The Invoicing Gap: How Small Businesses Get Paid, and Why Banks are Missing Out
New research from Javelin Advisory Services shows 61% of small businesses now send electronic invoices, but only 18% do it through their financial institution.
61% of SMBs now send electronic invoices, but from where?
For most of them, the answer is not their bank. Only 18% send electronic invoices through their financial institution. That number has barely moved since 2021, when it was 16%. In the same four years, the share of small businesses using third-party tools like PayPal, QuickBooks, and Square has grown to 53%.
This is the Invoicing Gap. Small businesses need to invoice and collect payments to run their business. They want to do it from a place they trust. For most, that is no longer their bank.
Why it matters for financial institutions
Every invoice sent outside the bank is a payment that routes around the deposit account. It is a receivable the bank cannot see. It is data the bank does not have when it is time to underwrite a loan or recommend a product. And it is a small business relationship that is, quietly, becoming a third-party relationship.
The report documents what small businesses actually want from a bank-delivered invoicing solution. Four frustrations show up across every segment: customers ignore invoices, invoicing is time-consuming, card fees are too high, and cash flow is disconnected from the accounting record.
Why invoicing isn't a feature problem
Javelin frames the stakes more directly than we would:
Banks' invoicing failures undermine a business's operational efficiency and engagement with the bank. Invoicing is not an isolated feature; it sits at the center of how businesses get paid, manage cash flow, and engage customers. For businesses, the value of effective invoicing is far greater than a request for payment. It is a record of value exchanged, a touchpoint with the customer, and an input into receivables and cash-flow analysis. For banks, invoicing touches payment acceptance, reconciliation and the ledger, cash-flow forecasting, and even credit.
What Javelin is describing is not a feature roadmap. It is where the small business banking relationship lives. The harder question the report puts on the table is whether financial institutions treat invoicing as the connection point for those four functions or as a feature in isolation. The institutions closing the gap have answered, and the report names them.
The report runs 19 pages and covers:
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How small businesses actually send invoices today, by method and by segment
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The four frustrations that cut across every small business segment
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Feature demand ranked by what small businesses say matters most
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Why early bank invoicing tools often increase frustration instead of reducing it
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A three-step roadmap financial institutions can use to close the gap
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Named case studies of banks that have acted
Who should read this report
Product leaders at community banks, regional banks, and credit unions. Small business banking executives. Core and digital banking partners thinking about where to invest next. Board members evaluating the small business strategy.