Here are the week’s main news stories in the world of small business and digital payments:
SMEs benefit from diverse workforce
There is a close link between SMEs recruiting a diverse workforce and improved financial performance, according to research from Close Brothers Asset Finance. A survey of more than 900 SME owners in the UK and Ireland revealed wide-ranging support for actively creating a diverse employee base, with 71 per cent saying it improves financial performance. The research also found that 64 per cent of companies feel diversity makes their business more attractive to candidates.
UK small businesses owed £23 billion in overdue payments
Small businesses in the UK are owed £23.4 billion in late payments, according to figures released by payment firm Pay UK. The company that run Bacs Direct Credit and Direct Debit payment services said the figure has risen by £10.4 billion in the past year alone. The research also shows that UK SMEs are facing a bill of £4.4 billion per year just to collect the money they are owed, with 22 per cent of those waiting on funds spending £500 per month chasing payments. And the proportion of SMEs experiencing overdue payments has hit 54 per cent, the highest level since 2015. The average late payment debt burden has also increased from £17,000 per company in 2018 to £25,000.
E-money making progress in Japan
Almost a fifth of households in Japan use electronic money for small purchases, according to a survey by a central bank-affiliated research institute. In the survey conducted between June and July, 19 per cent of households said they use electronic money, such as smartphone apps and debit card payments, on shopping trips where ¥1,000 or less is spent, up from 15.4 per cent in the previous year. Among single-person households – 43 per cent of whom are in their 20s and 30s – the ratio was much higher at 36 per cent, suggesting government efforts to encourage people to go cashless may be paying off, at least among the younger generation. Despite the growth in electronic payments, the survey found that 84 per cent of respondents still use paper money and coins for small purchases.
UK SMEs prioritising business growth
Driving future growth is the main priority for UK SMEs, according to a study commissioned by Google, which also highlighted the need for SMEs to have access to easy-to-use, fast tools to enable advertising. Just over a third (36 per cent) of respondents stated ‘increasing business growth’ was their primary goal over the next year, with a further 39 per cent opting for ‘consistent growth’. Although uncertainties around Brexit are often pointed to as a key concern for business owners, 79 per cent of respondents said that the majority of their revenues came from domestic sales.
Elavon to acquire SME payment processor Sage Pay
Payments company Elavon has agreed to acquire Sage Pay, one of the bigger payment processors in the UK and Ireland serving SMEs. Sage Pay’s owner Sage Group said the deal is being done for £232 million in cash. Elavon is active in 10 countries and claims to be the fourth-largest merchant acquirer in Europe, competing against the likes of Global Payments, FIS, Ingenico, Stripe, MasterCard and Visa. The deal is expected to close in Q2 of 2020. The acquisition suggests the market, which is very fragmented in terms of companies that manage the complexities at the back end, could be starting consolidate.
UK SMEs looking to tech to drive growth
Three quarters (75 per cent) of UK SMEs believe integrating technology tools and solutions such as video calling and cloud telephony will be crucial for growth in the coming years, according to research commissioned by conference call provider PowWowNow. In contrast, just 16 per cent of French and 33 per cent of German SMEs perceive technology tools as being vital for business success. The report also found the UK is ahead of European businesses in linking communication technology solutions to remote working: 51 per cent of UK SMEs invest in technology to enable staff to work remotely, compared to just 25 per cent of French SMEs and 32 per cent of German companies.