In the accounts receivable department of a B2B company, you’re often dealing with companies all over the United States and across different industries. Each industry typically has their average length of time that it takes them to pay. Some are worse than others and you have to keep an eye on those companies, training them to become more proactive on making payments.
What many accounts receivable departments don’t realize, however, is trends for bad – and good – payments extend far beyond just the industries these companies service. Reports show that depending on where a company is located can also affect whether they are likely to pay on time or late.
Creditsafe, a leading cloud solution for business credit reports and intelligence, released a report in November 2016 showing which states had the best and worst pay their bills the fastest and slowest. They were able to gather the data from the over 200,000 users on their platform who are reporting payment information on their customers. According to Creditsafe, their database is updated over 1 million times a day, giving keen insights on the speed at which each state pays their bills.
According to Creditsafe’s report, the fastest paying states are Maine, New Hampshire and Oregon. These three states have an average DBT (days beyond terms) of 4.53 or just over 4 days. This means that, on average, businesses in Maine, New Hampshire and Oregon tend to not go past their payment terms by more than 4 days. On the other hand, businesses in Nevada, Alabama and Florida pay on average the slowest, with a DBT of 14.91.
So what can you do with this information on which states pay faster or slower?
- First of all, don’t treat companies from these states as they are already delinquent, if they’re not. This report is on average, not all businesses from these states will pay you late.
- Keep an eye on accounts that are in the slower range.
- Put companies from these states in a bucket, so they come up more often in your call and email queue.
- Send reminders to pay more often to companies from these states.
- Get credit report alerts for companies from these states, so you can see immediately if they are at risk