Overcoming Cash Flow Challenges

Is your small business struggling with cash flow issues? Cash flow problems are a common concern for entrepreneurs.

More than four in 10 (41 percent) of small business owners in a new survey have experienced cash flow challenges — and these challenges have a serious impact on their businesses.

The majority (59 percent) of small business owners in the WePay SMB & Money Survey who have suffered from cash flow problems say the financial impact on their businesses is consequential or highly consequential. Beyond the monetary issues, 56 percent say the emotional impact is consequential or highly consequential, while 44 percent say the same for the effect on administrative processes.

The survey focused on cash flow issues resulting from payment problems.

Here are some common payment challenges that small business owners face:

  • Just one-third of small business owners say they get paid immediately for their products or services.
  • 12 percent say it’s standard for customers to take one month or longer to pay.
  • 10 percent say they have had customers avoid paying for 181 days or more.

In addition to late payments, customer payment fraud is a serious problem for entrepreneurs in the survey.

  • One-fourth of small business owners say they have had a chargeback in the past year. (A chargeback is a disputed or fraudulent transaction that ends with the business owner having to make good on the loss.)
  • Multiple instances of customer payment fraud are common; in fact, 8 percent of those who have suffered customer payment fraud say it’s happened 10 times or more.
  • Customer payment fraud is an early and ongoing problem: 21 percent of entrepreneurs hit by customer payment fraud say it started within a year of opening their businesses; 51 percent say it started within two years.

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Since 1964, SCORE “Mentors to America’s Small Business” has helped more than 10 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in over 320 chapters serve their communities through entrepreneur education dedicated to the formation, growth and success of small businesses. For more information about starting or operating a small business, call 1-800-634-0245 for the SCORE chapter nearest you. Visit SCORE at www.score.org.