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Kabbage Offers New Solution to Improve SMB Cash Flow

Helping small businesses collect money faster is a huge opportunity in the small business fintech space. Kabbage, one of the big kahunas in online SMB lending, last week launched Kabbage Payments, a payment-processing tool recently out of beta that’s designed to cut short the invoicing process.

Kabbage said two-thirds of its 200,000 customers rely on invoices to collect payments, and many are left hanging for up to 90 days.

Here’s how Kabbage describes the product:

“…The new custom pay link solves a fundamental challenge for business owners relying on invoice payments. Kabbage Payments customers can create a unique URL for their business and send payment requests through texts, emails or the web to collect card payments securely and quickly. With more flexibility, the custom pay link eliminates the need to manually create new accounts, open new payment orders, and duplicate work for recurring invoices.”

The ability to send a payment link via text or WhatsApp is a potential game-changer for SMBs. This gives them capability we’re used to seeing from large entities like wireless carriers who use text messaging to facilitate payments.

Slow payments is a well-defined pain point for small businesses. In fact, it’s a leading cause of business failure.

Fundbox posted an infographic on its blog illustrating just how deep an impact slow pays have on SMBs, including missed paychecks for business owners, less hiring, and delayed investment in things like new equipment and marketing.

According to Investopia, half of small businesses that go under cite a lack of working capital as the main reason they had to close shop. Certainly, many of these companies might have hung on longer if they got paid faster.

Kabbage isn’t alone in addressing this challenge. We’ve seen recent efforts from Fundbox, a joint effort from Stripe, and Xero, and Freshbooks to solve this issue.

Kabbage is on a mission to own the competitive SMB cash management space. It says Kabbage Payments is the first of many new products the company plans to roll out in the coming months designed to help SMBs “more efficiently and intelligently manage their cash flow.”

The company recently acquired SMB data firm Radius Intelligence to shore up its small business data capabilities. And earlier this year it bolstered its ability to keep growing and lending cash to small businesses with a $200 million credit facility that followed a $700 million asset-backed securitization.


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