Earlier this year, we released the “The State of Small Business Cash Flow” report to better understand the behaviors, attitudes, and cash flow challenges experienced by small businesses and self-employed professionals around the world. One year later, we are taking a fresh look at cash flow, releasing new information on how small businesses are feeling about their cash flow management skills.
Overall, small business owners feel confident in their finances, but those who have experienced cash flow issues continue to struggle … their cash flow woes just don’t seem to go away.
Similar to last year, more than 3 in 5 small businesses (62%) experienced a cash flow issue at some point during their company’s history, and many of these SMBs were not prepared for these challenges; nearly half (44%) of SMBs who experienced cash flow issues said the problems were a surprise.
In spite of these prior struggles, these small business owners feel confident in their financial management skills. Most global SMBs (92%) claim their cash flow is under control. In fact:
- 89% of SMBs claim to know the amount of money their company has in monthly receivables.
- 92% feel they know how much money is coming into their business every month.
- 93% of SMBs know how much money their company spends on monthly business expenses.
They also have a positive outlook for the future of their business. Almost half (48%) of small businesses think their revenue will increase in the next 12 months. This means a great opportunity for more hiring and more work.
While small business owners may feel confident, they also admit to experiencing recent struggles with cash flow. In fact, 59% of SMBs globally experienced cash flow issues in the past 12 months (up from 42% in 2018), and many have trouble managing outstanding receivables and paying suppliers:
- In the United States, SMBs have an average of $78,355 in outstanding receivables, an increase of 81% ($43,394) compared to the 2018 report.
- 71% of global small business owners who have had cash flow issues struggled to pay their suppliers – and the same percentage say it had a negative impact on their relationship with the supplier.
- 64% of these SMBs globally have been charged a fee for late payment specifically due to cash flow issues.
This disconnect between past experiences and future optimism shows that small businesses may be more confident than they should be, especially given their current economic outlook: Nearly 3 in 4 SMBs (71%) feel there will be an economic recession in the next two years.
So, while SMBs are concerned about the economy and experienced cash flow issues in the past, they feel confident in their businesses and do not anticipate this potential financial dip to have an impact on their companies.
QuickBooks is working to arm small businesses with tools that take the guesswork out of being a small business owner by being a one-stop shop where all of the accurate information about a business can be found, acting as a single source of truth. Everything they need to know, do, and prepare for cash flow highs and lows can be done through the QuickBooks platform. We are committed to solving cash flow issues for small businesses and the self-employed by delivering services and features that help businesses get money as soon as possible, and keep it in their accounts longer, which includes instant deposit payments, end-to-end payroll services, and loans up to $100,000 based on the data within QuickBooks.
We have also launched a QuickBooks Cash Flow Planner that will enable small businesses to predict their cash flow up to 90 days out. Designed for regular use, the app predicts recurring expenses and income, while giving small businesses the opportunity to modify inputs based on what they know about their business. This unique design combines the power of artificial intelligence with full transparency and data from the QuickBooks platform. Beyond automatically alerting business owners when a cash crunch is coming up, the QuickBooks Cash Flow Planner shows what is causing the crunch, so owners can decide how to navigate their challenges.
Has your cash flow ever stressed you out? Comment below with how you overcame your cash flow struggles using QuickBooks!
Research Methodology: The Intuit Cash Flow Survey was conducted by Wakefield Research among 3,500 small business owners at companies of 0-100 employees, including 1,000 in the U.S. and 500 in the U.K., Australia, Canada, India, and Brazil, between November 1 and November 18, 2019, using an email invitation and an online survey. When reporting tracking data, quotas were set to ensure samples could be compared to data collected in 2018 in the U.S., U.K., Australia, Canada, and India.
Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results.