Cash flow is, ideally, a fluid process. The idea of spending money to make money truncates the reality of matching money out with the money that comes in, with a close eye on the daily needs of funding a business’ needs in real time. Everything from equipment to wages ties into a real expense.
For small businesses, managing cash flow is sometimes a perilous activity, with smaller firms having less-than-optimal access to stopgap measures should cash flow grind to a halt, even in a short time frame. Factoring of receivables can be an expensive proposition. The advent of technology has smoothed some processes, such as searching for the right suppliers or navigating the various financing options available.
Fundbox, which focuses on cash flow optimization, announced earlier this month an iOS mobile app that lets small business clients choose a one-click financing solution to cover funding needs. The mobile offering, providing the same functionality of the firm’s dashboard on desktop, takes as its goal a more streamlined process of managing finances. The app works with a firm’s accounting software and, with one click, allows business owners to choose to finance certain invoices.
In an interview with PYMNTS, Prashant Fuloria, the company’s chief product officer, stated that the “cash flow gap,” as he termed it, is something that has come to the notice of the firm through its own insight into the data and accounting activity that spotlights the vagaries of cash flow.
Fundbox’s own research shows that “as much as 64 percent of the businesses we have … have been affected by late payments … and this is not something that is determined or affects only certain geographies or verticals.”
The late payments impact has been one that can be difficult to navigate, with initial investments in plant or manufacturing, and then waiting for payments to translate into cash. “Add in the fact,” said the executive, “82 percent of business failures, as has been estimated, fail because of cash flow problems.”
Thus, there is a huge need, said Fuloria, and one that has not been addressed, with technology able to ease the movement of cash, to alleviate the gap mentioned before, through platforms such as Fundbox’s that can be both “easy and convenient,” with the ability to get paid instantly on outstanding invoices and now on the go. Small business owners, said Fuloria, “wear many hats across functions, such as accounting, hiring and selling … and are often not at their desktops.”
Outstanding invoices transformed into cash, through invoice financing, help bridge day-to-day needs of meeting payroll, funding equipment and hiring new workers. Fuloria noted that, through the Fundbox terms, repayment on credit extended (and offering funds) is paid back over a 12-week term, with no penalty for early payment.