SMEs Focus On Cash Management For Global Growth

This week, our focus is on the small and medium-sized enterprise. Global ambitions mean an eye on growth, but for SMEs, managing cash remains a challenge. New research provides an in-depth look into exactly how the smaller companies of the world are managing their need for international expansion with the demand for stringent cash management.

80% of SMEs delay adoption of new technology despite long-term benefits, said Australia’s Commonwealth Bank. The majority of SMEs, however, said they have a solid understanding of technology. Still, 48 percent said they have a lack of understanding of how new technologies work and how they might benefit their businesses, leading to reluctance to adopt these new tools. Specifically, nearly two-thirds of SMEs in the country aren’t looking into the potential of data analytics to boost business performance, representing a knowledge gap in SMEs’ understanding of that space.

80% of SMEs that sell internationally said revenues are up from last year, with more small and medium-sized U.S. companies looking overseas for growth opportunities. American Express’ Grow Global Survey concluded that a quarter of these businesses’ growth can be solely attributed to that international business. In the next five years, more than three-quarters said they expect their international revenues to increase by an average of 30 percent. The vast majority (90 percent) agreed that international markets offer major growth opportunities, though relationships with foreign business partners, international compliance, trade rules and logistics costs top the list of concerns for global expansion, researchers said.

70% of U.K. SMEs consider Brexit not a threat to their finances, with businesses in Greater London being the only ones that said Brexit could have a negative impact on their money. The data, revealed in the Close Brothers Business Barometer, found that most smaller companies in the U.K. are “confident” that Brexit won’t result in any impact on the ability for these firms to access some kind of financing. Close Brothers Asset Finance CEO Neil Davies said that, overall, SMEs in the U.K. “feel that, despite the outcome of the EU referendum, their access to finance has not been noticeably disrupted, and nor do they expect it to be.” It’s worth noting, however, that 57 percent of Greater London SMEs expect a financial impact from Brexit.

27 days — the length of time most U.S. SMEs could survive a cash outflow. JPMorgan Chase data released last week found that about half of these businesses have less than a month’s worth of cash on tap to survive such an event, and a quarter have less than just two weeks’ worth of funds. However, the same portion said they could survive as long as two months with their cash-on-hand, researchers found. According to JPMorgan Chase, the report “draws attention to an opportunity to develop new policies that target large numbers of especially financially fragile small businesses in labor-intensive or low-wage industries.” The report, authored by JPMorgan Chase Institute researchers Diana Farrell and Chris Wheat, added: “While small businesses manage liquidity by using credit cards, borrowing from lenders, selling equity to investors or managing terms with suppliers and customers, cash is the least expensive and most readily available source of liquidity for the majority of small businesses.”

2% more SMEs this year are prepping for working capital fluctuation by seeking finance, found a new report by Dun & Bradstreet and Pepperdine Graziadio School of Business and Management. Across both the small and medium-sized business, there has been a 7.8 percent increase in the availability of working capital and a 3.1 percent increase in demand for capital, compared to last year. According to Dun & Bradstreet Vice Chairman Jeff Stibel: “Small businesses are getting even more access to credit, and this correlates to continued expansion and revenue growth.” As these businesses look to secure their future, they’re looking towards credit to fuel their growth, he added. Slow accounts receivable and worsening economic conditions, however, surface as top cash flow concerns for SMEs.