- Through new tech solutions, Kabbage Payments reduces the time it takes for small businesses to get paid, with many remittances received within 24 hours.
- Before Kabbage Payments, approximately two-thirds of Kabbage's customers reported waiting up to 90 days to receive payment from clients.
- Kabbage offers a suite of tools for payment processing, invoicing, cash flow management, lending and more.
- This article is for small businesses considering using Kabbage Payments as their payment processor.
One of the most important things a business needs to be successful is a steady cash flow. Receiving payments and processing them into the appropriate accounts is key to a company's survival, yet business owners must often wait for weeks – or even months – to receive payments. In 2019, Kabbage launched a new payment processing solution designed to significantly speed up that process, called Kabbage Payments. What can SMBs expect when they use Kabbage Payments?
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What is Kabbage Payments?
Kabbage Payments is an online payment platform backed by small business lender Kabbage. It has invoicing and online payment processing tools that allow small business owners to get paid quickly: Transactions processed by 5 p.m. Eastern time are deposited into the business's bank account the following banking day. This is crucial for many small businesses that depend on speedy and reliable invoice payments for cash flow.
Kabbage Payments is part of the Kabbage family of small business financial products. Founded in 2011, Kabbage offers flexible business funding and no-fee checking accounts in addition to the Kabbage Payments platform. It was acquired by American Express in August 2020.
The company touts Kabbage Payments as a "payment-processing solution for small businesses that makes getting paid faster as simple as sending a text message." Company representatives say the service makes one of the more frustrating parts of business ownership a little less of a headache.
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"Since 2011, we've helped hundreds of thousands of small businesses access over $8 billion in funding," said Kabbage CEO Rob Frohwein when Kabbage Payments launched in 2019. "We know firsthand a primary need is to cover cash flow gaps while waiting to be paid. Kabbage Payments not only expands our suite of products, but the very definition of our company. We deeply believe in the mission of small businesses and understand what they need to succeed – namely, more time building their businesses and less time worrying about cash flow."
Key takeaway: Kabbage Payments is an invoice payment processing service that allows business owners to receive their money the next banking day.
What does Kabbage Payments offer?
The main idea of Kabbage Payments is to speed up the entire invoicing and payment process. Before the platform's release, Kabbage tested the service through a beta program with some existing members.
In a press release from Kabbage, real estate investor Lee Brewer said the service alleviated problems he'd had for years.
"My clients receive dozens – if not hundreds – of invoices a month, so it's easy for them to pile up and be paid out all at once," he said. "For years, I've waited anywhere from 15 to 30 days to get paid for my work. Now, I send clients my Kabbage custom pay link through email or WhatsApp and get paid the next day. This has helped me collect so quickly; my cash flow concerns were eliminated, seemingly overnight."
Brewer isn't alone. According to Kabbage, approximately two-thirds of its 200,000 customers use invoices but still "wait as long as 90 days to be paid." You may be forced to wait for payment, but expenses like rent and utilities have hard deadlines.
To address this issue, the company says Kabbage Payments stands as a "fully automated working capital solution." By leveraging today's tech, Kabbage Payments "drastically reduces the time required to receive payments in typical net-term invoicing."
Deposits via Kabbage Payments are in the business's bank account by the next day, though they have to be processed by 5 p.m. EST. Any transactions made later than that will be deposited within two banking days.
Kabbage Payments manages this short turnaround by handling invoices online through an all-in-one dashboard. Along with creating a custom URL for their businesses, users can send secure payment requests via SMS, email or the web.
The company also offers an invoicing solution. Once your business begins using Kabbage Payments, you are free to send unlimited invoices and estimates with no monthly fees. The only fees you pay are credit card processing fees for the payments you receive through the service. Kabbage is currently offering a discounted rate of 2.25% until June 30, 2021, after which transactions will cost 2.9% plus 25 cents per payment.
Key takeaway: Kabbage Payments speeds up the invoice payment process with tech tools that simplify invoicing and make it easy for your clients to pay you.
Other services offered by Kabbage Payments
Here are some of the other services that Kabbage Payments includes:
- No-fee invoicing tools. Kabbage gives each client a unique business URL that makes it easy to invoice clients and collect payments. Your clients can make partial or full payments on their invoices at any time.
- Automatic payment reminders. You can set up automatic reminders to go out to clients with outstanding balances.
- Gift certificates. Through Kabbage Payments, you can purchase gift certificates worth anything from $15 to $500.
- App tools. You can access business tools on the go through the Kabbage app, which is available in the App Store for the iPhone and iPad and on Google Play for Android devices.
- Customer support. You can reach Kabbage Payments' customer support by email, and you'll receive a reply within 24 hours. Phone customer support is available seven days a week, with extended hours on weeknights. An online help center and resource center are also available.
Key takeaway: Kabbage Payments offers invoicing tools, including automatic payment reminders, and gift certificates. You can access Kabbage Payments through a web browser or the company's mobile app.
Stella Morrison contributed to the writing and reporting in this article.