Executive Briefings

Most U.S. Business Owners Prefer Customers Who Help Them Improve Cash Flow, Study Says

Fifty-six percent of U.S. business owners say having early payment options from their customers is a critically important business partnership consideration.

The C2FO Working Capital Outlook Survey examined more than 1,000 U.S. business owners’ preferences for improving working capital efficiency, including trends associated with financing, working capital deployment and late payments.

“Over the past three years, we’ve witnessed increased interest from businesses seeking to optimize working capital outside the traditional financing system.  Results from this survey underscore the reasons for this trend,” said Sandy Kemper, chairman and CEO of C2FO.

Financing Business Growth

According to those surveyed, more than half (54 percent) are increasingly concerned with their ability to finance long-term growth over short-term growth (46 percent).

In order to access the working capital needed to fund that business growth, many businesses have moved away from traditional forms of financing and are leveraging the cash flow from operations to fund their growth (57 percent).

For those businesses focused on borrowing short-term working capital, 57 percent noted that their estimated cost of borrowing short-term working capital is currently less than 8 percent.

With the appropriate access to working capital, most respondents say they would invest in purchasing equipment and/or inventory (25 percent); advertising or marketing (24 percent); investing in employees such as hiring, wages, benefits, etc. (21 percent); expanding operations (13 percent); investing in new technologies (12 percent); and contingency planning (5 percent).

Doing Business with Supplier-Friendly Buyers

In line with industry trends that indicate an ongoing concern over large corporates delaying supplier payments, nearly 20 percent of businesses claim their customers regularly pay invoices later than expected. Despite these findings, 45 percent of business owners indicated they would not feel comfortable directly asking their buyers for early payment.

When asked which type of payment options they might consider, 65 percent of businesses would prefer to have the ability to name their own rate for early payment depending on their company’s needs.

Source: C2FO

The C2FO Working Capital Outlook Survey examined more than 1,000 U.S. business owners’ preferences for improving working capital efficiency, including trends associated with financing, working capital deployment and late payments.

“Over the past three years, we’ve witnessed increased interest from businesses seeking to optimize working capital outside the traditional financing system.  Results from this survey underscore the reasons for this trend,” said Sandy Kemper, chairman and CEO of C2FO.

Financing Business Growth

According to those surveyed, more than half (54 percent) are increasingly concerned with their ability to finance long-term growth over short-term growth (46 percent).

In order to access the working capital needed to fund that business growth, many businesses have moved away from traditional forms of financing and are leveraging the cash flow from operations to fund their growth (57 percent).

For those businesses focused on borrowing short-term working capital, 57 percent noted that their estimated cost of borrowing short-term working capital is currently less than 8 percent.

With the appropriate access to working capital, most respondents say they would invest in purchasing equipment and/or inventory (25 percent); advertising or marketing (24 percent); investing in employees such as hiring, wages, benefits, etc. (21 percent); expanding operations (13 percent); investing in new technologies (12 percent); and contingency planning (5 percent).

Doing Business with Supplier-Friendly Buyers

In line with industry trends that indicate an ongoing concern over large corporates delaying supplier payments, nearly 20 percent of businesses claim their customers regularly pay invoices later than expected. Despite these findings, 45 percent of business owners indicated they would not feel comfortable directly asking their buyers for early payment.

When asked which type of payment options they might consider, 65 percent of businesses would prefer to have the ability to name their own rate for early payment depending on their company’s needs.

Source: C2FO