SAN FRANCISCO, March 16, 2017 /PRNewswire/ -- Fundbox, the leading cash flow optimization platform for small businesses (SMBs), released survey findings today based on data gathered from nationwide responses across numerous SMB industries. The study was designed to better understand the microeconomic impact of unpaid invoices or late payments.
Recent Fundbox studies showed that 64 percent of SMBs get paid late and that the total amount in unpaid invoices across all U.S. SMBs is approximately $825 billion. This latest study digs deeper to find out what happens to businesses when paid late, where spending cuts are made first, how it affects employees, and what would happen if they were paid on time.
Key findings include:
- 79 percent of small business owners can't pay themselves
- 23 percent can't hire new employees
- 23 percent can't invest in new equipment
- 20 percent stop marketing efforts
- 18 percent hold back on pay increases or bonuses for employees
- 17 percent cannot build up inventory
- If paid on time, Fundbox estimates that these SMBs across the U.S. could hire an additional 2.1 million employees, which would reduce unemployment in the U.S. by 27 percent
The impact of these results reveal that when a small business is not paid on time they ultimately fall behind on bills and mortgage payments; they can't take on new projects to grow; they are unable to fill large orders; revenue stagnates; employees leave and they lose their competitive edge.
If paid on time, Fundbox estimates that each SMB owner could pay themselves an incremental $30,990, purchase $9,207 in new equipment, invest an incremental $8,308 in marketing, spend $7,411 in pay increases or bonuses to employees, and build up an incremental $6,737 in inventory.
"Being paid late is an unfortunate reality faced by most small businesses. This has a massive trickle down effect on the owner, the company, and the economy," said Prashant Fuloria, Chief Product Officer, Fundbox. "We have a strong pulse check on small businesses, and this study further underscores the critical need for services like Fundbox that solve small business owners' cash flow problems."
Small business owner Stephen Lockeby, who operates Blackstone Services, a construction company in Oklahoma, said: "As a small business, it seems I have two options that have any integrity to them. Those are: to not pay myself, and to reduce marketing costs. Not paying myself is first because reducing marketing cost is about equivalent to hitting a self destruct button."
"When we are not paid on time or slowly, we cannot obtain big customers because big customer accounts require more capital to service," said Jose Ramirez, who runs Supreme Maintenance Solutions in Texas.
Fundbox has developed a tech-powered 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. To date, Fundbox has served more than 50,000 SMBs and has approximately 40 million B2B invoices on its 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 for risk automatically and right away. Approved small and medium-sized business owners are able to access capital with a single click - funds show up in their bank account as soon as the next business day. 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. Fundbox makes capital available to businesses through business loans and lines of credit made by First Electronic Bank, member FDIC, in addition to invoice-clearing advances, business loans and lines of credit made directly by Fundbox.