As we hope to leave the aftermath of the COVID-19 pandemic in the back mirror and head off to a brighter future, for small and medium businesses (SMEs) progress has been a trickier proposition.
The pandemic has brought about radical societal changes to how consumers purchase and sell products. There are more alternative payment methods (APMs) than ever before, the reliance on handheld cash has dwindled and businesses have had to adjust to these behaviours.
But shifts in monetary behaviours and loss in revenues are not the only pressing issues facing Small and Medium Enterprises today, as Mark Hartley, CEO of BankiFi emphasised.
“Even prior to the pandemic, small businesses faced two major challenges – time that they face on administrative tasks and the second one being late payments”, he stated.
Hartley is someone who knows the struggles SMEs have faced over the past several years and with BankiFi, they are using technology and advanced softwares to afford time and resources to SMEs.
He went on to outline how and why SMEs have been struggling and how BankiFi can use their resources as a solution.
“Typically a small business where they’re a sole trader or a micro business – which is defined as 10 people or less – or even slightly larger businesses, they don’t have the admin departments and certainly won’t have finance teams to take time on admin.
“According to research that has been done by various bodies including the Federation of Small Businesses, we know SMEs spend a lot of time chasing businesses or government departments that haven’t paid them. Prior to the pandemic that was taking around 56 days to collect their money, but post-pandemic that has changed to 76 days to get paid.”
Prior to the pandemic, Hartley revealed that the Federation of Small Businesses attributed late payments as‘one of the main reasons why 40,000 businesses go out of business.’
In recent UK government findings, despite the total number of SMEs dropping from 5.9 to 5.59 million, SMEs were responsible for 52% of all business turnover revenue in the UK last year.
Yet SMEs still run into the same admin and late payment issues that aren’t as majorly prevalent to larger businesses.
“They don’t have the people around to do the things that larger businesses would normally have”, stated Hartley.
“They don’t have a finance department so they are generally time poor people who don’t have the resources for those two critical things. Not only do they not get paid on time, it means they’re spending less time not generating money and sales, so it has a bit of a double-whammy effect.”
Additionally, in the growing support for small businesses, small business commissioner Liz Barclay, has created a prompt payment code which enables payments from business to business/customer, to be paid on time.
Hartley expounded on the variety of reasons why late payments are such a common occurrence for businesses.
“There are a variety of reasons, bureaucracy is definitely one of them, perhaps lack of procedure is another one and then often it’s about simply not getting round to paying people, which is not good enough,” states Hartley.
Hartley adds on how BankiFi are helping provide solutions to these problems, highlighting its recently launched ‘Revenu’ app in collaboration with TSB bank.
“We’ve done that through technology, the product that we launched with TSB called ‘Revenu’ automates the whole order to cash cycle,” said Hartley.
“It automatically goes back into your accounting package. Therefore it removes anything you will have to do manually, helps cut down time and also if your customer hasn’t paid you within that 30 day invoice time, you can send them reminders via text message or Whatsapp.
“You can request that they pay you immediately. We can render a QR code which enables the customer to pay that trades person.”