Why SME’s struggle to manage payments and money transfers


Andrew Rosenbaum
Senior Content Specialist
Andrew Rosenbaum has been a financial journalist for more than 15 years. He has worked for Euromoney, Institutional Investor, Time magazine, MSN Money and the Wall Street Journal before joining… Read more



 Source: Karmic Labs and Mastercard

One very real concern that keeps small business owners awake at night is how to best manage payments and transfers.

As a study by Karmic Labs and Mastercard shows, issues with payments management can cripple a business’s success. When there are issues with these services, businesses find themselves unable to make routine product and service purchases.

Even more serious, as the study shows, is that failure to collect receivables is a major cause of failure for small businesses.

Too Many types of Payment for SME’s

As the chart above shows, most SME’s use multiple payment mechanisms, and it is the complexity of tracking these different payments, especially non-electronic forms such as checks and cash, that often leads to cashflow troubles.

“The use of personal payment products also suggests that some small businesses have not separated their business and personal household finances, making a transparent evaluation of cash flow even more difficult. Expenses incurred with all of these payment forms need to be managed individually and consolidated in order to truly understand cash flow,” the study notes.

The study recommends the consolidation of payment methods as a means to resolve these cashflow issues for small businesses. The more that transaction types are consolidated, particularly to electronic methods, the more readily transactions can be tracked and monitored in a timely manner to shed light on cash flow. A solution like a payment app or online solution would add visibility and greater predictability to expenses, saving time for both employees and account payable staff, the study points out.

Clearly the adoption of a payments or money transfer app would provide the kind of consolidation recommended by the study. P

repaid cards for general expenses and employee travel and entertainment would also help to solve control issues associated with expense management. 

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