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How Unpaid Invoices Cripple U.S. Economy (And Your SMB)

You know unpaid customer invoices can hurt your company. But if you analyze all the unpaid invoices across the U.S. economy, you'd see just how dramatically those delinquent payments harm small and medium-sized businesses (SMBs) and the overall economy.

That’s according to a recent study from Fundbox, which shows 79% of small business owners have skipped paying themselves after late payments.

The cash flow optimization platform sponsored the study in order to better understand the microeconomic impact of unpaid invoices or late payments. Previous studies from the company show 64% of SMBs struggle with late payments, while the total amount of unpaid invoices to SMBs in the United States is around $825 billion.

Unpaid Invoices and Economic Impact

This culture of late payments can hold back companies as they try to grow. The survey found:

  • 23% of SMBs can’t hire new employees or invest in new equipment;
  • 20% stop their marketing efforts, and
  • 17% can’t increase their inventory.

Now let's apply the data to the broader economy. If invoices were paid on time, SMBs could hire an additional 2.1 million employees, reducing national unemployment by 27%, the research claims.

And on the individual business front, if invoices were paid on time:

  • SMB owners could pay themselves an incremental $30,990;
  • purchase $9,207 in new equipment;
  • invest an incremental $8,308 in marketing;
  • spend $7,411 in pay increases or bonuses to employees;
  • and build up an incremental $6,737 in inventory.

"Being paid late is an unfortunate reality faced by most small businesses. This has a massive trickle down effect on the owner, the company, and the economy," said Prashant Fuloria, chief product officer, Fundbox. "We have a strong pulse check on small businesses, and this study further underscores the critical need for services like Fundbox that solve small business owners' cash flow problems."

Not by coincidence, Fundbox helps SMBs to manage and optimize their cash flow. To date, Fundbox says it’s served more than 50,000 SMBs and has approximately 40 million B2B invoices on its platform.