Increase in timely payments could help Main Street businesses improve credit ratings
QUINCY, Mass. AND BOCA RATON, Fla. – December 14, 2009 — Cortera™, a community-driven business credit bureau, announced the publication of its November 2009 Small Business Index™ (SBI) report, a monthly index of accounts receivable (A/R) activities covering businesses with less than 500 employees (the Small Business Association definition of a small business). Measuring payment activities of more than 200,000 small businesses, the Cortera November 2009 SBI™ showed small businesses speeding payments to their vendors, suppliers and other business partners over the past month. Such payment behavior is a primary factor in establishing favorable credit ratings, which are essential for securing loans from lenders and optimal terms with suppliers.
The November 2009 SBI also revealed that the gap between big businesses and small businesses shrunk significantly, with the average days beyond terms (DBT) for small businesses only 15 percent higher than their larger counterparts (businesses with more than 500 employees). In Cortera’s October 2009 SBI the average small business DBT was 38 percent higher than big business DBT, which has returned to pre-recession levels.
“This improvement in payment behavior could be a promising sign that business health, in the face of the much talked about credit environment, is improving. It will be important to see if this trend continues over the coming months,” said Jim Swift, president and CEO of Cortera. “The fast and efficient flow of cash through the supply chain is vital for business growth. Small business owners should not only do their part to improve the speed of payments, but they should also proactively assess the payment behavior of potential partners and customers to minimize risks to their cash flow and working capital.”
The average rate of late payments is now at 9.35 DBT for small businesses, down from its high in December 2008 of 12.6 days beyond terms. It remains 19 percent higher than it was in October 2007, prior to the recent recession.
The Cortera SBI tracks late payments against agreed upon terms, measuring late accounts receivable measured in days beyond terms (Average DBT) for businesses with less than 500 employees, comparing this data with equivalent A/R metrics for large companies (greater than 500 employees) and all businesses.
About Cortera
In a sea of business information providers, Cortera is different. With over 15 years of experience serving finance professionals, Cortera combines premium business information and innovative tools with a fresh community approach to commercial credit. It represents the first community for small business credit reporting and a fundamentally new way to capture the collective insight of millions of financial transactions. As a result, small businesses can make smarter, informed decisions to ensure optimal cash flow while attracting more favorable payment terms from existing and potential business partners. Free credit reports on millions of businesses are available at http://start.cortera.com.
Media Contacts:
Craig VerColen
VerColen Communications
craig@vercolen.com
617-599-2180
Alex Coté
Cortera
857-403-1370
"Cortera gives our analysts powerful tools to minimize bad debt and identify previously lost revenue opportunities."
"It is very gratifying when your VP of Finance comes out of his office to congratulate your team on their improved metrics. Our partnership with Cortera has really helped us to achieve these results."
