Unpaid Invoices Prevent Small Businesses from Creating 2.1 Million New Jobs (Infographic)

The Impact of Unpaid Invoices Prevents Small Businesses from Creating 2.1 Million New Jobs (Infographic)

For one week a month, jobs reports dominate the headlines.

Political sides argue the implications of the numbers. And everyone wants to know — who’s responsible?

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You may never hear slow job growth numbers being blamed on unpaid invoices to small businesses, though.

The Biggest Impact of Unpaid Invoices

But according to new data from Fundbox, small businesses not getting paid for their products or services has a direct impact on their ability to hire.

Of the six ways that unpaid invoices adversely impact small businesses, hiring is No. 1.

Twenty-three percent of the small businesses surveyed by Fundbox say they can’t hire a new employee if they have outstanding invoices.

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One small business owner told Fundbox that an unpaid invoice results in a dilemma: “I choose between hiring freezes and not paying myself while I work on getting the payment.”

So, if small businesses got paid for all unpaid invoices at once, Fundbox estimates, they could add 2.1 million new jobs to the U.S. economy.

Something’s Got to Give

It’s obvious small businesses are operating on a shoestring budget. No bill can go unpaid without having a negative impact.

And while hiring is most likely to take the hit initially, other areas of a small business will suffer, too.

“Being paid late is an unfortunate reality faced by most small businesses. This has a massive trickle down effect on the owner, the company, and the economy,” says Prashant Fuloria, Chief Product Officer for Fundbox.

Owners told Fundbox that an unpaid bill will likely hit their pay first. Small business owners will eat the loss. A total of 79 percent of small business owners say they can’t pay themselves if they have an unpaid invoice.

Eventually, an unpaid invoice’s impact will snowball.

New equipment will be the next thing to take a hit. New computers or new tires on the company truck will have to wait.

Marketing will suffer, too. And then, if the invoices continue to go unpaid, small businesses say they’ll cut back on current payroll, starting with scaling back hours.

Check out more data from the Fundbox survey in the full infographic below.

The Impact of Unpaid Invoices

Budgeting Photo via Shutterstock


Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and the Head of Content Partnerships. A journalist with 20 years of experience in traditional and online media, he is a member of the Society of Professional Journalists. He founded his own local newspaper, the Pottsville Free Press, covering his hometown.

4 Reactions
  1. It is important to have some sort of tracking. Also, pay your invoices on a regular basis. It will help you keep track of everything.

  2. I learned that you can record items when it is delivered. But it is also very important to look at the cash flow. I think that is even more important than

  3. Even the tiniest things can have the greatest impact if it goes unnoticed. I agree that tracking is important.

  4. Invoice financing, or factoring, will help to take care of this problem in at least three ways:

    1. By running a credit check of a potential client before you sign a contract with them. A non-recourse Factor will guarantee the credit of a client.

    2. By paying you an advance on your invoice within about 24 hours after invoicing a client of completed work or receiving of product. You pay your employees and suppliers on time.

    3. By doing the collections for you. Business owner can concentrate on building a sales team instead of a collection staff.