WePay, an integrated payments provider for online platforms, released new data that shows a majority of US-based SMBs end the calendar year with at least one significant payments challenge which severely impacts their business. Conducted in partnership with Survata, an independent research firm, WePay polled more than 500 US-based small business owners and operators for its second national SMB & Money Survey.
“Small businesses are a big boost to the U.S. economy, providing financial independence, encouraging innovation, and creating employment opportunities,” indicated new WePay Chief Operating Officer Tina Hsiao. “But it’s clear late payments and issues around fraud continue to be a serious burden for these businesses and need to be addressed.”
According to the findings, the end-of-year time period is particularly important for SMB coffers — business owners and operators report earning 20% of their annual revenue between Thanksgiving and December 31. For businesses that sell goods rather than services, the impact is much greater — they report earning 28% of their annual revenue during this time due to more and higher ticket transactions.
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But the concentrated year-end revenue is a double-edged sword, with many SMBs saying the financial boost is accompanied by significant payments challenges. Seventy percent report having experienced at least one severe business issue between Thanksgiving and December 31, 2016. What’s more, the most commonly cited pain point is late payments — more than 21% of survey respondents say they grappled with this problem at the end of last year.
The impact of late payments and other end-of-year business challenges is notable:
- 44% who reported dealing with fraud rated the severity of impact to themselves and their business as very high — 9 or 10 on a 10-point scale, with 10 being the most severe impact
- 40% who reported dealing with chargebacks (a fraudulent or disputed transaction that resulted in a financial institution requiring the SMB to cover the loss) reported a 9 or 10 in impact severity
Many SMBs face payments and accounts receivable challenges throughout the year, not just at its end. WePay’s survey finds late payments, fraud, and chargebacks are highly prevalent. Almost two-thirds of respondents say that at least 10% of their customers do not pay in accordance with their payment terms. Late payments are also eating into SMB business productivity, with 59% of SMBs saying they follow up with their customers on late payments at least two times on average.
When asked how WePay will address address such issues going forward, Hsiao explained to Crowdfund Insider via email,
“WePay helps online software platforms like Constant Contact, FreshBooks, and Meetup to integrate payments seamlessly into their user experiences. This matters because our experience demonstrates that many small businesses get paid faster and with less hassle when they can easily accept customer payments within their go-to software and apps.”
Other year-round business and payments challenges persist for SMBs. 26% of survey respondents reported losing money to fraud and/or chargebacks in the past year. Additionally, for businesses that experienced this particular pain point, the data showed:
- The median amount lost in the past year was $925
- Twenty two percent of these SMBs reported losing $5,000 or more
- One business (of 515 surveyed) reported fraud loss above $1 million
This past October, JPMorgan Chase (NYSE: JPM) acquired payments platform WePay.
“We’re combining the global brand, scale, capabilities, and distribution of JPMorgan Chase with our proven technology and team,” added Hsaio. “We believe this will enable us to serve more software platforms better, which will in turn help more small businesses and their customers.”
Founded in 2006, WePay touts over 1000 partners including Constant Contact, GoFundMe and Meetup.