Running a small to midsized business (SMB) in the modern economy can be challenging even under perfect economic conditions. Marketing, staffing, inventory management and other variables fully within owners’ control can be difficult due to a lack of funding. Payments are one of SMBs’ most widely reported struggles, whether involving purchases sold to customers, transactions with vendors or expenses such as rent or payroll.
Real-time payments could provide a critical lifeline for businesses when receiving from customers and sending to vendors and creditors. In today’s unstable economic climate, SMBs need all the payments help they can get.
The “Real-Time Payments Tracker®” examines how real-time payments can help SMBs mitigate cash flow problems.
A recent PYMNTS study found that 43% of British merchants planned to add support for real-time payments in the next three years. Just 33% of American merchants plan to do so. The share of merchants planning to improve real-time payments support reflected this difference, at 6% for U.K. merchants versus just 2.6% for U.S. merchants. Customers of retailers with real-time payment capabilities were also likelier to adopt their loyalty programs or digital coupons, with 63% of British shoppers using at least one grocery store loyalty program, compared with 54% of U.S. consumers.
Slow payments are a significant issue for SMBs around the world. A recent study found customers owe 55% of SMBs in the U.K. between £10,000 and £75,000 in outstanding invoices monthly. Thirty-six percent of these businesses said these funds were necessary to remain solvent. Half of the businesses said customers paid within 30 days, while one-third said they had to wait 60 days, and 14% said they waited 90 days or more. Altogether, businesses in the U.K. had more than £23 billion in outstanding payments.
A recent survey found that half of U.S. SMBs are financially unhealthy, a troubling development for the country’s economic future. Sending and receiving fast and easy payments could help SMB owners and give them a head start toward financial success.
To learn more about how real-time payments can improve cash flow, read the Tracker’s PYMNTS Intelligence.