Earlier this month we hosted a webinar to discuss the current situation many SMEs across the UK find themselves in, both in the midst of a recession caused by the COVID-19 pandemic and ahead of the final Brexit deadline at the end of 2021. As an SME ourselves we were interested in hearing different views on the topic from a range of industry experts, so we brought together leading figures in UK finance, including Kevin McCallum, Chief Commercial Officer at FreeAgent; Marc O’Brien, former CEO of Visa UK and Ireland; Sukhendu Pal, Chairman of the Board at Sirius and Company; and Dr. Dinusha Weerawardane, Global Council Member at Association of Chartered Certified Accountants (ACCA) and Senior Lecturer at UWL.

Below are the key takeaways from our discussion:

The current state of play and the future for SMEs

It’s no secret, although sometimes under-played, that SMEs are the backbone of the UK economy, accounting for 50% of the UK’s total business revenue and making up 44% of the country’s labour force pre-pandemic. But what lies ahead as we navigate the rest of 2020 and beyond?

The future of banking

The banking and payments sectors are seeing big changes caused indirectly and directly by the pandemic which will impact SMEs. COVID-19 has caused a massive increase in consumer contactless payments and a decrease in cash payments, undoubtedly accelerating the move towards digitalisation for the majority of businesses.

This rapid charge towards digitalisation has meant many SMEs are being pushed towards embracing automation and Open Banking in particular. Both bring enormous benefits to both the business and their customers, but the B2B market has historically always been slower to adapt to new technology – even when it is in demand from consumers. 

However, these new technologies are worth investigating – and soon – because not only will they bring on new customers with their benefits (at a time when they’re needed more than ever) but they will help cut down key business challenges such as admin time. Open Banking and automated products are also able to simplify payment processes and accounting as well as offering better financial security for SMEs. 

The COVID-19 financial risk landscape

We’ve mentioned that new technologies offer better security for SMEs’ financial comings and goings, but are they facing an increase in any risks? The pandemic has seen an exponential rise in targeted cyberattacks on consumers and businesses, with numerous news reports of data breaches and financial scams, such as furlough fraud, where criminals have posed as legitimate businesses to claim money for ‘staff’ while pocketing this themselves. According to HMRC between 5 and 10 percent of the £39bn sum handed out by chancellor Rishi Sunak to support workers during the pandemic has been claimed fraudulently.

An additional threat discussed by the group that could be affecting many SMEs, especially at a time when international travel is reduced significantly but our communications and business transactions with the rest of the world remain high, is scamming around transferring money. The risks associated with sending money internationally using traditional methods, such as wire transfers, are extremely high as there is little to no protection around money transfers when compared with using a bank payment card.

For example, if a payment is sent to the wrong person or account due to fraudulent activity, then it can be very difficult if not impossible to recover. However, utilising more modern forms of card payment (like Currensea!) offers businesses both  protection, and fintech levels of value. With Debit cards, the card issuer is able to invoke Mastercard & Visa Chargeback rights on behalf of their customers if there’s a problem with the things that have been purchased or if the company that has provided the goods goes bust.

What to expect post COVID-19 

This led us on to discuss the current support that is available for businesses during this time and what impact this might have on the future of UK SMEs. 

Pre-COVID there was a good deal of government stimuli encouraging investment into businesses which, during the pandemic, were subsidised with government grants and bail-out funds. These grants and bail out funds have been vital in keeping many SMEs on their feet during this unprecedented time as well as offering a lifeline to the self-employed and micro-businesses. Despite these initiatives it’s been sad to see many businesses shut their doors for the final time with the economy taking a real hit. 

However, there is hope on the horizon: crises and economic downturns have a tendency to stimulate entrepreneurship and creativity which we have already been witnessing during these past few months. It will be exciting to see what emerges post-pandemic but it’s crucial that the government is ready to support this new wave of small businesses. 

Advice for SMEs

In sum, the key pieces of advice for SMEs to come out of the conversation were as follows:

  • Pay carefully. Make sure you are aware of all of the payment fees and of who you are paying. Look for payment options that offer full transparency.
  • You’re not alone. There are plenty of businesses in the same position and there is a wealth of support and information out there for anyone worried about the financial impact of the pandemic. A good place to start is here: https://www.gov.uk/business-coronavirus-support-finder 
  • Have a hand on your cash position. Be aware of your financials and what is available to you in terms of Open Banking, switching banks or taking advantage of new payment products. These could save both time and money.
  • Automation is key. Automation has the potential to decrease the amount of time spent on admin and free up time. 

Find out more about Currensea’s new solution for SMEs here: https://www.currensea.com/business/

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