Fundbox Jumps into Race to Solve the SMB Cash Crunch
June 28, 2019 | Contributed by: Charles Laughlin
Solving B2B cash flow inefficiency is getting more and more attention from fintech players. It’s a huge problem for businesses of all sizes, with an estimated $3.1 trillion in outstanding account receivables floating around on any given day (according to this report). And for small businesses, late payment of receivables is a leading cause of business failure.
Solving this issue, or at least mitigating it, is a giant opportunity for fintech. Improved cash flow doesn’t just keep more SMBs afloat. It also allows them to invest in their businesses to help them grow and thrive.
Last week we reported that Stripe and Xero have joined forces to develop tools to help small businesses get paid faster while also drawing more insights out of their payments data.
B2B e-commerce platform OroCommerce also recently announced it has selected Fundbox to develop checkout solutions for its corporate customers to expedite credit decisions and gain access to trade financing. The idea is to take the friction out of the process of getting the short term financing businesses need to smooth out cash flow.
Fundbox is a fintech company that has disrupted the small-business credit space, giving more SMBs access to credit. The company was a visible presence at the LSA’s recent LOCALOGY:ENGAGE event in Washington, D.C.
An article this week in PYMNTS.com makes the point that the generational shift taking place in business ownership is having an impact on the notion of how businesses acquire the financing they need for day to day operations, with alternative payment and lending platforms in the B2C sector increasingly in vogue.
Naturally, the customer experience expectations that using Apple Pay or PayPal has created for young entrepreneurs as consumers will spill over to their expectations as small business operators. They are not going to tolerate current inefficient processes in the B2B realm.
This combination of generational pressure with the true agony that late receivables create for businesses is driving innovation to bring greater efficiency to the cash management process for businesses.
Fundbox estimates that the average business has 24% of its monthly revenue tied up in unpaid invoices. The impact of freeing up this cash would be profound for any business, small businesses in particular.
Update: Right after we published this post, we came across Freshbooks‘ announcement from earlier in the week that it has launched a new payment option called Retainers that makes it easy for service-based businesses to automate recurring revenue.
Freshbooks specializes in accounting solutions for the freelancer, small creative agency space, and the Retainers solution is designed for businesses that work on recurring retainer revenue. So it’s a solution designed for a specific market niche. Nonetheless, it fits within the recent trend of fintech companies figuring out how to help small businesses get paid faster.