Late payments impact SMEs as study reveals 63% of small businesses are ‘self-taught’ about invoicing
A recent study has highlighted a number of key challenges facing small businesses in 2020, with financial issues topping the list.
The What challenges will small businesses face in 2020? report by takepayments Ltd surveyed 1,000 small business owners and sole traders across the UK to discover the key issues they will face in the year ahead.
36 per cent of those surveyed flagged financial challenges as the biggest uncertainty, with respondents highlighting pricing and cash flow as the two primary worries.
With 46 per cent of SMEs noting having to constantly chase late payments, 56 per cent of respondents claimed that late payments were having a concerning impact of cash flow.
The report also signalled potential financial skills gaps in small businesses, with 40 per cent of business owners and senior decision-makers describing their knowledge of invoicing as ‘limited.’
According to the research, 63 per cent of small business owners have taught themselves how to manage taxes and invoices, with 45 per cent stating that a struggle to find funding to grow was holding their business back.
Interesting, 39 per cent of those integral to the running of their companies said that they are not confident using online banking for work.
“Pricing structure and cash flow are both key to driving a business forward and yet for small businesses, many have had no or very little training,” commented Sandra Rowley, Head of Marketing at takepayments.
“There are plenty of online courses available but, it’s not just training that can help.
“Technology such as Electronic Point of Sale (EPOS) systems can be beneficial in giving key insights real-time to business performance, saving time on accounts and getting a true reflection of what products and services achieve the best margin.”
With financial challenges being the number one concern of SMEs in 2020, technology risks were second with 21 per cent of respondents stating that keeping up with technology, cybersecurity, compliance and online marketing were key issues.
All three of these areas are specialist skills and small businesses will not always have the resource available to be “experts” in, said takepayments.
In particular, social media marketing stood out as an area where small businesses could see quick wins in 2020, with 45 per cent responding that they want to try more social media marketing but lack the knowledge.
Of those using social media marketing, 52 per cent attested to the online marketing channel helping to grow their businesses and gain new customers.
“Our study revealed that 49 per cent of small businesses have seen a decrease in consumer spending and so implementing technology to improve your business could be a smart step to help overcome a variety of finance-related challenges,” added Sandra.
In addition to social media marketing, 42 per cent of those surveyed stressed that a move towards a cashless society would be “bad news” for their business, likely because of a lack of systems and infrastructure to support the trend.
More than five million people lead a close to cashless lifestyle, according to a BBC report, reinforcing the need for businesses to be prepared with cashless technology for the year and beyond.
5 tips for small businesses in 2020 from takepayments
Following the report, takepayments provided five tips to SME on how to make it easier for small businesses to thrive.
Face technology head on
Technology can be daunting but, it brings with it so many advantages. Whether you look to implement new systems or improve old ones, businesses need to make sure they are adapting alongside the rest of society. You could be alienating some customers by not keeping up.
Review company sustainability and ethics
51% of small businesses have noticed clients/customers are caring more about sustainability over the past year. This trend is set to grow further in 2020 and businesses need to make it a consideration in all areas, from supply chain to décor, employee wellbeing and product packaging.
With the local high street struggling, businesses need to look to other platforms to grow such as online channels. 52% say social media has helped their business grow and gain new customers but a lack of knowledge in how to do this is holding people back.
Take care of your work-life balance
Small business owners are known for being hard workers: 1 in 6 do not take 2 rest days (non-workdays) per week and only around half (57%) stick to a 48-hour working week or less. Make 2020 the year you implement a healthier work-life balance for yourself and your team. Though your working less, productivity levels are likely to improve.
Keep up to date on EU news and changes
There will be plenty of change over the year following Britain’s exit from the EU, so make sure to stay up to date with news. Especially if your business is reliant on imports and exports. 42% are worried about potential changes to rules regarding this.