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Could BNPL Solve Cash SME Flow Issues Caused by Unpaid Invoices? Marqeta Reveals Research

Over half (55 per cent) of SMBs have between £10,000 and £75,000 owed to them by customers every month, with one-third (36 per cent) of businesses needing the funds to remain solvent; revealed modern card issuing platform Marqeta.

The severity of liquidity and cash flow concerns is causing business leaders to spend more time and resources to focus on finance-related admin – instead of fulfilling their core business duties. Nearly 75 per cent of business leaders respondents to the Marqeta survey stated that they are reliant on handling invoicing in-house either by themselves (21 per cent), or through the use of an internal accountant (50 per cent).

Marqeta research also found that 14 per cent of businesses waited 90 days or longer for payment, while just over half were being paid within 30 days. A further one-third waited 60 days for payment from clients.

Currently, £23.4billion worth of late invoices is owed to firms across Britain and Marqeta’s findings highlight the impact these funds can make on SMEs’ survival.  It also highlights the untapped potential for growth across the economy.

Forty-four per cent of businesses said they would spend the money currently owed to them in outstanding invoices upgrading their technology. Forty per cent would recruit more staff if they received payment on time.

These findings suggest that money owed on overdue invoices is preventing small businesses from growing. Twenty-two per cent of respondents stated they would expand their physical or online footprint, 28 per cent would undertake more marketing activities, and 20 per cent would spend more with suppliers.

BNPL could help address cash flow issues

Marqeta explained that the likes of buy now, pay later (BNPL) offer businesses short-term loans to prop up cash flow, support innovation and enable expansion through the purchasing of products and services without committing to a full payment upfront. However, 43 per cent of SMBs surveyed were unaware of this potential option.

Lack of awareness also proved to be the most common barrier to BNPL take-up. Twenty-five per cent of SMEs believed that BNPL options weren’t available for businesses like theirs and a further 25 per centfelt it was too risky.

Jeff Parker, Marqeta on cash flow
Jeff Parker, SVP of international at Marqeta

Jeff Parker, SVP of international at Marqeta, explained the significance of the research findings. Parker said: “Cash flow is the lifeblood of any business but our survey shows that a huge number of SMBs are finding access to critical external funding to keep them afloat and growing is complex, time-consuming, and expensive.

“Just as we’ve seen in the consumer space where customers now have access to seamless, frictionless experiences when they pay for something, a combination of changes to the macroeconomic environment, customer expectations, technology, competition and regulation in the business space suggests that there is an appetite for real change. The findings from our survey suggest that user-friendly BNPL options could be a big part of this change, but there is currently a knowledge blind spot, which, if addressed, could accelerate adoption.”

Author

  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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