So the machine shop was losing business as a result of tightening credit, but that's not the whole story. The machine shop was tightening up on fulfilling orders to its smaller customers out of fear they couldn't pay -- demanding cash upon delivery, 50% payment in advance, or even cash up front.
But enough anecdotal evidence, let's get some numbers behind this. Cash flow concerns are at the top of the list of concerns cited in the recent American Express OPEN Small Business Monitor. More than half (55%) of the entrepreneurs surveyed are experiencing cash flow issues (up from 49% six months ago) and 17% of business owners are concerned about paying bills on time. As a result, more than a quarter (27%) are likely to reach across the work/life balance wall and use personal funds for their business, 11% plan to increase use of credit cards, and one in five plan to delay purchases.
Losing business due to tight credit and turning away business because of concerns about creditworthiness. Now that's a ripple effect -- from Wall Street right down to the smallest business. Of course, if you can pay cash for everything, the world's your oyster, but that's not the way business works (at least until last week).
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