U.S. Small Businesses Owed $825 Billion in Unpaid Invoices (Infographic)
That so many small businesses fail is no mystery when, on average, each is owed $84,000 for products and services delivered but not paid for.
According to a study by U.S. Bank, 82 percent of small businesses fail due to poor cash flow management. I know many small businesses where lack of cash on-hand forced them to shut down right as they were hitting there stride. My mother's staffing business eventually shut down because of this exact problem.
This is not an uncommon story for small business owners but I didn't realize was the scale to which this is happening until my team at Fundbox analyzed more than 39 million invoices on our platform from the tens of thousands of small business customers we serve.
We estimated the total amount in unpaid invoices across all U.S. small businesses is approximately $825 billion, equivalent to about 5 percent of the U.S. GDP. On average, each small business has $84,000 in unpaid invoices.
Can you imagine what they could do with an extra $84,000 to fund their operations? Likewise, can you imagine how the economy could benefit from millions of small businesses spending $84,000 each on supplies, equipment, advertising or hiring more employees?
The below infographic highlights how this phenomenon happens when small businesses' invoices go unpaid, and the tremendous impact it has on the economy. The takeaway for me is simple: when small businesses don't get paid on time, the entire economy slows down.
Entrepreneur Editors' Picks
'No One Believed' This Black Founder Was the Owner of a Liquor Brand in 2012. He Launched to Great Acclaim — Then Lost It All. Here's How He Made a Multi-Million-Dollar Comeback.
Inspired by Elon Musk's Twitter Takeover, Here Are 10 Marketing Tactics That Will Help You Make the Most of Big Changes to Your Company
These Brothers Transformed a High School Project Into the Largest Online Soccer Retailer of All Time. Here's What the World Cup Means for Business Now.
'I Just Lost All My Life Savings': Michigan Woman Lost $15,000 in Facebook Marketplace Car Scam
This Founder Was Dismayed by Food Waste in the Restaurant Industry, So She Started a Zero-Waste Grocery Line That Now Caters Events for Nike
Netflix's Secret Club Allows Members to Preview Content Before Anyone Else — But There's a Catch
Franchising Could Be the Secret to Reaping the Rewards of a Down Economy. Here Are 5 Reasons Why.