• SMEs and the Quest for Cash: B2B E-Commerce and Financial Transaction Systems  
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SMEs and the Quest for Cash: B2B E-Commerce and Financial Transaction Systems

Small- to medium-sized businesses (SMEs) form the cornerstone of private industry in the UK. According to the Federation of Small Businesses (FSB), these firms make up 99.9 percent of the private economy. Whether the business supports one, or one hundred jobs, it’s statistically evident that the business owner puts it all on the line each day. Experian reports that most use personal capital of some sort, including savings, mortgages, or credit cards, to pay suppliers or lenders when other finance sources fail.

SME owners must wear many hats, but the need to multitask leaves them with little inclination to connect, co-create, or collaborate with others. Yet, identifying and boosting collaborative business-to-business relationships, increasing revenues, and improving the firm’s bottom line are precisely what is necessary for these firms now.

Business-to-Business E-Commerce
SMEs must use technology for maximum ROI. According to “Funds,” (Matthew Hudson, 2014) B2B e-commerce is a highly effective and efficient way to deploy capital. When combined with other strategic cost-saving initiatives, such as a business development partnership with another small firm, e-commerce drives down the cost of sales while increasing revenues.

A successful e-commerce solution always involves the selection of a reliable third-party payments system. The platform must be fully compliant with the firm’s legal and regulatory structure, while providing fast funds reconciliation. The best types also tend to facilitate positive communication between buyers and sellers.

Small to Medium-Sized Businesses Need Cash
The average principal needs help in managing their balance sheet. The average firm is waiting for payment of GBP 11,358, and the collective is struggling to collect GBP 55 billion! In this unfortunate finance model, the smallest firms are pressed to extend credit and preferred terms to their better-capitalized customers.

SMEs need to receive money in a timely fashion, but most lack an organized system or process to do so. Solutions and tools, such as a meaningful online payment platform or financial transaction system, must be identified and used. Principals need to free-up cash with revolutionary funding and cash-freeing tools and processes.

Funding For Lending Scheme Isn’t Working
Government programs, such as the Funding for Lending Scheme (FLS), and traditional bankers aren’t helping SMEs. FLS was developed by the Bank of England and Treasury (2012) with the goal to increase bank lending by GBP 70 billion. FLS was supposed to support the economy by helping lenders start lending again. The Bank of England was to let commercial banks – HSBC, Royal Bank of Scotland, Santander, Lloyds, and Barclays – borrow cheaply so that they could in turn make low-cost loans to struggling firms in need of capital. The “debate” about whether FLS is working shows that banks are still gun-shy lenders. Net lending in the first quarter was down. SMEs typically drive an economic recovery and, in this instance, they’re slow to recover from the last recession.

Alternative Lenders
Traditional lenders control 85 percent of the loan market. Firms with few assets might not have collateral necessary for the traditional banker. FSB and the Crowdfunding Association (UKCFA) believe that alternative financing can help many small firms to access capital when they’re turned down by bankers. NESTA says that companies raised GBP 1.5 billion from crowdfunding in 2011. Other strategies include peer-to-peer funding, invoice trading, revenue advances, and bartering for goods and services.

Small- to medium-sized businesses need financial education. They must use innovative strategies, such as B2B e-commerce, to increase sales and reduce costs. They desperately need resources and tools to increase cash flow while extracting more cash from operations. Technology solutions connect partners and customers. Low-cost apps improve processes and the tendency for trading partners to make transactions. Financial tools are an easy way for firms to increase cash, collaboration, and the bottom line.

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