SmallBusinessNewz

Business credit bureau Cortera has shared some interesting findings from its November 2009 Small Business Index (SBI) report. The report is a monthly index of accounts receivable (A/R) activities covering businesses with less than 500 employees (the SBA's definition of a small business).

Cortera measured the payment activities of over 200,000 small businesses, and found that small businesses have been speeding payments to their vendors, suppliers and other business partners over the past month. The firm says 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 report also found that the gap between big businesses and small businesses shrank significantly, with the average days beyond terms (DBT) for small businesses only 15 percent higher than their larger counterparts (businesses with over 500 employees). In the previous month's report, 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," says Cortera President and CEO Jim Swift. "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."

According to Cortera, 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 is still 19 percent higher than it was in October 2007, before the recession.