Cash flow - or dribble? Small firms fight money drain
Professor Jerry White, director of SMU's Caruth Institute for Entrepreneurship, talks about how slow payment of bills is affecting small businesses.
By SHERYL JEAN
The Dallas Morning News
Many small businesses are facing a cash-flow crunch as customers drag their feet to pay their bills – taking as long as 120 days in some cases.
The cost can be high, leading to layoffs, financing limits and even bankruptcy.
"You can find yourself pretty strapped," said Jerry White, director of Southern Methodist University's Caruth Institute for Entrepreneurship. "I see quite a few people who are right on the edge."
Nationally, 60 percent of entrepreneurs say they are dealing with cash flow issues vs. 55 percent a year ago, according to a recent American Express OPEN survey of 763 small businesses.
Cash flow – the money coming in minus expenditures – can be more important than profitability as an indicator of financial health.
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