Fundbox Reveals 64% of Small Businesses Wait Beyond Net Terms For Payments

November 20, 2015     By : LTP Team

Fundbox, the leading cash flow optimization platform for small businesses (SMBs), today released data findings on invoice payments from its platform. Based on data entered into the accounting and bookkeeping systems of tens of thousands of SMBs, the study revealed the widespread problem of late payments; 64 percent of small businesses are affected by late payments on open invoices. Additionally, the data showed that many large corporations, such as Walmart and McDonalds, take the longest to pay SMBs.

We had an opportunity to discuss this infographic with Jordan MacAvoy, VP of Marketing, Fundbox. On asking him about the industry specific trends he said, “20 million invoices in the Fundbox system were analyzed and the data represents small businesses across many industries in the U.S. Our study revealed that cleaning services, accounting and bookkeeping, web design, landscaping services and construction trades were the industries that were most affected by late payments.”

According to a U.S. Bank study, 82 percent of small businesses fail due to poor cash flow management. Fundbox’s analysis highlights how net-terms and late payments contribute to poor cash flow: half of all net-30 invoices are paid late, while 45 percent of net-60 and 35 percent of net-90 terms are not paid on time. This creates a massive pain point for SMBs and underscores the market demand for technologies that help manage and optimize the billions of dollars tied up in outstanding invoices.

Additional key findings of the study included:

• Corporations that take the longest to pay SMBs:
o Walmart – 86 days on average
o McDonalds – 64 days on average
o Target – 48 days on average

• Industries most affected by late payments:
o Cleaning services
o Accounting & bookkeeping
o Web design
o Landscaping service
o Construction trades

• U.S. states where businesses wait the longest to get paid:
o Hawaii – 95 days on average
o Iowa – 63 days on average
o Alaska – 54 days on average
• U.S. states where businesses wait the shortest to get paid:
o Wyoming – 17 days on average
o North Dakota – 21 days on average
o South Dakota – 23 days on average

“The nature of B2B payments, and the common practice of net 30, 60, 90+ terms, puts incredible pressure on small businesses,” said Jordan. “The problem is amplified in healthy, growing businesses where short-term expenses increase before additional income can be captured. Fundbox is laser-focused on making cash flow gaps for small businesses obsolete, and to date, our platform has improved the cash flow for tens of thousands of businesses.”

Explaining the invoicing processes at big companies, he continued, “Ironically, big businesses have the same considerations as small businesses when it comes to cash flow.  When you have hundreds or even thousands of suppliers, you have to standardize your business process to ensure the money coming in meets the demands of the money going out of the business.  This is really the genesis of net-terms and the standardization of payment times.  It also highlights how systematically this is a problem on both sides of the transaction.”

We also discussed the competition in the invoicing market with Jordan. He added the following thoughts to the question: “No one is directly competing with us today.  Fundbox is the only cash flow management tool that directly integrates with an existing accounting or invoicing solution giving the small business owner the ability to access the funds associated with their outstanding invoices in as little as 24 hours and with just one-click. Other solutions on the market require lengthy applications, offer only partial amounts of an invoice, or require cumbersome and uncomfortable processes, like introducing a third party into the relationship a small business owner has with their client.”

Fundbox is a cash flow optimization tool that leverages Big Data analytics, engineering, and predictive modeling to provide small businesses with credit-on-demand. The platform can underwrite a business and it’s invoices in as little as 50 seconds.

Jordan further explained how Fundbox is solving the problem for small businesses and said, “Fundbox puts small business owners in control of their cash flow by offering simple, one-click financing of outstanding invoices. No longer does a small business have to wait to get paid for their outstanding invoices. With Fundbox, they’ll have access the funds in their bank account the next day and the flexibility to continue to run their business. Fundbox also recently launched its second product, Credit-as-a-Service, which allows a third-party (like Intuit QuickBooks) to embed Fundbox functionality directly into the workflow of its application.”

The study is based on recent Fundbox data from over 20 million invoices on the company’s platform. Infographic by Fundbox:

The Waiting Game - A Fundbox Infographic

Jordan ended his thoughts by telling us about the next milestones the company is looking forward to. He said, “Fundbox has underwritten its 20 millionth invoice while also completing its 7th consecutive quarter of at least 2x quarter-over-quarter revenue growth. Fundbox’s recently announces its funding round of $50M that was led by Twitter investor Spark Capital with participation from Bezos Expeditions (the personal investment arm of Jeff Bezos). Additionally, the company recently closed a successful $40 million Series B funding round in March 2015.”

About Fundbox
Fundbox is an innovative FinTech company with a mission to help small businesses grow and achieve their full potential. The company leverages deep data analytics enabling businesses to accelerate cash flow against their outstanding invoices. The Fundbox risk engine taps into numerous data signals within its network to assess customers and invoices for risk automatically and instantly, allowing small businesses to choose which invoices to clear with a single click. Leading Silicon Valley entrepreneurs, finance veterans, and venture capitalists, including Spark Capital Growth, General Catalyst Partners, Khosla Ventures, SV Angel, Jeff Bezos, Sound Ventures, former CitiGroup CEO, Vikram Pandit, and Thomson Reuters CEO, Thomas Glocer, back the company.

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LTP Team

LTP Team

A group of content writers, bloggers, journalists and editors from the Let's Talk Payments team.

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LTP Team