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Fintech Invoice Financing Approaches Aim to Reduce the Impact of Late B2B Payments

By Zack Andresen

Invoice financing has long been a way for businesses to manage cash flow when faced with the problem of overdue B2B payments.1 Now, with late payments increasing around the globe, financial-technology (fintech) companies are introducing new technologies that aim to make invoice financing more accessible, thus helping to increase liquidity for companies experiencing late-payment problems.2

Overdue B2B Payments are a Global Problem


The annual Payment Practices Barometer reports from Atradius, a Dutch credit insurance provider, highlight the global growth of the late B2B payments problem. In 2017, the percentage of overdue invoices increased in nearly every corner of the globe, including the Americas, Asia-Pacific, and Western Europe.3,4,5,6,7 In the U.S. alone, 45.4 percent of domestic receivables and 58.6 percent of cross-border B2B payments are past due, according to the reports.8


SMEs may be particularly hard hit by the problem. One invoice financing provider estimates that 81 percent of SME invoices in the U.S. are 30 days past due, and that the average small business has just 27 days of cash reserves on hand.9 The same source estimates the total value of U.S. unpaid SME invoices at $825 billion.10


The Unmet Need for SME Financing


Despite the fact that U.S. SME B2B payments are growing, there is a considerable unmet need for small-business financing, experts say. According to Deloitte, U.S. B2B payments are growing at 5.8 percent annually; the company expects small-business payments alone to be worth $4.52 trillion by 2020. However, the B2B payments market has not attracted as much attention from financial institutions as business-to-consumer payments.11


One reason is that it can be more difficult for banks to assess the creditworthiness of SMEs, according to Moody's Analytics, due to a variety of factors such as fragmented financial data, the difficulty of forecasting cash flow, and the strength of credit-rating models.12 Furthermore, banks lose money underwriting loans below $100,000, according to PayNet, a provider of small-business credit ratings.13 These smaller loans accounted for 92 percent of all small business loans in the U.S. in 2014-2015, according to the U.S. Small Business Administration.14


According to a survey by the Federal Reserve Bank of New York, 60 percent of small businesses applying for funding in 2016 did not receive all the financing they requested.15


Late payments exacerbate the financial problems for SMEs. According to a World Economic Forum analysis, small businesses in the B2B sector are often in a relatively weak negotiating position towards their larger customers; as a result, they often have to accept late or even overdue B2B payments as an inevitable aspect of conducting business.16


Fintechs and Invoice Finance


A number of startups are seeking to address the problem of overdue B2B payments with invoice financing technologies tailored toward the needs of small businesses.17 Invoice financing technologies typically help companies sell their outstanding invoices to a third party (factoring) or obtain financing based on the money that they are owed.18


Some of these fintechs use blockchain technology, which is being adopted for a variety of other applications in international trade, including B2B payments. For example, one company is planning a blockchain-based peer-to-peer marketplace that businesses can use to buy and sell B2B invoices globally. The goal is to enable lower transaction fees, faster B2B payment processing, and enhanced security for businesses.19 Another approach lets SMEs upload encrypted invoices to a blockchain-based platform; the goal is that uploaded invoices can be traded or used to build a financial track record.20


Other technologies apply artificial intelligence (AI) to assess risk and expedite financing. One approach analyzes millions of data points and uses AI to provide a score of a corporate buyer's likelihood to pay SMEs' outstanding invoices. This allows funders to instantly lend funds to SMEs, thereby enabling the SMEs to better manage cash flow.21


Though such technologies are still at an early stage, the PwC 2017 Global Fintech Report predicts that 77 percent of financial institutions will adopt blockchain in payment processing by 2020, while another 30 percent are currently investing in artificial intelligence.22



Fintechs are introducing new invoice financing technologies designed to reduce the impact of late B2B payments. However, awareness and adoption are still at an early stage, and it remains to be seen how big an impact they will make.23

Zack Andersen - The Author

The Author

Zack Andresen

Zack Andresen is a business technology writer based in Brooklyn, NY, but currently traveling the world with his wife and son. Learn more at


1. “The History of Invoice Financing,” Open Business Council;
2. “Atradius Payment Practices Barometer Americas,” Atradius;
3. “Atradius Payment Practices Barometer Americas,” Atradius;
4. “Atradius Payments Practices Barometer APAC,” Atradius;
5. “Atradius Payment Practices Barometer China”, Atradius;
6. “Atradius Payment Practices Barometer UK,” Atradius;
7. “Atradius Payment Practices Barometer Western Europe,” Atradius;
8. Statistical Appendix — Atradius Payment Practices Barometer, Atradius;
9. “The Economic Impact of Unpaid Invoices,” Fundbox;
10. Ibid.
11. B2B payments market is a significant untapped opportunity, Deloitte;
12. Seven key challenges in assessing SME credit risk, Moody’s Analytics;
13. The Small Business Credit Gap Solution, Paynet;
14. “Small Business Lending in the United States, 2014-2015,” U.S. Small Business Administration;
15. Small Business Credit Survey 2016, Federal Reserve Bank of New York;
16. The Future of FinTech: A Paradigm Shift in Small Business Finance, World Economic Forum;
17. Ibid.
18. Ibid.
19. “Fintech startup brings blockchain and cryptocurrencies to invoice finance,” Global Trade Review;
20. “What problem does Hive Project Platform solve?,” Hive;
21. “Buyers/Sellers,” Previse;
22. Redrawing the lines: FinTech’s growing influence on Financial Services, PwC;
23. “The State of Business Lending in 2017, According to Small Business Owners,” Fundera;

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