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Elavon index finds UK SMEs have positive business outlook

Global payments provider Elavon has released the UK SME Pulse Index, a survey of 865 small to medium-size enterprises (SMEs) across 17 cities in the UK. The research revealed that UK SMEs feel broadly confident on their growth prospects, despite challenges such as Brexit, cash flow and customer retention. The report also identified a growth opportunity in e-commerce, which many UK SMEs have yet to tap.

While the use of e-commerce and innovative cashless technology increases, many UK SMEs have yet to embrace online sales channels and the latest payments technology. Only around half (53%) of businesses surveyed are trading online. Nearly a quarter (23%) do not have a website. These gaps in e-commerce point to the significant potential to better leverage online sales channels for growth.

Similarly, with consumers indicating they want more choice in the ways they pay, many businesses are not adopting new technology. By facilitating a variety of cashless payments methods, SMEs are poised to increase revenue via mobile wallets, through in-app payment and with next-generation, point-of-sale (POS) terminals. One-third of SMEs indicate concern about keeping pace with these technological changes. Lack of knowledge is an issue with one in four SMEs (24%), admitting they don’t understand the payment options available.

“SMEs make up the largest proportion of our customers, and a significant portion of the private sector business in the UK," said Hannah Fitzsimons, European executive vice president and general manager of Elavon Europe. "Understanding their perceptions and concerns is critical. Our research highlights that businesses are positive about their growth. Smaller companies tend to be more positive and entrepreneurial. They are concerned with getting paid on time and securing repeat business to stay viable.”

Confidence and challenges

The study reveals that despite the economic uncertainty around Brexit, 60% of UK SMEs feel positive about growth prospects; 70% feel confident in general and 68% believe there are more opportunities now than ten years ago. Apart from Brexit, which was the biggest concern voiced by SMEs (51%), other main challenges include cash flow (39%) and customer retention (24%).

While some sectors embrace e-commerce, opportunities remain

The survey shows that the retail, catering and leisure (73%) sectors are most likely to engage in e-commerce. Also, 18% of retail, catering and leisure SMEs indicate that 90-100% of their sales are generated online. Among SMEs with an e-commerce presence, sales made online (48%) and offline (52%) are nearly split.

Card payments are most common payments, with cash waning

The research found that businesses primarily use card payments - in person or online - with cash on the decline. Card payments (44%) comprise the most common payment method, followed by bank transfers (36%). Just 11% of SMEs reported that they trade mainly in cash. In-app transactions make up five percent of payments. The most infrequent payment types are cheques and other methods (2% each).

Elavon commissioned Opinion Matters to survey 865 SMEs from 17 UK cities from 22 May to 4 June 2019. The research considers the operating and payments environment for UK SMEs in the year ahead by examining market conditions, opportunities and concerns. 

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