Small businesses are the backbone of the economy, yet, 50% of the total value of invoices are held up in late payments. Modern technology can solve the late payments problem for SMEs - see items on Previse service and Banking Circle services below - but do you really care about your small suppliers?
Previse gets suppliers paid, instantly. Our smart tech analyses the data of a large company to predict the very few invoices that are unlikely to get paid, so that the rest can be paid instantly. The 1 per cent fee paid by suppliers who opt for instant payment is shared between the buyer, the funder and Previse.
The AI-driven technology enables buyers to pay most all of their suppliers 'instantly', as their figure on Trade Finance 2.0 below shows:
Source & Copyright©2019 - Previse
Banking Circle offers a receivables settlement service in which:
- The merchant applies for receivables financing via their Payment Service Provider and provides details of the receivable due
- A decision is made instantly and, if the advance is approved, Banking Circle pays the merchant an agreed percentage of the full amount due, up to 95%. Payment is received instantly
- When the invoice or marketplace settlement is due, the buyer or marketplace pays the full amount directly into a dedicated Banking Circle settlement account. The account is held in the name of the seller, not Banking Circle or the PSP, providing the merchant with valuable confidentiality
- The settlement is made in just one payment, to one account.
The need is growing
Banking Circle survey in 2018 of over 500 SMEs showed that:
- 92.5% of respondents have required additional finance within the past five years
- Almost all had experienced some difficulties getting hold of the cash they needed, including poor rates, high fees, slow facilitation and length of loan available
- A quarter (24.6%) of the SMEs said that without additional funding they would have to let employees go.
In an article today, Previse point out that Brexit is going to make it much worse. “Businesses are worried that Brexit will bring reduced consumer confidence; additional costs to trade and supply chain disruption.” Already many suppliers are stockpiling goods to weather any potential immediate shock from a ‘hard Brexit’ or ‘no deal’ outcome.
CTMfile take: Peter Drucker wrote. “The best way to predict your future is to create it” ... And the way to create a better future for SMEs is to have fair payment terms, to pay on-time and also offer solutions to pay instantly. Late payments are a-moral and destructive. But do you really care?
Payment revolutions: open up opportunities for corporate treasury
Card companies role changing; Nordic banks harmonised cross-border; Ripple multi-solutions; new normals - subscriptions and faster payments
Future of banking is ecosystems as banks profitability and share declines?
McKinsey: Global banking-industry performance has been lackluster. Now comes the hard part: the rise of nonbanking platform companies targeting the most profitable parts of the banking value chain
Late payments cause SMEs average shortfall of £30k – plus cash flow problems
Late payments are a serious constraint on business: new research has found that a large majority – 94 per cent – of medium-sized companies say late payments are causing them cash flow problems