Cash flow can be a major hurdle for any size of business, but small businesses may be suffering the most. From processing invoices to waiting for funds to transfer to actually receiving the money in your account, getting paid has become a complicated process. And that's without the threat of clients or partners delaying their payment on invoices for sometimes as long as 30 days. Expenses can mount as a business owner scrambles to move through this process.
In The State of Small Business Cash Flow, QuickBooks found that 69% of small business owners surveyed have been "kept up at night by concerns about cash flow."
Editor's note: Looking for information on accounting software? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need:
"Cash flow is one of the bigger pain points for these businesses," said Rishav Chopra, head of business operations and revenue optimization for global payments at Intuit, QuickBooks' parent company. "Our customers are looking to pay their contracts and pay their employees, and they're stretched as well."
QuickBooks wants to be an omnichannel tool for the small business owner, and the company is prioritizing the research and development of new technology to address challenges faced by small business owners. Based on its cash flow study, QuickBooks has developed next-day payment features for ACH payments through its platform.
Next-day payments will mean that small business owners won't have to wait the standard three to five business days for a payment to process, which can have a huge impact on cash flow as expenses mount. As QuickBooks' study found, this can be a useful tool for many small businesses. [Interested in accounting software for your small business? Check out our best picks and reviews.]
Nearly 31% of SMB owners estimate it takes more than 30 days to get paid
Having to wait almost a month for payment is only the beginning of cash flow problems in small business, according to QuickBooks' study. It also found that 61% of businesses regularly struggle with cash flow, and nearly a third have been unable to either pay vendors, loans, themselves or employees.
When cash flow becomes an issue, employees can often suffer. Thirty-two percent of small business owners have paid their employees late when not at risk of being able to pay their employees by payday. Creating a cash flow solution means building in features so that business owners can get the money they need as quickly as possible.
"It was more about the change in the mindset that really helped us based on the study we did on cash flow around how we can help those businesses be more successful," Chopra said.
The State of Small Business Cash Flow was an initial step by QuickBooks to better understand the needs of small business owners. What resulted is a useful tool to combat cash flow issues among small business.
Next-day ACH payments and how QuickBooks can help
Next-day payments mean small businesses owners can get their money way faster than traditional methods. QuickBooks processes $37 billion in payments every year. By adding next-day ACH payments to its arsenal, it is becoming a leader in B2B payments.
"With the addition of Next Day Payments for credit card and ACH, we are giving small businesses and the self-employed a powerful suite of payments tools that allows them to get paid both fast and affordably," said Rania Succar, business leader for QuickBooks Payments and Capital, in a statement.
Next-day payments provide business owners with the opportunity to get started on projects faster, pay workers on time and manage their businesses more effectively. If, for example, you operate on a payment structure of 50% upfront and 50% due at the end of a project, you'll be able to use that first payment for materials, overhead costs and labor costs almost immediately.
Of course, this new feature is only relevant to your business if QuickBooks is processing invoices for you. As of right now, QuickBooks is one of the only major payments solution providers offering next-day funding.
The future of small business payment
As technology develops, banking and lending are two areas where new solutions are emerging to meet small business needs. MasterCard is a major solutions provider that is investing in the future of SMB payments. Its startup program, Start Path, has nurtured countless startups with big banking and loan ideas for the small business space. While B2B technology was once overlooked compared to its B2C counterpart, companies like QuickBooks and programs like Start Path are forging ahead to push the industry discussion forward.
Cash flow is a big issue for small business, and companies like QuickBooks are striving to find an answer for it. If you're not using QuickBooks or another Intuit product for your business, it's important to learn more about how your business can benefit and if next-day payments are ideal for your business.
Small business banking and loans is an area that's expected to expand rapidly in the coming years. If you're running a small business and your cash flow needs aren't being met, a solution will likely emerge as more companies scramble to meet small business needs.