Small Business Checkpoint: The costs of doing business

Loan payments and services inflation are driving up operational costs, though optimism around future revenue expectations remains.

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Taylor Bowley

May 2024

Key takeaways

  • In April, the small business account inflow-to-outflow ratio, which we view as a proxy for profit margins, reached a five-year low, according to Bank of America internal data. Although the ratio was still positive, elevated automated clearing house (ACH) payments could point to higher operating costs, presenting a headwind to small businesses' overall profitability.
  • Using Bank of America internal data, we find that beyond payroll, ACH transaction payments to financial commitments such as loans has been growing. Additionally, inflationary pressure on services appears to have contributed to elevated payment levels in the form of distributors and property insurance costs, the latter of which is up nearly 35% since 2019.
  • Geographically, small businesses feel the pinch from elevated costs differently. In April, ACH payment growth was generally strongest in localities in the South, potentially as a reflection of increased payroll payments growth in line with domestic migration trends.

Read our full analysis for a more in-depth look at these trends.

Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.

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