Bottomline has revealed that almost half of businesses across Great Britain (47%) that intend to stop processing outbound international payments are doing so due to the difficulty in tracking them, while 40% plan to stop as they find it difficult to pay international suppliers on time. These issues are acutely felt by small businesses, who are more hesitant than their enterprise counterparts to start making international payments (38% vs 10%).
These findings stem from Bottomline’s sixth annual Business Payments Barometer, which highlights the need to remove barriers and improve the ease and visibility of international payments in order to stimulate the economy and boost business confidence.
Lack of confidence is felt most by small businesses, seen as crucial to the revival of the UK economy, who rate cash collections as their number one priority in light of ongoing uncertainties caused by the pandemic and Brexit.
"To benefit trade and economic growth, more must be done to highlight the opportunity of using modern digital payment tools that can simplify cross-border payments and streamline operations," said Paul Fannon, managing director, Global Business Solutions at Bottomline. "It’s perfectly reasonable that all businesses should pay international invoices, overseas staff or transfer funds, with the same degree of security, ease and control as making a local payment."
Businesses focus on survival and prioritise keeping 'cash in'
For businesses of all sizes, priorities focus on keeping 'cash in' and centred on survival rather than business transformation and digital acceleration. In light of this, companies are willing to be flexible, as shown by the fact that two-thirds (64%) are prepared to re-negotiate payment terms in order to maximise their cash flow. This figure drops to 52% for smaller businesses who are less likely to have sufficient reserves to make these changes.
Indeed, 68% of organisations say that receiving money quickly has never been more critical. Almost half of businesses (48%) surveyed had to accept new payment methods in 2020, with 30% claiming to have started receiving mobile payments during the pandemic as a way to remove the friction associated with cash collection.
Conversely, just under half of organisations (48%) claim their cash flow forecasts are rarely accurate, a figure which rises to 56% of enterprise organisations. Decision-makers tend to use more than one method to manage cash flow, with 37% of small businesses still using manual calculations on Excel.
"Undoubtedly, the pandemic disruption, as well as trade uncertainty related to Brexit, means that forecasting is more difficult than ever," said Fannon. "But this uncertainty suggests a clear opportunity for solutions that can easily address cash management requirements, and organisations should look to new industry initiatives, such as Request to Pay, Confirmation of Payee and Enhanced Data tools to facilitate the billing process. We as an industry need to drive greater awareness around the benefits of existing payment and cash management solutions, empowering smaller businesses in particular with the tools they need to increase financial efficiency, minimise fraud risk and ultimately enhance financial performance long into the future."
SMEs in the dark on payments regulations, as lack of preparedness increases across the board
Despite clear benefits to help improve cash management, awareness of new payment initiatives and regulations remains low. Worryingly, there has been a consistent decline year on year in preparedness for payment regulations, with businesses at both ends of the spectrum losing confidence in Open Banking. Smaller organisations appear to be most in the dark, with only 38% of decision-makers prepared to embrace Open Banking, compared to 66% of enterprise decision-makers (down from 47% and 70% respectively in 2020).
Similarly, only 32% of small businesses have adopted real-time payments (RTP), versus 61% of enterprise organisations. Real-time payments bring heightened visibility and efficiency to the payments landscape and are incredibly impactful for small businesses looking to improve their cash flow and have their debts settled more quickly; yet one-third (30%) state that they have not adopted and do not plan to adopt real-time payments moving forward, an increase of 14% from 2020.
When asked to rank their top five drivers for change regarding payment processes, small businesses ranked regulatory changes to UK payments in eighth place versus enterprise organisations who placed it in fourth. It is clear that third-party payment partners, such as banks, consulting partners and financial advisers, must do more to explain how each new regulation can directly solve business problems, rather than focusing on industry jargon and red tape.
Fraud felt most by larger organisations
While fraud impacts businesses regardless of size, it appears that worries around fraud are more acute amongst larger companies. Enterprise organisations are significantly more likely than smaller companies to show concern around insider collusion (58% vs 31%), external cyber fraud (69% vs 49%), and authorised push payment fraud (65% vs 41%).
This disparity in concern may, in part, be due to changes in operating circumstances, with many large and enterprise organisations moving towards online and remote methods of working. Accordingly, around half of organisations suggested that they have seen an increase in insider fraud and collusion (48%), overwhelmingly driven by bigger businesses (57% & 53% for large and enterprise respectively), while only 34% of small companies suggest they have seen an increase. In fact, in 2021 alone, enterprise businesses have seen their losses increase by 20% in just one year.
"As we move towards hybrid models of working, developing a multi-layered security strategy will be critical for organisations of all sizes to ensure that insider fraud and collusion does not expand further," concluded Fannon.
The research was conducted in partnership with Ipsos Mori and commissioned by Bottomline. It consisted of an online survey among 800 financial decision-makers in Great Britain. Financial decision-makers are defined as those who input solely, or as part of a group, into the purchase of accounting, tax or financial services.
The sample of 800 interviews was split into 200 financial decision-makers each from small (10-249 employees or annual turnover of less than £1,999,999), medium (250-999 employees or annual turnover between £2,000,000 and £124,999,999), large (1,000-9,999 employees or annual turnover between £125,000,000 and £499,999,999) and enterprise organisations (10,000+ employees or annual turnover £500,000,000).
The data was weighted to be representative of business in the UK on average turnover across business size. The research used ONS-Business populate estimates 2019 to calculate the weighting. Fieldwork was conducted between January and February 2021.
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