Cash flow management kills small businesses, but financial institutions have a cure.
The leading cause of death for small businesses is lack of cash flow. In fact, a U.S. Bank study reports82 percent of these businesses fail for this exact reason. The good news is, financial institutions can offer small businesses the tools to resolve cash flow problems.
Businesses rely on a steady supply of cash to support inventory, accounts receivable, vendors and payroll. Managing all these moving parts can be difficult for the busy business owner, especially if funds and resources are limited. Even the most profitable businesses will fail if cash flow isn’t well managed.
Gig economy (self-employed consumers, freelancers), lifestyle businesses, micro and small businesses are especially in need of assistance; they don’t have accountants managing their invoices and payments, and cash flow can get complicated very quickly. Third-party providers such as Square, QuickBooks and PayPal, might be meeting some of their needs, but bankers can offer better, more integrated solutions.
Financial institutions can help save small businesses from closing their doors by providing easy, integrated ways to accept multiple forms of payments like ACH, credit and debit card, check and lockbox within their existing bank account. Solutions with interactive dashboards and contextual insights enable these businesses to proactively manage cash flow. And as a result, small businesses that offer modern invoicing options have collected 82% more payments from their customers, with 45% of their customers making more payments online. As business owners recognize the value of these tools, financial institutions will benefit directly from loyalty and high adoption rates; about 1/3 of businesses will adopt invoicing and payments solutions within 60 days.
Small businesses depend on their financial institutions to provide for their financial needs, and a consolidated, simplified payments process is part of what they need to succeed. Three Mich.-based institutions who offered such services collectively accrued more than $8 million in receivables in their first year in the market. Other institutions have experienced a 40% increase in digital engagement from their small business customers. And, businesses increase their deposits by an average of 18%, gaining access to their receivables in only 16 days compared to the traditional 33 days wait time.
As you continue conversations around this market opportunity, follow our blog for additional insight and read more from our co-founder and CEO Steve Robert on PaymentsSource.