Today the Wall Street Journal published a great article by Angus Loten about a critical issue in successfully building a small business – getting paid. The article goes into great detail, but in a nut shell it says that companies are getting slower and slower when it comes to paying invoices. Small businesses typically have to wait 45 days for payment and in the article, they give one example of a business that waited 404 days. Over the years working at Intuit I spoke to thousands of small businesses and this was a frequent topic. Very small businesses struggled to stay on top of paperwork and invoice promptly. Once they did invoice, often companies wouldn’t pay on time and they had to remember to follow up (often several times) to get payment.
What the article doesn’t hit is that not only is slow payment a problem, bad debt is also a problem. As a small company, you can expect that some percent of your invoices will never get paid. This is a huge issue when you factor in the sunk cost in time, materials, payroll, and missed opportunities (customers you didn’t work for).
What really struck me when I read this article is that this issue never comes up when I talk to OnForce Pros… at least about the part of their business that they get from OnForce. This is a problem that dates back to the invention of credit. I love that the OnForce business model has solved this. Here’s some data on how OnForce compares to the typical experience that the WSJ describes:
- Zero unpaid work orders! During the last few years of economic turmoil several of OnForce’s customers have gone out of business. During that time not a single work order went unpaid due to lack of funds.
- Paid in 54 hours! Last check, on average, OnForce Pros get funds credited to their account 54 hours after they mark a job as complete. That certainly beats 45 days or 404 days.
- 99.97% of work orders paid in 30 days! As of right now, we have about 1.2% of completed work orders that haven’t been paid within 5 days. Looking out to 30 days, we have 0.035% of completed work orders not paid. That’s less than 4 work orders for every 10,000 completed. Each of these is actively monitored as we help the two parties work through the dispute.
We constantly hear stories in the press and on TV about small business lending and access to capital. While this is a critical issue, imagine how much easier it would get if businesses weren’t investing funds up front to pay workers, buy materials, and do work, only to wait for weeks/months after completion to get the revenue associated with that outlay of capital. Small business success will be critical to reviving our economy and cash flow is at the heart of how small businesses start, grow, and thrive. I’m happy that we can help in the IT industry.