The Payment Frictions Costing SMBs Their Cash Flow

People tend to gravitate toward what’s easy and familiar. Businesses typically do the same.

This reality creates an uncomfortable truth for small- to medium-sized business (SMB): if it’s even slightly inconvenient to pay them, they might get paid last.

In a business environment shaped by consumer-grade digital expectations, the payment experience is becoming a decisive factor in when invoices get paid. If settling an invoice requires extra steps such as downloading attachments, manually entering bank details, mailing checks or navigating outdated portals, buyers may simply move on to the next bill in their queue.

This may be no big deal for hyper-liquid multinationals, but for SMBs operating on tighter margins and thinner liquidity buffers, even small shifts in payment timing can have outsized consequences. A few days’ delay in receivables can translate directly into postponed payroll decisions, constrained hiring plans or delayed supplier payments.

And in a marketplace where the easiest bill to pay often gets paid first, simplifying how customers pay may be one of the most practical cash flow strategies available for SMBs.

See more: CFOs Capture B2B Payments Digitization Value by Targeting Year-Two Gap

Payment Experience as a Competitive Advantage

For many SMBs, cash flow challenges are often framed as a structural reality: long payment cycles, slow-moving accounts payable departments, and the inevitable lag between delivering work and collecting revenue.

Traditional invoicing processes, particularly those built around PDFs, spreadsheets or paper checks, can introduce multiple micro-frictions that slow the path from invoice to payment. Buyers must extract payment details, log into banking portals, manually enter routing numbers or submit internal approvals. Each step creates an opportunity for delay.

Data from the report “Ready for Change: Why Nearly Half of SMBs Want to Ditch Cash and Checks,” a collaboration between PYMNTS Intelligence and Mastercard, found that 52% of the payments that Gen Z-owned SMBs make are in cash, despite the prevalence of digital tools.

Individually, these legacy frictions may seem trivial. Collectively, they create a hierarchy of convenience.

Accounts payable teams, like consumers paying personal bills, often prioritize the transactions that are easiest to complete. A vendor that includes a one-click payment link or a pre-populated payment form can often leap ahead of those that require manual processing. Convenience effectively becomes a competitive advantage in the payment queue.

In other words, the invoice itself is no longer the finish line. The ease of completing the payment has become part of the product.

“Gone are the days where you can have a great product and a great service, and your invoices aren’t any good,” North Vice President of Product Management Greg Gorman told PYMNTS last month.

See also: Platforms Expand SMB Lending as Working Capital Demand Rises

Rethinking the Role of Invoicing

For large enterprises, payment timing can be a strategic tool used to manage liquidity across complex financial structures. For smaller companies, it’s far more straightforward: cash arriving sooner simply means greater operational flexibility.

Businesses that replicate the simplicity of consumer transactions—digital wallets, embedded payment links, automated payment data, or flexible payment methods—reduce cognitive load for buyers. That convenience translates directly into faster settlement. A payment experience that feels outdated can stand out in a world where nearly every other financial interaction has been streamlined.

A growing number of SMBs now approach payment workflows the same way they approach customer journeys: as an experience to be optimized.

None of these changes require dramatic operational overhauls. Often, the difference between a delayed payment and a prompt one lies in small design choices: whether a payment link is embedded in the invoice, whether buyer information auto-populates, whether reminders are automated rather than manual.

Some businesses also provide multiple payment paths—credit card, bank transfer, digital wallet—allowing buyers to choose the method that aligns with their own workflows.

Increasingly, companies are realizing that payment design is no longer an administrative detail but a strategic lever for financial stability. The difference between a 15-day payment cycle and a 30-day one may not appear dramatic on paper, but it compounds over time.

As a result, more SMB leaders are scrutinizing—and upgrading—the systems that shape how quickly money actually lands in their accounts.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.