Nearly two-thirds of small businesses are affected by late payments on open invoices, according to a new survey, with almost a quarter of them unable to hire new employees.
The poll, by Fundbox, a developer of cash flow optimization software for small businesses, found that 64 percent of SMBs are affected by late payments, while 23 percent can’t hire new employees. In addition, 79 percent of the business owners surveyed said they are unable to pay themselves because of the open invoices, and 23 percent can’t invest in new equipment for their companies.
The poll also found 20 percent of the small business owners surveyed said they can’t spend money on marketing and advertising efforts due to late payments on invoices, while 18 percent have needed to hold back on pay increases or bonuses for employees. On top of that, 17 percent of the business owners said they cannot build up inventory because of the late payments.
If these businesses were paid on time, Fundbox estimates small businesses across the U.S. could hire an additional 2.1 million employees, potentially reducing unemployment 27 percent. The company estimates U.S. small businesses are owed $825 billion in unpaid invoices and that on average each is owed $84,000 for products and services delivered but not paid for.
If businesses were paid on time, Fundbox estimates each SMB owner could pay themselves an additional $30,990, buy $9,207 in new equipment, invest another $8,308 in marketing, spend $7,411 in pay increases or bonuses to employees, and build up an extra $6,737 in inventory.
