SMEs are a vital part of the country’s economic health, comprising 99% of businesses operating in the UK, and accounting for 51% of total turnover last year. However, many SMEs are still unable to operate to their full potential, relying on antiquated systems and relatively limited resources for processing payments. And without effective payment systems SMEs risk treading water to stay afloat, stifling innovation and growth.
Outdated processes drain staff time and prevent the ability to manage payments effectively, meaning businesses are held back from achieving their full potential. Over time, inefficient solutions seriously impact cash flow while diverting attention away from the innovation which fuels business growth. As the UK enters a recession that is predicted to be long and shallow, the already thin profit lines of SMEs put them at huge risk.
Go deeper with GlobalData
Saving time for value added work
When recessions hit, the first consideration many business owners face is ‘where can I strip back resources to remain profitable?’ However, this does not need to be the case. Instead, the first port of call should be finding the correct resources to help reduce time spent on non-value adding activity, wherever possible.
It goes without saying that collecting payments is a critical activity for a business to succeed but using up hours of staff time to process and manage them isn’t. Automation is key to reclaiming valuable time.
A study by Pay.UK revealed that on average, SMEs spend around two working days a month manually reconciling payments. This is a significant deficit for a small business, and over the course of a year it adds up to around 10% of an employee’s individual working time. When considering that other manual processes, such as transferring information to accounting, stock management, and customer record systems, are excluded from these figures the scale of the issue becomes clear.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataTo streamline workflows and reduce unnecessary wasted resources, digital systems automate the entire payment processes, providing manageable end-to-end solutions. Customer records are easily tracked as the need for cumbersome paper-based or spreadsheet processes is eradicated.
As staff save time on rifling through paperwork or searching for data across multiple spreadsheets, digital solutions enable the majority of payment processes to be totally ‘hands-free’, and accounting teams are able to spend more time working on valuable parts of the business.
When integrating a payment system across all aspects of the business, the admin required for providing coherent records is minimised. By replacing repetitive manual processes, costly mistakes and human-error oversights are prevented. In their place, a reliable digital system protects brand reputation and customer relationships. With digital payment solutions, customers can have consistent, dependable and fast payment experiences, while stakeholders are reassured that finances are coming in as expected, and the risk of clerical error is low.
Even when manual inputs are required, doing so will not disrupt the automated workflows or cause backlogs in payment processing, as the integrated system continues to operate in the background. With this, the task at hand can be given the full attention it needs without diverting resources away from value adding activity retrospectively.
Securing income from missed payments
Late and missing payments have always posed issues for businesses. For smaller companies without massive balance sheets, any amount of variance can quickly snowball, as expected income certainty is the basis of budgeting reliably. In times of financial hardship, such as recessions, this becomes a priority.
Towards the end of last year, the ICAEW announced that late payments for SMEs hit a two year high. In fact, official government figures revealed that in December 2022, £23.4 billion was owed to small businesses in outstanding invoices. This figure is a clear indication that the current payment practices for SMEs needs to change.
Under a manual process, missed payments could go under the radar, especially during busy periods where smaller businesses may find resources stretched. Oversights such as these compound over time and cause much larger problems down the line – such as financial instability and becoming swamped in avoidable admin. However, with digital payment systems in place, late and missed payments are automatically flagged, and can be resolved in a timely manner. With integration across the whole business every department can respond in a coordinated way until the issue is resolved, and no one is left out of the loop.
Providing flexible solutions
Market trends from 2022 showed us the demand for flexible payments. Not only did we see a massive increase in the buy-now-pay-later space, but the threat of recession and cost of living crisis brought budgeting to the forefront of the media. Now, the ability to plan finances to suit individual needs is crucial for customers and businesses alike.
For SMEs, as customer outgoings are put under greater scrutiny, keeping as many customers onboard as possible is vital to maintaining turnover and surviving the recession. Direct debits with flexible payment dates allow customers to take control of their finances and work around their financial situation – providing more avenues for small businesses to receive recurring payments without complication and deliver a greater service.
Should a customer get in touch, asking for account details, to pause a payment or change a payment method, being able to fulfil this request quickly is important for customer satisfaction and reassurance. Equally, with customer information digitally stored on a single, easy-to-use platform, waiting times are reduced and your staff can efficiently deliver a prompt response. With greater flexibility, and a comprehensive overview of their financial situation, client reassurance is guaranteed.
When it comes down to it, an outstanding customer experience plays a huge role in keeping clients and customers onboard, especially as their own financial circumstances are likely to change.
For SMEs, the year ahead will prove challenging as the UK’s economic outlook worsens. Ensuring that teams can stay on top of their payments without losing valuable time will become a vital aspect of maintaining a thriving business. Taking the steps to improve footing now will help to prevent stumbling down the line.
Andrea Dunlop is managing director at Access PaySuite
