WePay Survey Reveals SMBs Struggle with Cash Flow Management

The cash flow issues hit particularly hard: A majority (59%) say the financial impact is highly consequential or consequential.

Small business owners and operators also report significant pain beyond their bank accounts: 56% said the emotional impact is highly consequential or consequential, and 44% said the same of the administrative impact.

More findings on payments challenges:

• 25% of SMBs have experienced a chargeback (a fraudulent or disputed transaction that resulted in a financial institution requiring the business to make good on the loss) in the last year
• Many small businesses have experienced multiple instances of customer payment fraud, including 8% of those affected reporting 10 or more instances
• 21% of SMBs hit with payment fraud first experienced it less than one year after the business started, and 51% experienced it within two years of when the business started

The research indicates technology can help SMBs. For example, those small businesses that process all of their customer payments directly within the software platforms and apps they use to manage their business – like Shopify, Square, and Zoho – report a 15% lower incidence of cash flow management issues and especially lower administrative consequences.

SMBs handling their payments online also indicate a variety of other benefits, like rarely, if ever, needing to visit their banks, whereas respondents overall reported frequent bank visits that often take them away from their primary work.

“It’s disheartening to see how many, and how much, small businesses are distracted by challenges related to collecting their hard-earned money” said Tina Hsiao, WePay’s Vice President of Risk and Chargeback Operations. “Yet it’s also encouraging to see how software platforms with integrated payments processing are starting to fundamentally change the game.”

Deeper payments findings:

• Payment fraud and chargebacks affect all types of SMBs – new and old, those that sell goods and services, and those that conduct commerce in-person and online
• SMBs are often left waiting for payment, with only 33% reporting they get paid immediately (mostly those selling goods in-person)
• 12% report they have come to expect it will usually take one month or longer after requesting payment to collect from customers
• 10% of respondents say they have had to chase down a customer payment for 181 days or longer
• Small business owners are making frequent trips to the bank – 58% of survey respondents visit their bank on a daily or weekly basis to deposit cash or checks

Deeper business management software / apps findings:

• 84% of SMBs routinely use at least one software tool or app to manage their business
• Most of those SMBs managing their business via software and apps have narrowed to 1-2 tools, yet 16% find need to consistently use 5 or more
• Speed and security matter – asked what improvements they would desire most from their go-to software, 50% want faster service and 45% want improved security.

This survey was conducted in April 2017 by Survata, an independent research firm, on behalf of WePay. Survata completed 505 online interviews with US-based small business owners and operators.