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The Impact of Late Supplier B2B Payments on Small Businesses

It’s no surprise that late supplier payments is a growing issue in the B2B space. Some of the latest research, however, is shedding light on just how many businesses are affected.

A recent analysis from alternative lender and cash flow management platform, Fundbox, revealed that 64% of small and midsize businesses (SMBs) get paid late, reports Crossroadstoday.com. The total amount in unpaid invoices across all United States SMBs totals nearly $825 billion.

Not only do these late payments affect cash flow, they hinder businesses-growth opportunities. In fact, 79% of small business owners can’t draw a salary because their corporate buyers are paying too late. Nearly 25% of those surveyed say they can’t hire new employers or invest in new equipment. Another 20% have halted marketing efforts.

And the reach of late payments goes way beyond the company getting paid late. “Every time a small business gets hit by late payments, dozens of others in its network can also be hurt,” Prashant Fuloria, chief product officer at Fundbox, told PYMNTS.com. “Such a chain reaction creates tremendous inefficiency in the small business economy.”

Will Trump’s Administration Attempt to Regulate Late Supplier Payments?

Fuloria told PYMNTS.com he’s not sure if Donald Trump’s administration will attempt to regulate supplier payments in the U.S. But Fuloria is hopeful that Trump’s administration will move forward with a proposal to offer FinTech companies federal charters “so their efforts can be applied to solve the delayed payment problem.”

While it’s unclear whether Trump will promote the initiative, he has addressed the issue of Small and Medium-Sized Enterprise (SME) access to working capital by easing Dodd-Frank regulatory burdens on community banks by enabling more efficient SME lending.

“Banks are definitely aware that small businesses represent a big opportunity, but many of them simply cannot service the smaller capital needs of SMBs profitably,” Fuloria points out. “FinTech companies can help banks solve this problem through the application of technology and innovation.”

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