Home Finance The Biggest Payment Issues Small Businesses Face and How to Navigate Them 

The Biggest Payment Issues Small Businesses Face and How to Navigate Them 

by uma

By Gary Prince, Chief Strategy Officer, SimplyPayMe 

Payment processing for small businesses is often akin to navigating a minefield; there are a multitude of different problems that can arise and making sure that each problem is dealt with in a uniform and organised manner is key to making sure the landscape of your payment processing runs smoothly. 

Operational Efficiency 

The key to financial operational efficiency rests largely in organisation – any successful business requires a strong foundation to build upon and the financial state of your business exists as a key pillar of that foundation. 

An honest and rigorous evaluation of the financial processing of your business is the best place to start to maximise successful operations. 74% of small businesses cite cash flow, providing timely payments, making payments on financial products, unpaid bills, making payroll, and rent as current challenges they face. 

Taking a firm look at these financial aspects of your business and identifying which areas or processes are unproductive, inefficient, or stagnating is the best way to understand how you can begin to realign your financial operations for maximum clarity and success. 

Once you have clear and concise information on how strong your financial pillar is, it’s imperative that you make this information accessible to your employees. This will help to create a reliable and honest infrastructure in your company. Streamlining your processes and frameworks will only be achievable when you have clear and identifiable solutions to existing problems within your payment processes.

Keep your financial strategy clear and be prepared to undertake regular reviews to see if there are areas that need to be more tightly managed or reformed. This way you can manage your performance effectively and will be able to spot if your financial pillar is in need of adjustments or is beginning to impact either positively or negatively on the rest of your business.

Digital Enablement

The future of business lies in digitisation, and this has been proven over the course of the COVID-19 pandemic. Resisting digitisation or being ignorant of available technology will only negatively impact the state of your business, as your competitors will be engaging with online platforms. 

Financial technology is evolving at a rapid rate and it’s key that your primary financial institution works alongside, or even incorporates, these technologies to help enable your development as a business rather than hinder it. 

22% of business owners are considering switching banks to seek out relationships with financial institutions that they feel better value their work and can offer them the technological based support they require. 

For this reason, you need to have a clear understanding of what support and services are being offered to your business by your financial institution, and in many cases, your current provider may not be offering exactly what your business needs. Be prepared to undergo research that will help you to assess what financial technology your current provider is using and other providers might be offering solutions that are complimentary to your current set up. 

For example, some providers will not enable you payments without a terminal, which could benefit and complement how your business runs, whilst others could offer payment systems such as Pay by Bank app which not only offer payment without a terminal but boast additional benefits specific to small businesses. The takeaway here is that you need to be knowledgeable about what providers are offering on the market and how this, in turn, impacts your own success as a business. 

Safety and Security Within Payment Processes

Issues with fraudulent payments, security breaches and chargebacks are unfortunately common for small businesses. 

One of the best ways to reduce this kind of activity is to be proactive. Sitting on your hands and waiting for the fraud or security breach to take place is not a good preventative measure; instead, focus on creating strong return and refund policies (with clear understanding of necessary laws and regulations in your country), keep a watchful eye over the transactions occurring and flag up any inconsistencies immediately (consider things such as billing and shipping addresses, confusing or conflicting orders, bogus email addresses) and make sure you have as much one-to-one contact with your customer or supplier as possible to ascertain whether or not you’re facing a security breach or fraudster. 

When it comes to the security and safety of your business you must keep organised and structured databases for your records. These databases should maintain accurate information regarding any sales made with extensive details of the date, receipts, and order details. 

Keeping your company contact information easily accessible and readily available for your customer also means that they will communicate with you more readily and any problems pertaining specifically to customer orders can be dealt with swiftly. 

Financial safety and security ties back to organisational efficiency. If your company’s entire infrastructure is aware of the correct procedures and policies for any attempts at a security breach or fraudulent activity, then you will find that dealing with and preventing the problem will be more accessible at every level of the company. 

Late Payments 

As of January 2022, small businesses are facing a ‘late payment crisis’ which has the potential to force more than 440,000 small firms out of business. This is a crisis that has been underpinning the business relationship between small and large businesses for years, with late payments – often by big FTSE firms – forcing long wait periods.

Smaller businesses can also feel uncomfortable talking to their customers or suppliers about the topic of money, meaning that the issue of late payments can go unaddressed and unresolved. 

There are a few ways smaller businesses can safeguard against late payments. The first is to ensure that your expectations are clearly laid out and agreed upon at the beginning of a new financial relationship – highlight what needs to be paid and when and then stipulate any fines or fees for late payments. 

This may feel uncomfortable at first, but by laying out the terms from the get-go it gives you the advantage of referring to the conversation should late payments begin to creep in, as well as reinforce your expectation of good faith and honesty in the business relationship. 

You also need to ensure that your own policies and practices are streamlined to make and receive payments easily, with good record-keeping acting as your pillar of support should you run into any difficulties in the future. You can even choose helpful payment platforms, such as SimplyPayMe, that will not only keep track of your payments, but allow you to schedule automated payment reminders that save time and hassle.

Regular discussions and reminders around payments will make it less of a ‘taboo’ topic and you will be able to articulate your expectations without feeling like you’re overstepping any boundaries. 

Work Smarter, Not Harder

When it comes to payment issues facing small business, there are four main points to be mindful of when trying to successfully navigate these problems: 

  1. Operate efficiently 
  2. Embrace digital support and platforms 
  3. Keep control of financial security
  4. Reduce late payments with proactivity

Mastering the first bullet point – operating efficiently – will result in a trickle-down impact into the other bullet points by ensuring you know what structures need to be put in place and maintained to keep the financial pillar of your business strong. 

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