Marqeta Survey: Over Half of SMBs Are Owed up to £75,000 Each Month in Outstanding Invoices

Almost half of business owners surveyed reported that they are unaware that B2B buy-now-pay-later (BNPL) services offer financing alternatives for businesses, which could help them smooth cash flow

The highest levels of inflation seen in decades are squeezing small businesses and creating an opportunity to reinvent how they access working capital, according to a new survey published by Marqeta, the global modern card issuing platform. The company’s ‘Small business financing done differently’ research draws upon interviews with hundreds of small to medium sized businesses (SMBs) across Europe, looking at the opportunities for BNPL use by businesses as a mechanism to make access to capital easier without increasing overall debt risk.

“Cash flow is the lifeblood of any business but our survey shows that a huge number of SMBs are finding that access to capital has become cumbersome and expensive”

Marqeta’s research finds that over half (55%) of SMBs surveyed have between £10k and £75k owed to them by customers every month, with one-third (36%) of businesses saying that they need those funds to remain solvent. Given the severity of these liquidity concerns, business leaders are currently spending valuable time and resources away from their core business duties to focus on critical finance-related admin, with almost 75% of business leaders surveyed stating that they are reliant on handling invoicing in-house either by themselves (21%), or through the use of an internal accountant (50%). Just over half of businesses surveyed said they were being paid in 30 days, with a further one-third waiting 60 days for payment from clients, a remaining 14% stating they could be waiting 90 days or longer.

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With over £23 billion owed to businesses in late payments in the UK alone, the findings highlight both the difference these funds can have in whether a small business stays afloat or goes under, as well as untapped potential for growth across the economy. When asked how they’d use the funds owed to them if they weren’t tied up in outstanding invoices, almost half of respondents (44%) said they would spend the money upgrading their technology, and a further 40% that they would recruit more staff. The findings suggest that monies owed on invoices are currently preventing small businesses from growing with a further 22% of respondents stating they would expand their physical or online footprint, 28% undertaking more marketing activities, and 20% stating they would spend more with suppliers.

Difficulties accessing finance

Circumstances created by the pandemic have meant that the number of businesses taking on debt has grown. Recent data from the FSB showed that SMBs in the UK alone are collectively carrying around £36 billion more in debt compared to before the COVID-19 pandemic. Yet while the demand for credit is high, accessing it is still a struggle for many small and medium businesses.

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With liquidity a concern for businesses across the board, BNPL allows businesses to borrow to pay a specific bill, supporting innovation and enabling expansion through the purchasing of products and services without committing to a full payment up front, but nearly half (43%) of SMBs surveyed are unaware of this potential option. Lack of awareness also proved to be the most common barrier to BNPL take-up with 25% of respondents believing that BNPL wasn’t for businesses like theirs and a further 25% feeling it was too risky.

“Cash flow is the lifeblood of any business but our survey shows that a huge number of SMBs are finding that access to capital has become cumbersome and expensive,” explained Jeff Parker, SVP International, Marqeta. “Drawing from what we’ve seen happen across the consumer space, we expect the same level of lending innovation to help SMBs navigate challenging credit markets. The findings from our survey suggests that while B2B BNPL options could be a big part of this change, there is currently a major awareness issue, which if addressed could greatly accelerate adoption.”