Small Business Strategies for Dealing with Delayed Payments
In the latest installment of the WSJ/Vistage Small Business CEO Survey, University of Michigan’s Dr. Richard Curtin, who has analyzed the data for both our Vistage CEO Confidence Index and our WSJ/Vistage Small Business CEO Survey, since their inception, pointed to an interesting trend. He noted: “One-third of all small firms reported that their customers requested extended payment terms for their products or services. Most of the requests were for 90 days (20%), with 30 day terms requested much less frequently (9%) as well as 120 days or longer (5%). Among all small firms, a significant portion (29%) reported that delayed payments had negatively affected their businesses.”
While we will continue to follow this trend over the coming months, for now, I invite you to watch this month’s Pulse of Small Business video and my talk with Scott McKenna of Gardner Outdoor and Pool Remodeling. Scott and I discuss some strategies that small businesses can use to prevent or lessen delayed payments such as:
- Limiting the amount of credit you offer.
- Keeping the lines of communication open.
- Diversifying your client portfolio.
- Not accepting the terms without talking with your client first.
In addition, the WSJ/Vistage Small Business CEO Survey results found that despite being surrounded by the prospect of slower economic growth for the remainder of the year, CEOs remain optimistic about the financial performance of their own businesses for 2015. The results revealed that 62% of CEOs still anticipate higher profits, even though the number of CEOs who expect the economy to improve during the remainder of the year fell 10% from 46% to 36%.
This brand of CEO optimism is not unprecedented. We have found over the years, in both our Vistage CEO Confidence Index and our WSJ/Vistage Small Business CEO Survey, that when armed with data about even near-term economic trends, CEOs can make adjustments on the fly to assure continued strong performance. Their ability to do so is not only a testament to their organizational agility, but this also gives them the confidence to forge ahead rather than pull back.
This is another solid example of how agility can inspire optimism! If you have examples of organizational agility you’d like to share, I’d invite you to leave a comment and join the conversation!