In this two part series, we share tactics to shorten business payment cycles that plague growing companies. Though this was written with small businesses and startups in mind, all businesses should follow these best practices for fast customer payment and improved cash flow.
Slow paying customers are particularly damaging for startups that have to pay their vendors and operating expenses prior to invoice payments. As startups hit new stages of growth, larger customers provide larger revenue opportunities at the cost of extended and delayed payment terms (see highlighted red box below).
For venture-backed startups, inability to get paid on time, leads to accelerated burn and premature fundraising, which can lead to sub-optimal valuation. For bootstrapped startups, inability to predict cash flow leads to liquidity traps and, ultimately, failure. 82% of business failures are attributable to poor cash flow management (U.S. Bank study).