B2B Payments

The Price Tags Of Unwise Business Spend

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Another quarter of the calendar year has passed, which means another quarter to reflect on the economy. Who better to ask about the state of the markets than the driver behind them: small businesses?

The latest reports suggest a bit of stagnancy: Hiring and spending practices among SMEs remained steady, and while small business owners are optimistic about their own performance, their optimism for the economy overall is another story.

Plus, research places a price tag on B2B sales efforts, the alternative lending industry and small business expense practices. All the stats funnel into the picture of how companies are spending their money — sometimes, not so wisely.

 

$591 billion is wasted every year on B2B sales meetings that lead nowhere, found Altify in its latest Buyer/Seller Value Index. The company’s report pointed to the wasted effort, time and funds U.S. suppliers spend to pitch and sell their goods and services to corporate buyers; in-person meetings, it seems, aren’t cutting it. Expanded globally, the price tag of wasted money hits $1.4 trillion every year, reports said. Altify found that suppliers must engage early with potential buyers if they are to see success in today’s ecosystem.

$36 billion in lending is now happening on alternative market spaces across the Americas, a new report from the CME Group Foundation and KPMG found. This includes a slew of alternative financing categories, from P2P consumer lending to balance sheet lending, invoice financing and P2P business lending. The more than $36 billion market worth of the alternative finance sector is a massive increase from 2015 levels, which were pegged at about $11.4 billion, according to reports.

$338 million of small and micro-business expenses are going unclaimed every year in the U.K., said FreeAgent research last week. That’s because these expenses are worth $14 or less, and individuals neglect to file clams for these low-value purchases. Twenty-two percent of individuals surveyed said it wasn’t worth it to file a claim for these expenses. But those little purchases add up — to hundreds of millions of dollars, reports said. Only 39 percent said they claim every single one of their purchases made while on business. 

1.5 million small business owners use personal credit cards for their businesses, which is worrying considering the reduction in credit card access to low-income and low-credit score Americans, according to new research from the Harvard Kennedy School of Government’s Mossavar-Rahmani Center for Business and Government. The paper, released last week, is likely to stir up some controversy as the authors concluded that regulation and tightening of credit assessment rules has unintentionally caused fewer individuals to be able to access a credit card; with this conclusion, the report has called for the repeal of the Durbin Amendment.

70% of mid-market businesses and 69% of small firms are optimistic about the future performance of their companies, concluded JPMorgan Chase in its Business Leaders Outlook report. Overall outlook on the economy, however, was less stellar, with just 10 percent of middle-market firms and 27 percent of small companies reporting optimism on this front. When broken down between local, national and global economic outlook, all three areas saw declines in optimism compared to 2015.

Half of cybercrime attacks target small businesses, says Symantec, which sifted through instances of cyberattacks over the last four years. Researchers concluded that small businesses have increased in popularity for these attackers, while larger companies improve their security capabilities. And while small businesses have limited funds to give up to these attackers, researchers highlighted the potential for SMEs to lead to their larger corporate partners for these scammers.

48% of U.K. SMEs are frustrated at their banks with how slow their payments land in their business accounts, statistics from ACI Worldwide and YouGov stated last week. One-third said these late payments negatively impact their ability to meet financial obligations. And while just 10 percent claimed that bank financing is limited for areas like equipment, a recent interview with PYMNTS had ACI noting that banks have an opportunity to boost profit margins by filling in this small, but significant, gap in SME lending.

48% of U.S. SMEs reported plans to expand their workforce in March, down 1 percent from the previous month, concluded the NFIB Small Business Optimism Index. Despite the decline, researchers agreed that small business optimism in the U.S. went largely unchanged between February and March. Credit conditions and reports of higher sales both declined slightly, though capital spending saw a minor increase.

30 percent of small business owners use personal funds to finance their companies, Hitachi Capital research found last week. The findings are in line with Harvard’s study citing the significant dependence on personal credit cards for small business financing. Hitachi’s analysis found that nearly one-third of those surveyed have used personal funds to help their business in the last year; meanwhile, just 21 percent said they seek external financing.

13% of Canadian small business owners say they’re in it for the money, suggesting that most small business owners in the country aren’t looking to boost their income as the main driver behind their decision to leave the corporate world and enter the entrepreneurial one. At least, that’s what Intuit QuickBooks suggested when it published the data. Instead, the motivation seems to be a desire for greater control over professional lives, reports said, with 79 percent of those surveyed reporting feeling happier today than they were in their corporate jobs. Still, that doesn’t mean smooth sailing every day; researchers found cash flow to be small business owners’ top stressor.

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