Good morning.
One measure of health in a big business is how it partners with small business—those 33 million U.S. companies that typically have one or a handful of employees and account for just under half of private-sector employment.
While the U.S. economy remains strong, persistent inflation, high interest rates and unequal wealth gains have left many Americans feeling pessimistic. Small business owners are increasingly likely to share that mixed outlook, with optimism at an 11-year low.
Many small businesses are experiencing lackluster sales growth and are waiting longer to get paid by those who use their services, according to research from Xero, a global small business platform that sells accounting software and other services to about 4.2 million subscribers. By the end of last year, Xero's customers were waiting an average of 29.1 days to be paid—almost 10 days late. That number has been creeping up, says Xero CEO Sukhinder Singh Cassidy, and big business is often a cause for the delay. "Small businesses have to deal with cash-flow struggles, even when they’re making the sale," she says. (Several weeks ago, my colleague Ryan Hogg reported that Bud Light maker AB InBev, Coca-Cola’s European bottler, and other major brands were taking months to pay invoices.)
Government can only help so much. The U.K. government recently took action to crack down on late payments. Here in the U.S., there's less inclination to intervene, though the government did make it easier for small businesses to file for bankruptcy protection with a COVID-era provision due to expire next month.
Big business has the power to do better, as Cassidy points out: "Big businesses have a role to play in both supporting small businesses as suppliers, and they're also one of their most stable customers."
Keep your eye on this critical segment of the U.S. economy. They need to digitize and adapt as much as their larger corporate brethren. Businesses that squeeze small suppliers are ultimately sabotaging their own success.
More news below.
Diane Brady
diane.brady@fortune.com
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