Cash flow has always been a balancing act for small businesses, but that balance is tougher to maintain than it has been in years. Between rising costs, late payments, and an unpredictable economy, SMBs are under more working capital pressure than they’ve ever faced.
According to Atradius, 50% of B2B invoices in the US are paid late, with bad debt affecting 8% of all credit-based B2B sales. With cash reserves shrinking, even one delayed payment can cause a major ripple effect throughout a small business.
One of the contributing factors to this cash pressure comes down to B2B payment methods. Traditional tools like credit cards and bank loans aren’t built to solve this kind of challenge, especially for businesses trying to stay nimble in a digital economy. This is leaving more and more owners stuck in survival mode, and focusing on covering immediate bills instead of investing in future growth.
In this article, we’ll take a closer look at what’s driving the current cash flow squeeze, the hidden costs it creates for SMBs, and how more flexible payment solutions can help ease the pressure and give businesses a smoother path forward.
Supply chain disruptions, tariffs, higher interest rates, and slower consumer demand have all combined to tighten the grip on working capital. For many SMBs, there’s little to no room left to maneuver.
Recent data from PYMNTS and American Express revealed that 70% of SMBs hold less than four months’ worth of cash reserves, while 90% of their revenue gets eaten up by operating expenses. That leaves razor-thin margins to work with, and almost no buffer when something unexpected happens — like a delayed payment, an interest rate hike, or a sudden drop in sales.
For industries like construction, retail, and hospitality, these delays can be the difference between paying employees and pausing operations. In sectors with long payment cycles, it’s not unusual for small business owners to cover the gap themselves, often by skipping their own paychecks.
What we’re seeing is more than a temporary cash flow issue. This is a systemic liquidity gap affecting everyday business operations. It’s a growing issue that’s forcing even profitable companies to make hard decisions just to stay afloat.
A few weeks’ delay in making a purchase might not sound like much, but for small businesses with limited cash reserves, that delay can ripple through their entire operation.
When SMBs don’t have access to flexible financing, they’re often forced to postpone orders, delay inventory restocks, or wait until incoming revenue clears before making essential purchases. That slows down their ability to serve customers and meet demand.
Without reliable financing options, these businesses are often forced into reactive decisions such as scaling back marketing, delaying new hires, or dipping into emergency funds. While the cash strain might not come from unpaid invoices, the result is the same — uncertainty, lost momentum, and missed opportunities.
These kinds of disruptions aren’t always easy to see on a balance sheet, but they quietly erode an SMB’s ability to plan, invest, and grow. When a business’s ability to buy is constrained, everything downstream gets slower and harder including the ability to generate revenue.
For many small and mid-size businesses, the margin for cash flow error has all but disappeared. New data from PYMNTS shows that half of SMBs rely solely on current sales or existing cash to keep afloat.
That leaves a massive segment of the business economy one disruption away from serious trouble. 56% of CEOs at firms generating less than $100 million revenue say they foresee limited future viability for their business without a change in working capital strategy.
These disruptions are no longer rare either. Without access to flexible capital or predictable payment cycles, even a temporary dip in revenue or delay in receivables can force businesses into hard decisions. Many SMBs are cutting staff, canceling vendor orders, or putting expansion plans on hold.
This operating fragility is showing up in increasingly personal ways. According to recent findings:
For businesses without a financial buffer or access to flexible short-term funding, there's often no way to absorb the shock of disrupted payments.
In theory, small businesses should be able to lean on financing when cash flow gets tight. But in reality, many of the most common financial products aren’t designed to support everyday working capital needs. This is especially true for businesses without strong credit profiles or established banking relationships.
Take business credit cards, for example. While they’re often the default solution for short-term cash flow issues, they come with high interest rates and low limits that don’t scale well with growing B2B expenses. They’re also not built to match the rhythm of invoice-based businesses, where cash in and cash out rarely line up neatly within a 30-day credit card billing cycle.
Traditional bank loans are another option, but they’re hard to access for many SMBs. Approval processes can take weeks, collateral is often required, and qualification standards remain high.
Only 44% of SMBs say they have access to financing, and even fewer actively use it for managing day-to-day liquidity. Many businesses simply don’t pursue financing because they think it’s too complex or not worth the time — but that lack of access or hesitancy often leads to more vulnerability.
Businesses without financing are 75% more likely to lack a plan for unexpected costs, and are significantly less confident in their ability to navigate a downturn.
Put simply, the old ways of managing cash flow (e.g. credit cards, loans, spreadsheets) aren’t keeping up with the pace and complexity of modern B2B commerce. As the economic environment grows more volatile, the cash flow gap is becoming harder to ignore. Over the next five years, 41% of SMBs say that a top priority will be to build up their cash reserves to manage unexpected events.
Thankfully it’s not all doom and gloom for SMBs. A new wave of financial technology is stepping up to fill the cash gap, offering tools that are fast, flexible, and built around how B2B businesses actually operate. One of the biggest shifts is moving cash flow support directly into the transaction flow.
Instead of waiting for a loan approval or juggling credit card statements, businesses can now access financing options at the point of purchase. For eCommerce-focused B2B merchants and their buyers, embedded working capital solutions at checkout are emerging as one of the most powerful innovations.
These tools flip the old B2B financing model on its head. Instead of making merchants wait 30 or 60 days for payment, they get paid upfront. On the other side of this transaction, buyers still receive Net 30-style terms, which gives them breathing room to manage their cash flow.
Platforms like Credit Key can embed flexible Net 30 terms into the eCommerce checkout process, as well as in-store. This enables merchants to unlock immediate revenue without taking on credit risk, and gives SMB borrowers the kind of working capital flexibility that traditional financing rarely provides. There’s no need for owner-level applications, credit cards, or third-party invoicing delays. Just clean, predictable, point-of-sale financing that supports both sides of the transaction.
This means that:
In a wholesale distribution market where speed and simplicity are just as important as accessing finance, embedded working capital solutions are becoming a key factor for stability and growth. Finance leaders agree that a cash optimization strategy should be a priority for SMBs, which modern embedded financing solutions such as Buy Now Pay Later (BNPL) can provide.
For wholesale distributors, this kind of payment flexibility is becoming a competitive necessity. When SMB buyers can manage their working capital more easily, they tend to buy more, more often, and stay loyal to vendors that make that possible.
Modern B2B payment options, especially embedded financing at the point of sale, are a practical, low-friction way to help ease cash flow pressure for SMBs.
Solutions like Credit Key offer merchants a reliable way to improve cash flow and drive more revenue through their SMB customer segment. With flexible financing, small business borrowers have greater control over their working capital, giving them more purchasing power.
If you’re looking to improve cash flow, now is the time to rethink how you offer terms, get paid, and support your buyers. The future of working capital isn’t about better math, it’s about using smarter tools that give SMBs the flexibility they need to grow.