B2B Payments

Where SMEs Stand At 2016’s Midpoint


With the second quarter of the year having wrapped up, it’s not quite yet earnings season. Still, analysts are taking 2016’s midpoint to assess the financial health of businesses outside the public realm — namely, SMEs.

At the end of Q2 2016, small businesses are still waiting a long time to get paid, though there have been some improvements in B2B payment speeds. Data also reveals the challenges businesses face when getting educated on how to financially manage their business.

But the hot topic as the second half of the year begins is small business employment. The numbers are up, though analysts warn that, with earnings season headed our way, SME hiring practices may take a downturn.


86% of Irish SMEs want a 30-day payment regime, found the Irish Small and Medium Enterprises Association (ISME) in its Credit Watch Survey for Q2 2016. A 30-day payment regime is far from what many small businesses experience today, being forced to wait 60, 90 or even 120 days for payment from their corporate buyers. The ISME did find that, as of the end of Q2, SMEs in Ireland are faring a bit better than Q1, enduring an average of 57 days to see their invoices settled, down from 59 days the previous quarter. Further, 17 percent of SMEs are waiting three months or more to get paid, though that’s down from the 24 percent that said the same in the first quarter of the year, researchers said.


52% of U.K. SMEs worry about unpaid invoices, a figure released by small business accounting firm Xero last week suggests. While B2B payments practices may be improving, they’re not yet where business owners might like them to be. The worst affected area in Xero’s report was London, in which businesses spend an average of 1.5 days every month chasing down late payments. The data also uncovered a potential problem in the financial supply chain itself: Nearly a third of businesses surveyed said the main reason they’re waiting to get paid is because their corporate customers are waiting to get paid from their own buyers.


19% of SMEs turn to Google for accounting advice, the Association of Accounting Technicians (AAT) found. Researchers found another interesting pattern: While small business owners may admit that they are not entirely fluent in accounting and finance, only 11 percent said that they regret not spending more time on this area when first launching their businesses. “Being confident in yourself and your idea is excellent,” said AAT Head of Business Development Rob Alder, “but you should still ensure you get as much advice as you can, from multiple sources.”


Small businesses have increased hiring for 5 months in a row, found CBIZ. Its Small Business Employment Index found a 0.9 percent month-over-month increase in small business hiring for June 2016, and with the promising numbers since February, the index suggests a golden first half of the year for small business hiring. CBIZ Employee Services Organization President Philip Noftsinger, however, did say that the impact from the U.K. referendum hasn’t yet made an impact on small business hiring levels, while the incoming earnings report deluge following the end of Q2 may also have a negative impact on SME employment. The index was released along with ADP’s finding that 172,000 jobs were added in June, surpassing forecasters’ expecations but representing only “mild growth” for small businesses, Noftsinger said.


A 0.21% increase in the Paychex IHS Small Business Jobs Index for June 2016 represents the largest gain in small business employment figures since June 2013, researchers said. Overall, the second quarter of 2016 saw a 0.07 percent increase in the index. At the end of the first quarter of 2016, the Paychex Small Business Jobs Index is now the highest it’s been all year, the company added.


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