Payments Innovation

SMBs, Girding For Bumps In The Night

Things that go bump in the payments night. 

Hardly a cheerful sentiment to kick off the start of a webcast on how small and midsized businesses can get ahead of the payments game. But an old Scottish prayer that featured that very imagery served up by MPD’s Karen Webster sought to encapsulate the mindset of SMB owners and executives. In business, things are not supernatural, but are scary nonetheless. 

Think cyberthreats and cash flow, for starters. In a wide-ranging conversation between MPD’s Karen Webster and Sage Payment Solutions’ Paul Bridgewater, chief executive, topics ran the gamut from fears to opportunities, and the use of technology that helps navigate those two opposite poles.

In the observance of the current SMB environment, the Sage executive said navigating complexity remained a key hindrance to businesses keeping customers happy, a hurdle that many professionals are “ill-equipped” to clear. 

Across a number of surveys conducted by Sage, a few data points mandated repeating. Among them: That when it comes to technology, the use of such an arrow in the quiver remained relatively low in terms of comfort level and confidence. As a matter of fact, noted Bridgewater, as one sliding scale found, technology adoption ranked, among SMBs, only at about a 6 out of 10. Not awful, but not great and perhaps of some surprise is that there is not all that much difference between the B2B and B2C realms, with Bridgewater noting that “I would have thought for sure” that the B2C would skew to be a bit more tech-savvy. 

The challenges remain that there is an educational component that would focus on how technology could replace the existing SMB processes that have been used for as long as 10 to 15 years, said the executive. That replacement is just as important as what is taking shape as new technology to be used for new and expanded functionalities. 

Both Bridgewater and Webster agreed that the movement toward EMV adoption – of course spurred by the liability shift that occurred in the not too distant past of October 2015 – has seen impressive uptake, at 39 percent of small businesses. At that pace, noted Bridgewater, total adoption across SMBs would occur in just several months, versus the three to five years that have been typically forecast, and tantamount to a sprint, not a marathon, especially as a significant number of firms surveyed by Bridgewater, at 23 percent, intend to cross over the EMV Rubicon within the next year.

What might spur greater embrace of technology? A generational shift, where millennials come in to run what has historically been a family business, and then the attendant push toward automated invoices, for example – against an antiquated system where the average time that is spent writing checks shakes out to about 60 hours annually. “There’s an emotional connection with checks,” came the conclusion (and here we advertise the only semi-violent exhortation by MPD’s Webster during the webcast, which was, and remains, to “kill the checks”).  Nonetheless, paper checks are still here, and still the predominant B2B conduit to payments, and still lead to a “frustration barrier” of getting paid on time (yet the timing mechanism of writing checks, dropping them in the mail and spacing payments out remains a favorite mechanism of controlling cash flow).

While both Webster and Bridgewater pointed to the critical importance of SMBs to the U.S. economy – which, as the latter noted, spawn as much as 60 percent of all new jobs created domestically – the pressure is always on to “be paid quickly” as cash flow remains crucial to success and education, tracking, and up-to-date information about cash flow in an effort to remain “cash flow confident” can help create even more new jobs. The tech adoption and cash flow mindset remain important against day care, and auto repair, and funeral homes and any other number of B2B verticals.

But tread cautiously among those things that go bump in the SMB night – because, to use another Scottish bit of lit: The best laid schemes o’ (computer) mice an’ men gang aft agley.


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