Entrepreneurship: How is the payments industry helping SMEs?

*For companies, when their customer pays invoices late, the lack of cash flow limits the growth of the operations, and in particular, it limits the ability of the company to be innovative and open to new technology solutions

Web Editor | ConsumerConnect

It is very easy for many who are new to the Financial Technology (FinTech) space to think that FinTech is an exclusive term for payments technology, and while there is some truth to this, it does not tell the entire story about FinTech.

However, in June 2022, The Fintech Times is looking to indulge this belief as we look to discuss hot topics surrounding both sending and receiving payments, like buy now pay later (BNPL), early paydays and much more.

This week, The Fintech Times has been discussing salary access improvements; specifically delving into how people are getting paid and how businesses can pay other businesses.

Today, we hear from QED Investors, Sonovate, Tranch, PayQuicker and Zimpler about how the payments industry is helping SMEs (small and medium-sized enterprises).

It is said, “With the shift to a more flexible way of working, many small businesses have found themselves in need of additional support to navigate the transition when it comes to paying their workforce on time.

“They need to be able to access simple, on-demand business finance that allows them to pay their workers while maximising cash flow, and the fintech and payments industry can support them with this.

“Sonovate offers real-time invoice financing to allow businesses to access the funding and cash flow they need to help them to scale and grow.

“The company recently launched its new tech platform, which will provide businesses with instant funding decisions and credit limits, variable advance and facility management, increased automation and enhanced reporting.

“For many SMEs, platforms such as these are the key to helping them fund a contingent workforce and scale into the global market.”

Innovation continues to find new ways to support SMEs, says expert

The Co-Founder and Chief Executive Officer of Tranch, Philip Kelvin, explains how the payments industry has shifted its sole focus away from consumers and e-commerce: “The payments industry has come late to SMEs.

Payments’ biggest focus traditionally was on the consumer sector, and then B2B e-commerce, with Stripe leading the way on alternatives for payment processes.

Kelvin stated: “Payments as a category can be split into a number of categories, for instance processes, integrations (e.g. into ERPs) or payment rails. More companies are being established to focus on all three of these categories in different jurisdictions.

“For instance, at Tranch, we’re continually questioning and innovating to find how payments can be financed whilst automating processes, integrating into systems and working on established payment rails.”,

Advancement of real-time payments opens doors for SMEs

Charles Rosenblatt, President at PayQuicker, explained that “the payments industry is breaking down barriers, especially in international transactions.

“The fastest and safest way to move money previously was taking a suitcase in cash on a plane from one country to the other.

“Today, business technology partners allow SMEs to get paid in any currency instantly, allowing them to continue doing business in real time.

“This will forge more seamless B2B interactions across continents, freeing up payments power and diversifying opportunities for growth,” Rosenblatt said.

The key to supporting SMEs is faster invoice payment

Johan Friis, Co-founder and Head of New Solutions at Zimpler, stressed the importance of ensuring that invoices are paid to SMEs on time.

Friis explains that the payments industry has begun to address this issue: “SMEs often experience cash flow issues due to, for example, the invoices payments being late.

“For companies, when their customer pays invoices late, the lack of cash flow limits the growth of the operations, and in particular, it limits the ability of the company to be innovative and open to new solutions.

“In that instance, these companies may not be able to provide instant salary payment services to their employees simply due to that reason. This is where it all comes together and where FinTech can come in to help.

“FinTech companies within payments are working on numerous solutions to support the SMEs and solve their various issues, including delayed invoice payments. Examples of such solutions include, for example, adding ‘request to pay’ or paylink options to the invoices.

“The results of this can be astonishing. In France, for example, it takes 72 days on average for the invoice to be paid. Our experience shows that adding paylink to the invoice sent results in 30-40 percent of all invoices being paid within the first week.

“Let that sink in! Apply that on a global scale, and we can jointly, as an industry, massively improve the well-being of all companies out there, and by doing so, fuel further innovation.

“We understand that many consumers and companies need the actual credit. However, for those that don’t need it but simply want to pay the invoice yet, are finding the process too complex, we should ensure that it is so streamlined that they can do it instantly, even from their cell phone.

“Modern technology could help SMEs improve their cash flow. It should make them more willing to embrace the new solutions and, as a result, will put them in a position to consider facilitating salary payouts to their employees in a way fitted for 2022.” (Piece extracted from TheFinTechTimes)

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