Around 36% of SMB owners claimed they rely on funds tied up in unpaid invoices to remain solvent.

Given the lack of proper funding, business owners must spend valuable time and resources away from their core business duties and focus instead on critical finance-related admin. Around 21% of them said they handle invoices in-house or by themselves, while 50% said they do so through an internal accountant.

The research, conducted by Marqeta and Propeller Research, surveyed 522 small business employees in seven countries – Denmark, Finland, France, Germany, Spain, Sweden and the UK. Forty per cent of SMB owners said they would further invest in recruitment if paid on time.

“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”, said Jeff Parker, senior vice president at Marqeta.

BNPL loans and SMBs

According to Marqeta and Propeller Research, the buy-now-pay-later (BNPL) sector could become a potential source of money for short-term loans offered to businesses to help with their cash flow and support business expansion and innovation.

However, 43% of SMBs surveyed are unaware of this potential option, with 25% of respondents believing it was too risky to take BNPL loans.

“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”

The BNPL sector has recently been rocked by a series of losses due to customers defaulting on their loans.

In February 2023, BNPL provider Klarna revealed it had suffered $1bn in operating losses in FY2022, a 40% increase in loss from the previous year ($680m).

Overall, over £23bn is owed to businesses in late payments in the UK alone.