SMBs Struggle with Cash Flow: 61% Turn to FinTechs for Faster Payments
Small and medium-sized businesses (SMBs) face significant challenges in managing their cash flow, with three-quarters experiencing late receivables and eight in ten struggling with payment-related issues. Despite representing over 90% of U.S. businesses, SMBs remain underserved in access to instant payments, with large corporations enjoying better access to real-time payment rails.
The demand for faster access to money is high among SMBs, with 61% turning to FinTechs for quicker payments due to perceived better fraud protections. However, liquidity is often the top priority, as 77% of SMBs operate with barely sufficient cash reserves. Interestingly, 33% of SMBs would switch banks for real-time payment options, indicating trust in fraud controls. When banks don't offer real-time payments, SMBs turn to FinTechs for faster and more predictable money movement.
Ad hoc transactions now represent more than half of small business receivables, with delays impacting payrolls, supply orders, or rent. To address these challenges, platforms like iBanFirst, Tide, and Noda have emerged. iBanFirst offers the fastest and most transparent international payment capabilities for SMEs, enabling recipients to receive funds within 6-8 hours. Tide provides fast, fully digital business accounts suitable for SMEs, with free Mastercard debit cards and quick setup, but focuses mainly on SEPA payments and limited international transfers. Open Banking payment providers such as Noda offer SMBs secure, fast, and cost-efficient direct bank-to-bank payments with flexible integration options, low fees, and immediate crediting. Large banks are less emphasized for speed in this context, with fintechs and specialized platforms leading in rapid SMB payment services.
The need for real-time payments among SMBs is clear, with 88% of the smallest SMBs willing to accept percentage-based fees for real-time access. Larger SMBs prefer fixed fees. As SMBs continue to demand faster access to money, innovative FinTech solutions and specialized platforms are stepping in to fill the gap left by traditional banking services.
