2024 was a milestone year for corporate bankruptcies – with well-known brands like Express, Joann, Red Lobster and TGI Friday’s filing for bankruptcy due to cash flow issues, high debt loads and declining sales. The reality is that erratic payment practices are often highly indicative of cash flow issues and financial distress. But only 3% of businesses recognize this as a real warning sign – despite historical data showing that sudden shifts in payment behavior often precede bankruptcy. In this report, we examine the state of overdue invoiced sales in companies and their impact on cash flow and revenue growth.
Overdue invoiced sales are a serious drain on monthly cash flow.
Our study found that 86% of businesses reported that up to 30% of their monthly invoiced sales were overdue. On top of this, 66% of the respondents said they’re typically waiting on up to $70,000 a month in overdue payments from customers. This puts considerable strain on their cash flow, supplier obligations and operational expenses.
Bad debt poses a risk to a significant minority of businesses.
Nearly one-third (32%) of businesses reported losing between 5% and 30% of their annual revenue to bad debt – with 16% losing 5-10% of their revenue and another 16% losing 11-30% of their revenue.
Erratic payments have a moderate to high impact on bankruptcy risk.
According to our study’s findings, 86% of businesses believe that frequent or increasing late payments over a 12-month period have a moderate to high impact on the likelihood that a customer will go out of business or file for bankruptcy.
Complete the form below to download the report