B2B Payments

As Tech Adoption Rises, SMBs Still Not Managing Cash On Mobile

Entrepreneurs are quickly embracing cash flow management technologies, and have significantly increased the use of such tools in only the last few years. But a new report from Fachhochschule des Mittelstands (FHM) suggests that small businesses have vastly different ways of deploying their cash flow management technologies and strategies.

On Tuesday (July 10), FHM, a Germany-based SME university, published its third study on small and medium-sized business liquidity management, according to a press release from Commerzbank. The research, which surveyed 280 small business finance managers, signals the accelerating adoption of financial technology among SMBs. But use of these tools does not look the same across each business, analysts noted.

Cash flow management systems appear to be finding the strongest footing within small businesses: According to FHM, 55 percent of SMBs surveyed have these tools implemented, compared to only 36 percent in 2015. Bank-owned cash flow management tools are most popular, with only about a quarter of small firms reporting use of cash flow management solutions from software developers.

Mobile Left Behind

The increasing use of cash flow management technology among small businesses is a promising trend that suggests SMBs are beginning to improve technology adoption. But FHM’s report found another trend that may contradict other assumptions about SMBs.

While entrepreneurs are often targeted by mobile-friendly B2B financial management solutions, the report found that mobile applications “do not yet play a role” in cash management technology adoption. Rather, 83 percent of respondents said their cash management tools are only accessible on desktop platforms, with only 10 percent accessing full functionality of their cash management solutions on a mobile device.

Less than a fifth of small businesses said they use mobile platforms to initiative and approve payments.

In a statement, Frank-Oliver Wolf, head of sales payment transactions and foreign trading at Commerzbank, said financial service providers must keep security top-of-mind when offering mobile solutions to small business customers.

“App solutions have become omnipresent in many day-to-day settings thanks to their user-friendliness,” Wolf said. “This is also true of cash management systems, as they provide sufficient security.”

Indeed, security is an increasing focus for the small businesses surveyed: 78 percent agreed that fraud prevention is important, up from 71 percent in 2017. Analysts noted that this trend may suggest that security “goes hand in hand” with digitization, and as cash management technology adoption rises, so does concern over fraud and cyberattacks.

At the same time, Wolf added, SMBs are feeling more confident in the security of their digital cash management tools, which supports rising adoption.

“Digitalization has also arrived in the financial management of small and medium-sized enterprises, now that security reservations are abating,” he added.

A Varied Picture of Adoption

FHM’s report points to possible trends in small business technology adoption, including increasing use of the technology when offered by banks, as well as heightened focus on security of the solutions they’re using. But researchers emphasized that there are striking differences in SMBs’ strategies for tech adoption of financial management solutions.

In the announcement of the research, FHM said the variety of usage patterns in cash management solutions is “the most striking difference” found in the survey. Analysts noted that for some SMBs, only one employee operates the solution under a single bank account. For other firms, an entire financial department will manage payment flows and various bank relationships.

Professor Dr. Volker Wittberg, the academic head of the report, said in a statement that this certainly reflects the varying size and access to resources of the SMB community – but that the data could hint at another revelation about the way small firms use these tools.

“There are certainly smaller companies that make full use of cash management systems that involve several employees – for example, if the monitoring of incoming payments is the direct responsibility of individual employees in sales,” Dr. Wittberg stated.

According to FHM, the statistics suggest a range in “innovative strength and management” across businesses, regardless of size.

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