Facebook bought $ 100 million in bills from various owned companies

This week, Facebook announced a $ 100 million commitment to a program that supports small businesses owned by women and minorities by buying their outstanding bills.

When buying outstanding invoices, the Facebook Invoice Fast Track program puts money in the hands of small businesses who would otherwise have to wait weeks, if not months, to receive their customers.

The program is Facebook’s latest effort to establish long-term relationships and loyalty among small businesses, many of whom rely on the social network to run ads targeted to niche demographic groups who may be interested in their services. .

Companies can send outstanding invoices for a minimum of $ 1,000, and if accepted, Facebook will buy the invoice from the small business and pay them in a matter of days. Customers pay outstanding bills on Facebook under the same conditions they had agreed with the small business. For Facebook, which generated nearly $ 86 billion in revenue by 2020, expecting payments is far less severe than for small businesses.

Facebook piloted a smaller version of the program in 2020 after hearing how the company’s suppliers were struggling in the wake of the Covid-19 pandemic, said Rich Rao, Facebook’s vice president of small businesses.

“We just heard first hand the financial difficulties these suppliers were facing and it was created very quickly, it came up as an idea and we went to our CFO to say,‘ Hey, we’d be able to d to help our suppliers with this? “” Rao said. “He was a very small driver, but we saw he was very successful.”

Now, Facebook is drastically expanding the program and will buy up to $ 100 million in outstanding bills. Rao estimates that this will support approximately 30,000 small businesses.

“It’s a new concept, but it makes us very excited,” Rao said.

U.S. companies owned by women and minorities, which are part of supplier organizations that serve underrepresented groups, are eligible for the program. This includes the National Minority Provider Development Council, the National Council of Women’s Business Enterprises, the LGBT National Chamber of Commerce, the National Veterans Business Development Council, Disability: IN and the Pan-Asian Chamber of Commerce of the United States. Facebook is also exploring adding more organizations associated with the program, the company told CNBC.

Entrepreneurs who have already gone through the show’s pilot include Lisa Dunnigan, co-founder of The Wright Stuff Chics, who sells merchandise for teachers and organizes the Teach Your Heart Out teacher conference.

After the pandemic forced Dunnigan to cancel all of his company’s face-to-face events in 2020, Dunnigan’s business announced a virtual version of the Teach Your Heart Out conference scheduled for July. Teachers signed up for the conference in early 2021, but many paid with purchase orders that take “a long time to pay,” Dunnigan said. After collecting the applications, Dunnigan sent them to Facebook and the company paid him more than $ 10,000 in a matter of days.

“This program has saved the life of our company,” said Dunnigan, who was featured on CNBC by Facebook.

Since then, Dunnigan said he re-applied for the program and that Facebook had paid its outstanding bills several times.

Dunnigan’s story is one of many that Facebook saw after the launch of its pilot that indicated to the company that this was something worth expanding, Rao said.

“We were overwhelmed by the stories that came back,” he said.

Interested companies will be able to start applying on Oct. 1 after the program officially expands, Facebook said.