Business
Are late payments an unavoidable part of doing business?
Published by Jessica Weisman-Pitts
Posted on October 19, 2022
4 min readLast updated: February 3, 2026
Global Banking and Finance Review
Company
Published by Jessica Weisman-Pitts
Posted on October 19, 2022
4 min readLast updated: February 3, 2026
By Krzysztof Hoffman, Head of Payments, Vodeno
Small to medium enterprises (SMEs) make up 99% of all businesses in the EU and account for more than half of Europe’s GDP, as such their role in the economy is impossible to overstate. Yet, one issue that impacts many SMEs’ ability to grow and expand is an effective payments system.
While domestic payments are largely efficient and cost-effective, Vodeno’s latest research revealed that delayed and late payments when transacting cross-border continue to plague SMEs, hindering their international expansion and growth.
Delayed settlement time was not the only burden to international trade, according to the research. Costly foreign exchange and processing fees, alongside ever-changing regulatory requirements, present further challenges. While such pain points may currently seem an unavoidable part of international trade, more SMEs are working with Banking-as-a-Service (BaaS) providers like Vodeno to provide the necessary technical solution and expertise in the payments space.
Why are delayed payments so damaging?
Although large organisations are equally susceptible to late payments, SMEs are much more vulnerable because most do not have the healthy cash reserves required to survive such delays. According to Vodeno’s research, at present, only 10% of SMEs have access to instant international payments. In some cases, processing can take several days and cost up to ten times more than domestic payments.
This poses cash-flow challenges for SMEs – 52% told us that they have failed to meet commitments due to slow payment processing; 62% told us that delayed and unpredictable cash flow is their business’s biggest challenge, and 23% say that this has hindered their international growth. Such consequences make delayed and late payments the biggest threat to SME growth and survival.
There are also other factors that make the terrain even more challenging – 62% said that costly foreign exchange fluctuations are a significant drain on their resources, and 15% say varying regulations across borders prevent international trade.
The road ahead
These issues can be, in part, attributed to the varying and confusing attributes of payment rails: while some may enable quicker payment processing, they may place limits on daily transactions, contain costly transaction fees or hold insufficient security guarantees. It is no surprise, given the number of complex factors to consider, that only 37% of SMEs understand what a payment rail is. But, are late payments avoidable?
SMEs recognise that in many cases this represents an existential question, and they are seeking to improve their capabilities before being swallowed by the consequences of inaction. 62% told us that they must urgently modernise their payment processing capabilities and 68% say that they plan to adopt real-time payment processing capabilities in the next 12 months.
BaaS providers are answering this question by innovating the payments space with API-first technology. With single API integration, effective BaaS solutions automatically identify the most efficient payment rail for each transaction, offering quick settlement times and minimal costs.
Choosing a payment partner
With many BaaS providers to choose from, selecting the right one for your business is critical. Providers like Vodeno who can provide fully API-based technology, access to the necessary licence and payment systems across EEA, as well as local schemes, and regulatory and compliance expertise set themselves apart from competitors.
Although there are still many barriers to real-time payments, namely the cost and transaction fees, BaaS providers are making it more accessible to all businesses. The arrival of new initiatives in Europe, such as the New Payments Architecture (NPA) and P27, is set to centralise cross-border payments across different currencies. The likely success of this will globalise this technology in later years, further breaking down international payment barriers.
SMEs who take advantage of new payment innovation stand to benefit from improved efficiency, lower costs, and the ability to operate seamlessly across borders
About Author:
Krzysztof Hoffman, Head of Payments, is an expert within the payments industry with significant fin-tech, Open Banking and Banking as a Service experience. He has led the Transactional Banking Product team within ING responsible for the development of payments products and services. In his current role, Krzysztof is responsible for building the Payment Platform for Aion/Vodeno, with extensive experience in transformation, banking and operations. Hi has end-to-end Product Management and development responsibilities for all components of Payments Platform across 16 countries offering access to the solutions based on the PaaS and BaaS.
Banking-as-a-Service (BaaS) is a model where banks offer their services through APIs, allowing businesses to integrate banking features into their own applications.
Foreign exchange fees are charges incurred when converting one currency to another, often affecting international transactions and payments.
Small and Medium Enterprises (SMEs) are businesses with a limited number of employees and revenue, playing a crucial role in the economy.
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