A troubled economy continues to take its toll on small to midsized businesses (SMBs). Just half of small business banking customers are now considered financially healthy. Of the rest, half are cash- or capital-constrained, and half are financially vulnerable. As a result, businesses are trying everything they can to stay afloat.
Nearly half of organizations plan to focus on liquidity management in the next year. Thirty-two percent plan to concentrate on cost-containment measures related to areas such as vendor contracts and staffing costs. Another 21% said they will focus on receivables, inventory and payables, while 16% are concerned with managing liquidity risk via better forecasting and cash flow tracking.
The “Embedded Finance Tracker®” examines the opportunities presented by cash flow and spend management technology in a down economy.
Just 26% of Main Street SMBs surveyed said they could access the equivalent of 60 days’ revenue. On the other hand, 17% said they have no source of emergency funding. Forty percent of businesses rely on credit cards, and nearly 31% said they use personal credit cards for business expenses. As loans from big banks become harder to find, 75% of SMBs say would most likely turn to digital-only banks.
For businesses, the cost of late payments is more than just dollars and cents. A recent study showed that, on average, European companies spend 29% of the working year just chasing down overdue payments. Forty percent of European businesses say they spend 10 hours or more every week pursuing those payments.
For more on these and other stories, visit the Tracker’s News and Trends section.
Spend management technology is becoming table stakes in every industry. But in times of economic uncertainty, many companies simply cut costs rather than making this necessary investment.
To get the Insider POV, we spoke with Global Rewards’ Isaac Itzkowitz to find out why a down economy is when companies should build the spend management systems they’ll need when the market roars back.
Businesses have tried several solutions to address cash flow issues. Sixty percent of SMBs have implemented real-time payment solutions to reduce the turnaround time between incoming and outgoing payments. Moreover, 48% of CFOs have invested in digitized working capital programs, with more than three-quarters reporting improvements.
To learn more about how spend management technology yields better working capital outcomes for SMBs, read the Tracker’s PYMNTS Intelligence.