A Quarter of UK Small Firms Restrict Overseas Activity due to Non-payment Fear

As the UK government pins hopes for at least part of the recovery on smaller businesses increasing exports, a new survey commissioned by Earthport Direct reveals their concerns over sending and receiving payments internationally. Of more than 100 companies who participated, 41% cited the cost of making and receiving international payments, after fluctuations in exchange rates, as the top frustration.

Approximately one-third of those polled ranked equally delays in waiting for payments, fears of actual or potential fraud, and extra costs such as ‘landing’ or ‘receiving’ charges when paying overseas suppliers or receiving payments as top concerns. Perhaps of most significance is that 25% of the companies surveyed choose not to do business in some countries because of the risk of not being paid.

Exactly half of the businesses surveyed by Earthport Direct currently organise their payments through correspondent banking arrangements, with credit cards the next popular method and 17% using foreign exchange (FX) brokers. Only 11% make use of online payment services, such as electronic wallets. Despite the range of options available, which also includes high street cash transfer franchises (chosen by 3%) and opening of bank accounts in other countries (chosen by 9%), 49% of responders do not compare the costs of the options, while 45% do.

Some 25% believe their needs are served very well, but 20% believe they are served badly or very badly.

Matt O’Donnell, director of business development at Earthport, said: “Helping the small business boost their exports depends on making it easier for them to do so by removing as many barriers as possible. The delays, costs and hassle in sending and collecting global payments and the difficulties in managing overseas bad debt are problems that need to be overcome.”

The survey also revealed a ‘wish list’ of the features that small and medium-sized enterprises (SMEs) would like to see from payment services. They included receiving payments within two business days, visibility of true costs, and receiving the actual amount invoiced (for example without a landing fee being deducted). The opportunity to pay and be paid in the local currency of the country where trade is conducted, without the necessity of opening a bank account in those countries, was also deemed desirable.

In other news, Earthport has made Earthport Direct available for SMEs in order to reduce the hassle, delay and cost they face when trading internationally.

The Earthport Direct online service enables SMEs to manage their own payments and collections throughout the world via a simple to operate payment account accessed through a secure portal. The service is targeted at businesses ranging from, for example, exporters and importers, manufacturers, tour operators, hoteliers, aviators and oil distributors to law firms, international property managers, wine merchants and e-tailers. The service is cost-effective for organisations making or receiving more than 10 global payments a month.


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