B2B Payments

The Good And Bad News About Increased SMB Spend

As the saying goes, “You have to spend money to make money.” For small businesses today, spending is up across several categories – but opened wallets and loosened purse strings don’t necessarily mean SMBs will benefit.

This week’s B2B Data Digest takes a look at some of the latest surveys of small business sentiment across the globe. Researchers find reason to be optimistic, especially as entrepreneurs plan to spend on financing and investments in their own companies. Others, however, are forced to up their spend on less strategic measures, like covering the costs of late payments, for example. PYMNTS breaks down the numbers in how small businesses are spending their money.

According to forecasts from Mercator Advisory Group, $700 billion in small business spend will land on cards by 2022. The analysis found that an additional 50 percent of transactions that are currently posted on consumer card products could eventually land on small business cards, as more SMB owners realize there are card products dedicated to corporate spending. According to Brian Riley, director of Mercator Advisory Group’s credit advisory service, while some entrepreneurs prefer to use their personal cards for business spend, commercial card products are key for expense management and accounting. “Issuers might accelerate movement if they give small business owners the same protections afforded to consumers in the CARD Act,” the executive noted.

Fourteen percent of U.K. SMBs planned to apply for financing at the end of 2017, up 4 percent from the start of the year, according to new analysis from BDRC. The market research firm’s SME Finance Monitor report, covered by the London School of Business & Finance, surveyed 132,000 SMBs and found that as more small businesses plan to seek financing, awareness of alternative funding solutions is also on the rise. More than 30 percent said they were familiar with P2P financing by the end of 2017, with that figure rising to 48 percent for larger SMBs with between 50 and 249 workers. Only 5 percent of survey respondents cited access to finance as the biggest barrier to success.

Eighty-seven percent of Canadian small firms agree payments innovation is important, and most are eager to integrate new payments technologies into their operations. That includes new solutions at the point of sale as well as in the back office, found the latest survey from Payments Canada. According to Dan Kelly, president of the Canadian Federation of Independent Business, SMBs are “particularly interested in new ways to make business-to-business payments,” which involve larger values that need to be moved quickly and affordably. According to Payments Canada, 81 percent of SMBs said they are willing to invest in adoption of new payments technologies for their companies.

Twenty percent tax breaks may cause some U.S. small businesses to spend more on accounting services, according to a new report by Senator Ron Wyden (D-Ore.). The senator released the report attacking the Republican-led tax reform initiative, warning that not all SMBs will benefit from tax cuts and that the legislation may actually force entrepreneurs to spend more on accounting services. “What good is a deduction if money spent in annual fees to your accountant far exceed the tax break?” he asked in the report.

The Kenyan government owes $1.1 billion to contractors and suppliers, while county governments are similarly withholding supplier payments, according to a report by the Office of the Controller of Budget. Reports in Business Daily Africa found that late supplier payments are worsening in the country. Separate analysis by the State Department for Trade, Kenya Retail Sector Prompt Payment similarly found that retailers are also skirting fair payment terms, and the Kenya Revenue Authority found that B2B suppliers have reported a worsening in payment times. At the same time, lending to SMBs has flattened, reports said, with small businesses unable to borrow due to poor credit ratings on previous loan repayments.

Seventy-eight percent of APAC SMBs that grew in 2017 saw a positive impact from technology investment, but among the largest challenges for APAC small businesses, according to CPA Australia’s latest survey, is the increased cost of doing business. In Singapore and Hong Kong, SMBs showed an increase dependence on external finance to cover those rising costs that analysts say could lead to troubling levels of debt.

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