Companies not paying their bills on time

| June 11 2012
Hannah Thoreson

Companies are holding on to record amounts of cash.  Apple’s cash reserves have occasionally exceeded those of the U.S. Treasury.  But it’s not because corporations are rich and just have tons of extra money laying around; it’s because they aren’t paying their bills on time.

From WSJ:

A study released in May by Experian, a global information-services company, found that overall, businesses earlier this spring were paying bills an average of 7.6 days past due, a 14.1% increase from the same period last year. The biggest companies in the study—those with more than 1,000 employees—had the sharpest year-over-year increase in late-payment days, up nearly 28%, the report found.

Businesses in 2012 are waiting an average of 29.2 days for payments after issuing an invoice, up from 22.83 days in 2009, according to an analysis by financial-information concern Sageworks of its own database of more than 500,000 financial statements for private companies.

Trickle-down economics works both ways.  When large companies aren’t sure where things are going and delay payments, it hurts the smaller companies they rely on for goods and services.  “Uncertainty” is not just a focus group-tested buzzword, it is a real thing.  This is is one of the quantifiable effects of public policy that inhibits growth and job creation.