Cash Flow Concerns Cause Three in Four Small Businesses to Delay Routine Purchases
Wednesday, November 22, 2017
Cash flow issues are an overriding concern for most small businesses in the United States, according to the recent Business Credit Cards and B2B Payments survey by Mercator Advisory Group. Three in four small businesses have had to delay routine purchases at least once or twice a year because of cash flow management issues. This concern causes small businesses to use credit lines wherever they can, seeking more generous credit lines from business credit cards and loans from banks, nonbanks and alternative lenders
Nearly all of the respondents to the survey have some type of business account with a financial institution, including eight in 10 who have a business credit or charge card. Less than half of them claim to pay their balance in full every month. Small businesses are less likely than consumers to pay their credit card bill in full every month.
Small businesses are hungry for credit and often supplement their business credit lines by using personal cards or funds. It’s not always easy for small businesses to obtain the credit they need, when they need it, particularly newer companies that seek business credit lines of less than $100,000. This is due to traditional banks’ often restrictive lending policies.
Nevertheless, small businesses are overwhelmingly optimistic about their growth and profitability over the next year. More than 80 percent of small businesses surveyed in 2017 expect their firms’ sales and profitability to increase over the next year.