Although no two small and medium-sized enterprises (SMEs) are the same, many face similar challenges.
And those challenges are often related to the growing gap in digital transformation when it comes to the back office and payments functions of SMBs versus their larger enterprise peers.
Still, with news on Tuesday (September 3) that payment-as-a-service provider UNIPaaS has launched a small-business-focused bill payment partnership with American Express, embracing solutions built specifically to address the unique needs of SMBs. Most importantly for both Main Street retailers and FinTechs and the payment innovators that serve them.
After all, SMBs are a diverse group, varying in size, industry and geographic location, making their payment preferences equally diverse. Unlike large companies that can build custom payment systems or dedicate resources to advanced treasury management, SMBs operate with more limited budgets and infrastructure. As a result, their payment needs tend to revolve around key priorities such as accessibility, simplicity, flexibility and reliability.
As these companies begin to adopt and integrate digital tools, the potential for increased efficiency, reduced costs and faster access to working capital will not only drive SME growth, but also transform the global trade landscape.
Read more: Small Businesses Embrace Instant Payments: Benefits Beyond Speed
Why the untapped small business segment is a goldmine
SMEs represent a massive volume of daily transactions in all sectors, from retail and manufacturing to services and logistics. Digitizing these transactions through better payment systems could dramatically improve the efficiency, cash flow and transparency of businesses.
PYMNTS Intelligence’s report, “End the Wait: SMBs and the Protracted Challenge of Delayed Payments,” in conjunction with American Express, looks at whether a new wave of digital transformation could signal the end of an ongoing and chronic problem facing SMBs : that of delays. payments Research finds that ineffective cash flow management, cited by 60% of SMEs as a major challenge, exacerbates the risk of business failure.
At the same time, only 5% of small business owners, or 1 in 20, have fully automated their accounts receivable (AR) and accounts payable (PA) processes, even though doing so can provide them with insights and opportunities of growth they search
Automation is key to reducing manual intervention in payment processes. Many SMEs still rely on manual invoicing and reconciliation, which is time-consuming and error-prone. By offering digital tools that automate these tasks, payment providers can help SMEs streamline their operations and reduce the friction that slows down transactions.
“Companies are concerned about investment in terms of time and resources,” American Express Vice President of Marketing, Business Blueprint and Small Business Banking Brett Sussman told PYMNTS.
This is why addressing the challenges that prevent SMEs from adopting digital solutions requires a multifaceted approach. While traditional methods such as ACH payments continue to play a crucial role in the SMB space, the rise of innovations such as virtual card payments and the growing demand for real-time digital solutions are reshaping the sector.
Still, many SMEs operate with legacy systems or basic accounting software, making seamless integration with new payment platforms essential.
Read more: 75% of companies still use paper checks despite the high cost
The complex and sometimes conflicting priorities of SMEs
The market continuously responds to the multiple needs of SMEs.
As covered by PYMNTS on Tuesday, Ziina raised $22 million to provide FinTech services for UAE-based small businesses; while on Friday (August 30), Brazilian FinTech Ume raised $15 million in a Series A funding round to expand its payments network and business services platform for SMEs in Pix.
And PYMNTS Intelligence finds that financial solutions like integrated lending are helping SMEs manage cash flow, invest in growth and improve their overall financial health.
Integrated lending allows SMEs to access credit directly within the platforms they already use, such as e-commerce platforms, accounting software or payment processing systems. This eliminates the need for separate applications for banks or other financial institutions, saving time and reducing friction in the borrowing process.
Jennifer Marriner, EVP, Global Acceptance Solutions at Mastercard, told PYMNTS that SMBs are an important focus in the integrated finance landscape. She noted that SMEs are particularly attracted to integrated finance, as it offers an easy way to access financial services through the platforms they already use for other business operations, such as accounting and inventory management.
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