A recent survey by CashEdge, a provider of intelligent money movement services, has found that there is a strong desire among small businesses to accelerate and simplify current payable/receivable processes and a willingness to adopt new electronic payment (e-payment) solutions in support of this. Importantly, most of these small businesses also report a strong loyalty to their bank, representing a key opportunity for banks to provide these payment services.
The 2011 Small Business Payables and Receivables Survey examined the behaviour and preferences of 405 small businesses as they relate to their overall payables and receivables processes. Small businesses were defined by US$1m or less in annual sales revenue.
The survey found that while most small businesses still rely on manual, spreadsheet and paper-based systems for their account payables (A/P) and receivables (A/R) processes, the majority are interested in new solutions that would increase the speed of customer payments. In fact, 60% said that they would use an automated clearing house (ACH) receivables service for getting paid electronically, if it did not require sharing account information.
“As we’ve seen with consumer banking, there is a strong, growing desire for more electronic P2P payments solutions among the small business segment,” said Neil Platt, senior vice president (SVP) and general manager, banking and payments, CashEdge. “Small businesses are looking for faster, simpler and more efficient options for both payables and receivables. We see this as a tremendous opportunity for banks to strengthen key small business relationships by providing more electronic payment options to their small business banking customers.”
Additional key survey findings included the following:
- Small business owners are looking for new solutions to get paid faster: respondents reported an average of 19 days to collect payments from customers. Sixty percent of respondents want to reduce the total days to payment.
- Demand for electronic vendor payments is strong: 19% of respondents already leverage ACH transfers for vendor payments, while additional 38% would do so if it were available to them.
- Small businesses demonstrate strong loyalty and online banking usage: 69% hold both their personal and business accounts at the same institution and 76% use online banking for their small business.
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