you. And that is constant
challenge for us. Before QuickBooks we had to have somebody sit
there all day and make the phone calls to remind people to pay
their invoice. Now every invoice we send goes out with the option
of paying either by check or by credit card, and we don't release
the order until a payment has been received.” -- Sanjay Sakhuja,
Owner and CEO of DPI
“I'm a bit of a wannabe superhero. I like to think that I can do
it all. And I used to view taking out a loan as a sign of failure.
But sometimes you need the cash, like when a project is put on hold
or takes longer than expected. Since taking out a loan with
QuickBooks Capital, my opinion that seeking a loan is a sign of
failure has changed. I think because the process with QuickBooks
Capital was so smooth and so straightforward, it felt like a
supportive process and made a huge difference to my business. After
all, the only thing that can fix cash flow is cash.” -- Itohan
Ellis, Space Planning & Interior Design Specialist at Red
Orchid Designs
About Intuit
Intuit’s mission is to Power Prosperity Around the World. Our
global products and platforms, including TurboTax®, QuickBooks®,
Mint® and Turbo®, are designed to empower consumers, self-employed
and small businesses to improve their financial lives, finding them
more money with the least amount of work, while giving them
complete confidence in their actions and decisions. Our innovative
ecosystem of financial management solutions serves 50 million
customers worldwide, unleashing the power of many for the
prosperity of one. Please visit us for the latest news and in-depth
information about Intuit and its brands and find us on social.
Intuit, QuickBooks, QuickBooks Connect, QuickBooks ProAdvisor,
TurboTax, and Mint are trademarks of Intuit Inc. Other parties’
marks are property of their respective owners.
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version on businesswire.com: https://www.businesswire.com/news/home/20190206005224/en/
Danielle ErnstIntuit
Inc.617-899-1673Danielle_Ernst@intuit.com
Carolyn LinckAccess
Communications702-845-6466carolynl@accesstheagency.com
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