ZipBooks, Speeding B2B Cash Flow Efficiency

Cash flow management can mean life or death for small to mid-sized businesses. The key is to manage invoices — both the ones that are coming in demanding payment and the ones that are going out demanding, well, payment.

Seldom are the two ever exactly in sync, with funds coming in covering, or more than covering, the funds going out. That, of course, means that working capital, or some sort of cash cushion, is needed to “float” the business as it continues to operate, regardless of staggered net cash flows (or outflows).

Access to adequate working capital can be problematic in an environment where some statistics, notably from the Federal Reserve of New York, show that up to 72 percent of smaller enterprises are turned down when they apply for bank loans.

Hesitation on the part of the bigger lenders spells opportunity for alternative financing mechanisms, where technology can help fill a meaningful gap, in a variety of ways, from helping firms manage invoices to reconciling expenses at the back end of accounting functions.

ZipBooks has stepped into that fray, announcing last week that it has launched a free accounting software suite for small businesses, with the software itself offering more than just data reconciliation and expanding to embrace invoice financing and credit card-based recurring billing, among other features.

In an interview with PYMNTS, Brad Hanks, ZipBooks vice president of marketing, said that his firm has seen that when clients grow, especially as they add staff, and payroll starts to move higher, they must grapple with some of the challenges that come with that growth, particularly as customers with whom they do business may start extending their payment terms. In that case, said Hanks, “growth can be exciting, but it can also be scary.” ZipBooks, he said, serves technology, IT and brick-and-mortar SMBs that are finding expansion avenues, with staffing levels at 10 to 20 employees that, in Hanks’ estimation, are “looking to go upmarket.” And by going upmarket, he added, the question remains as to how a firm can work with staggered cash coming in and “yet continue to meet their obligations,” he said.

Access to working capital thus becomes extremely important, and ZipBooks offers access for SMBs through short-term cash advances tied to invoice financing. The application, should it be approved through the ZipBooks cloud-based platform, typically results in funds being turned around within one to two business days, according to Hanks. The relatively streamlined process lets business owners (thus far, based only in the United States) opt to have invoices paid immediately (at a cap of several hundred dollars per invoice, even before they go to the client), which comes through a “send and get paid” feature, where a scheduled plan of 12 weekly payments covers the cost of the advance, with 0.5 percent charged weekly.

It is the fees charged on the underwriting and the fees taken through recurring credit card payments through partners, such as Stripe, said Hanks, that help enable ZipBooks to offer its flagship accounting software for free. Features that come through that suite include expense tracking and project management. Estimates can be sent to clients, too, said Hanks, and if the work estimate is approved, then ZipBooks is able to create a project with timeline and budget tracking.