SAN FRANCISCO, Nov. 15, 2016 /PRNewswire/ -- Fundbox, the leading cash flow optimization platform for small businesses (SMBs), today released findings from its customer data on invoice payments. The study, designed to better understand the overall financial health of SMBs, revealed the huge economic impact of unpaid invoices. Over the last 12 months, the total amount in unpaid invoices across all U.S. SMBs is approximately $825 billion.
Cash flow gaps from unpaid invoices are often cited as the most challenging hurdle for SMBs. Looking back at 12 months of data, Fundbox analysis found that 22 percent of invoices are unpaid at any given time. This equates to $84,000 per small business in unpaid invoices. In some cases they never receive payment.
Additional key findings from the study include:
- The amount in unpaid small business invoices is equal in value to 5 percent of the entire U.S. GDP.
- That's more than the defense industry (4 percent of GDP), or all of the technology companies in Silicon Valley combined (4 percent).
- Compare that to components of the US GDP:
- Small business unpaid invoices = $825 billion
- Defense = $731 billion
- Intellectual (software) = $730 billion
- Residential = $685 billion
- SMBs get paid slowly, very slowly…
- The average SMB has $84,000 in unpaid invoices
- 81% of the average amount owed to SMBs is past 30 days due
- …So they have no safety net
- 21 days = average time SMBs wait to get paid
- 27 days = number of days average SMB has in cash reserves
- If SMBs were paid for all of their unpaid invoices at once, they'd have 8x more cash in the bank
"Our daily focus is on helping small businesses succeed and the data we unearthed further underscores the enormous cash flow challenges they continue to face," said Jordan MacAvoy, vice president of marketing, Fundbox. "Small businesses are a critical growth engine of the economy. When they don't get paid, the entire economy slows down. This study is further validation of market demand for technologies like Fundbox that offer small business owners solutions to cash flow problems."
Fundbox has developed a tech-driven tool that employs advanced underwriting algorithms and deep learning capabilities to instantly advance funds tied up in outstanding invoices, helping business owners eliminate their cash flow challenges and grow their business.
The study is based on Fundbox data from over 39 million invoices on the company's platform.
For more information and to view the infographic, please click here.
Fundbox is the leading platform for small and medium-sized businesses to manage and optimize cash flow. Through its advanced data science and analytics capabilities, Fundbox taps into numerous data signals to assess customers and invoices for risk automatically and instantly. Small and medium-sized business owners are able to unlock capital tied up in outstanding invoices with a single click - funds show up in their bank account in as little as 24 hours. Leading Silicon Valley entrepreneurs, finance veterans, and venture capitalists, including Spark Capital Growth, Bezos Expeditions (the personal investment arm of Jeff Bezos), General Catalyst Partners, Khosla Ventures, SV Angel, former CitiGroup CEO Vikram Pandit, and other prominent investors back the company.