Why Are More American Businesses Waiting to Get Paid?
Something has changed in the way cash is moving through American small businesses.
In January 2025, 47% of U.S. small businesses surveyed by Intuit QuickBooks said they had invoices more than 30 days overdue. By July, that figure had climbed to 54%. Its latest report puts the number at 59%.
That is a sharp deterioration in a relatively short period.
Perhaps more revealing is what hasn’t changed. Businesses with unpaid invoices were owed an average of $17,500 in the 2025 study. The latest figure is $17,700.
The average unpaid balance has barely moved. Instead, late payment appears to have spread across a much larger proportion of businesses.
So what changed?
Tariffs are one obvious suspect
The Federal Reserve’s latest Small Business Credit Survey offers some clues.
Rising costs of goods, services and wages were the most commonly reported financial challenge among small businesses. More than four in ten firms also identified increased costs associated with tariffs as a financial challenge. In total, 77% reported pressure from rising costs, tariffs, or both.
The tariff exposure becomes clearer when the data is broken down by industry.
Research published by the New York Fed found that tariff-related costs were reported as a financial challenge by 55% of small businesses in goods-producing sectors and 67% of retailers. Even among services businesses, the figure was 34%.
Almost half of the firms in the broader Federal Reserve survey sourced at least some inputs internationally. Among businesses experiencing higher prices on those foreign inputs, 76% passed at least some of the increase on to customers. But 60% also absorbed some of the additional cost themselves.
The arithmetic is unforgiving.
A business can raise its prices and still be worse off for cash. Suppliers need paying. Employees need paying. Materials have to be purchased. Higher costs leave the business before the corresponding higher-priced sale returns as cash, often weeks or months later.
The business is effectively financing that gap.
Make the gap more expensive at the same time that customers are taking longer to pay, and working-capital pressure rises very quickly.
One late payment can become someone else’s
The latest QuickBooks numbers suggest that pressure is being passed through the economy.
Forty-two percent of businesses said outside pressures had caused them to delay payments to contractors, suppliers or vendors. Among businesses already carrying invoices more than 30 days overdue, that figure rises to 53%.
Nearly one in four businesses with overdue invoices specifically said delayed revenue or sales was the reason they couldn’t pay others on time.
The sequence isn’t difficult to imagine:
A customer pays Company A late.
Company A holds back payment to Supplier B.
Supplier B now has its own cash-flow problem.
Payment delays can propagate through a supply chain rather than remaining isolated inside the business that first experiences them.
QuickBooks isn’t alone in seeing the pressure. Atradius’ 2025 U.S. payment research found that 43% of credit-based B2B sales were overdue. Thirty-five percent of U.S. businesses said customer payment behaviour had worsened, with customer cash-flow pressure identified as the primary reason for overdue invoices.
Tariffs aren’t the whole story
It would be convenient to pin the entire deterioration on trade policy. The evidence doesn’t support going that far.
There are several pressures operating at the same time.
The Federal Reserve found expectations for future revenue growth had fallen to their lowest level since the 2020 survey.
QuickBooks respondents put economic uncertainty at the top of the external factors causing them to delay their own payments, followed by delayed revenue or sales and higher costs.
And businesses with overdue invoices are increasingly reaching for short-term credit to bridge the gap. Thirty-eight percent said they had become more reliant on credit cards over the previous year, compared with 21% of businesses without overdue invoices.
The more plausible explanation is therefore cumulative.
Higher input prices. Tariffs. Wage and operating-cost pressure. Softer expectations for demand. Customers protecting their own liquidity. Businesses relying more heavily on credit while waiting for invoices to convert into cash.
None necessarily explains the jump on its own. Together, they leave businesses with considerably less room for error.
More businesses are borrowing simply to operate
The Federal Reserve data contains another useful clue.
Sixty percent of surveyed businesses applied for financing during the previous 12 months. Among those seeking capital, 56% said the reason was to meet operating expenses. Expansion or pursuing a new opportunity came second, at 46%.
These aren’t necessarily businesses looking for money to buy another company, build a factory or make some distant investment. Many are looking for capital to keep the normal operating cycle moving.
A company can be profitable, have good customers and be growing while still running short of cash. Growth can actually amplify the problem because more payroll, materials and supplier costs have to be funded before the corresponding receivables are collected.
For businesses selling to strong commercial customers, there is another way of looking at the problem.
Receivables finance doesn’t fix weak demand, poor margins or an invoice that is unlikely ever to be collected. It can solve a very different problem: the work has been done, the customer is good, the invoice exists, but the cash is trapped inside the payment cycle.
The recent increase in overdue invoices suggests that more U.S. businesses are finding themselves in precisely that position.
And while we can’t yet say exactly why the number has risen so sharply, the evidence points towards something broader than simply a deterioration in payment discipline.
Businesses are carrying higher costs, absorbing economic uncertainty and increasingly financing the wait between doing the work and getting paid.
The question may no longer be simply whether your customer will pay. It is how much of the operating cycle you can afford to finance while you wait.
