SMBs

Building Better SMBs With Rapid Settlement

Building Better SMBs With Rapid Settlement

Despite countless books, lectures and social media courses by ersatz millionaires sharing their foolproof “systems” from a beach house somewhere, there is no secret to creating a successful business. That said, the new Small Business Guide to Rapid Settlement Playbook contains at least one cardinal equation for making it as an SMB.

Without giving it away, here’s a hint: cash flow.

Studying the importance of rapid settlements for SMBs, PYMNTS researchers have consistently found that firms with the most vigorous growth potential – and the most optimistic outlook on the future of their businesses – have two things in common: they are digital natives, or have moved substantial portions of their storefront businesses online; and they increasingly choose point-of-sale (POS) and accounting systems, enabling rapid settlements to increase cash flow.

There are, of course, numerous other contributing factors to small business success, many of which are laid out in the February 2020 Small Business Guide to Rapid Settlement Playbook, a Mastercard collaboration.

Curing for Cash Flow

Cash flow problems are infamously toxic to SMBs – a lack of liquidity can start causing problems in less than a week. That’s an existential threat by another name, and business owners are hyperaware of it. PYMNTS research shows that 80 percent of digitally native SMBs and 78 percent of omnichannel firms consider fast access to monies owed extremely important.

Cash flow issues vary depending on whether the SMB is a digital business, a brick-and-mortar store, a microbusiness or a larger entity. Whatever the company’s size or category, cash flow woes bring on serious problems: Over 61 percent of brick-and-mortar microbusinesses said they would delay paying vendors in a cash crunch, while almost 67 percent of omnichannel microbusinesses said cash flow disruptions can even delay payroll (see infographic below).

With push payments, rapid settlements, real-time payments and other forms of instant money enjoying their moment in the sun, it’s no surprise that of the six SMB personas tracked by PYMNTS for the Small Business Guide to Rapid Settlement Playbook, all have expressed high enthusiasm (and even impatience) to implement rapid settlements.

SMBs’ pursuit of rapid settlements is also a wake-up call to solutions providers in the POS space. Up to 80 percent of SMBs surveyed would switch POS vendors to get rapid settlements capabilities. In other words, the horse is out of the barn and there’s no going back.

It’s Time for Rapid Settlements

The world gets more digital by the hour, but legacy payments systems seemed to be asleep at the switch as P2P and instant money flew by in the faster payments lane. Inertia, costs, implementation challenges and related worries slowed the adoption of rapid settlement systems. That’s easing now as companies begin to understand what faster payments really means.

As explained in the latest Small Business Guide to Rapid Settlement Playbook, the more online commerce a company does, the more they want to do. And the more digital commerce a company does, the more interested they become in rapid settlements.

Small Business Rapid Settlements

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Social distancing has changed eCommerce from a ‘want to have’ to a ‘must have’ for businesses, yet retailers could struggle to create convenient payment and refund experiences for their apps and websites, says Abdul Raof Latiff, head of DBS Bank’s digital institutional banking group. In the April 2020 B2B API Tracker, Latiff explains how banks can provide a timely assist via application programming interfaces (APIs) that integrate payments into those eCommerce platforms.

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