B2B Payments

SMEs Struggle To Find The Cash To Invest

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The year’s third quarter is over, so it’s prime time to check into the economy. Part of that effort, of course, includes examining the state of the foundation of the economy: small businesses. SMBs have big plans on how they plan to spend their money, but the latest data suggests getting the money to spend is the challenge. Whether it’s getting paid by corporate buyers with the sluggish paper check or facing the stamp of rejection on a bank loan application, SMEs aren’t in the easiest of spots to invest in new technology and human capital as the final quarter of 2016 commences.

 

$203 billion to be spent on Big Data analytics solutions by 2020, said IDC, highlighting banking and manufacturing as the industries that will fuel this spend. Already, the banking sector has spent $17 billion on Big Data and data analytics solutions in 2016; financial services is likely to remain Big Data’s top market in the future, according to research. That’s due to the capabilities of risk management, fraud detection and prevention and compliance within data analytics solutions. And it’s not just large enterprises ready to open their wallets to data tech; SMEs are expected to make up a quarter of Big Data spend by the end of the decade.

One-fifth of U.K. SMEs pay suppliers with cash and checks, with slightly more — 22 percent — reporting paying their suppliers with both cash/check and electronic payment. Luckily, the majority (54 percent) said most of their supplier payments are done via electronic rails. The statistics came from HM Revenue & Customs, which reported that, for a significant portion of SMEs in the nation, cash is still king — for both B2B and B2C payments. Interestingly, however, a significant portion of SMEs shun cash entirely. The crown on cash’s head hasn’t fallen, but there’s certainly a distribution of power happening when it comes to SME payment preferences.

15% of SMEs get rejected for a bank loan in Canada, found the CFIB in a new report. And even though FinTech innovation has spawned new alternative finance options, analysts said small and medium-sized businesses in Canada still want a personal relationship with their banks, and only 0.1 percent of SMEs surveyed said they’ve relied on crowdfunding to access financing. Overall, the smaller the business, the more likely it is to get rejected for a bank loan, the report said, with the CFIB pointing to the role of the Small Business Banking Code of Conduct for banks to refer rejected SMEs to alternative loan sources.

6.5 checks are sent to mid-sized businesses a day, while microcompanies only receive about two checks a day. But check volume jumps when businesses offer both online and physical store fronts, which receive up to nine checks daily. This constant flow of paper checks offers an opportunity for mobile report deposit capture technologies to gain traction within the SME space, found a new report by WAUSAU Financial Systems. Mobile check capture technology is the norm in larger companies, analysts said, but SMEs are looking for low-cost options, the firm said.

A 0.23% decrease in small business hiring in September suggests SMEs in the U.S. have “hit the pause button” on employment expansion, according to CBIZ Employee Services Organization President Philip Noftsinger. Its latest survey of small U.S. businesses shows modest improvement from August’s 0.82 percent decrease in hiring, but the news, Noftsinger said, isn’t necessarily bad. “Three months of declines in employment totals for small business owners demonstrates a willingness among employers to allow natural attrition to reduce labor costs in advance of greater clarity being earned from the election itself,” he said, citing a “tumultuous election cycle” as impacting SMEs and their plans for the future.

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