Finance
OVERCOMING LATE PAYMENTS AND INFLATION WITH DIGITAL INNOVATION
Global Banking & Finance Review®
Company
By Bradlie Houldsworth, head of product at Remarkable Commerce
Mastercard’s Strive Business Barometer report revealed around 1.5 million small and medium-sized (SME) retailers anticipate a loss of business due to the rising cost of living. With some consumers having less money to spend on non-essential items, retailers are understandably uncertain about what the future holds.
Given the challenging economic climate, providing flexible payment options is becoming essential for those looking to maintain existing customers, as well as attract new ones.
But what steps can businesses take to help overcome the financial challenges of late payments, and help make consumers’ lives easier when they’re facing adversity?
The pressure on SME retailers to deliver
Rapidly increasing gas, energy and even food prices due to inflation has seen a surge of economic factors impacting consumers and their level of disposable income. It was recently announced inflation could reach 18.6 per cent in January next year, presenting a number of unprecedented challenges for businesses.
With consumers also facing tighter budgets, SME retailers may also start to see a rise in late or missed payments. In fact, a report recently published by Xero and Accenture revealed that late payments are undermining the growth and operations of at least nine in ten small businesses across the UK.
The issue of late payments
The Federation of Self Employed and Small Business (FSB) further revealed up to 440,000 SMEs could be forced to close due to late payments alone. While many large retailers may have the assets and financial security to combat late payments, SMEs are undoubtedly starting to feel the consequences of the cost-of-living crisis.
One of the main challenges created by late payments is the unforeseen drop in income, which often results in cash flow instability. For some smaller retailers, this owed money might prevent them from being able to explore new opportunities such as investing back into the business, re-platforming their website, or marketing to attract new customers. In the worst case, they might be forced to close.
Buy Now, Pay Later can help retailers and customers
Convenience is a major factor when customers are choosing where to shop. Banking Circle revealed that Europe is leading the trend of using Buy Now, Pay Later (BNPL), with two in five young adults now using it regularly to purchase technology items, fashion and apparel, and even food and drink.
During these challenging times, it’s crucial for retailers to adapt and provide flexibility for their customers. Giving multiple options for payment collection dates or allowing for the splitting of monthly payments into smaller increments could make meeting payments more manageable.
How technology can boost business performance
While cost is a major driving factor for consumers right now, customers who are faced with a clunky website interface and a lengthy payment process may choose to shop elsewhere due to the extra time spent working out how to use it or navigating from one page to another.
By integrating customer information into one centralised data system, employees can quickly access the necessary data and save time answering enquiries with a built-in messaging and help desk system.
An eCommerce CRM (eCRM) platform supports retailers to bridge the gap between growing eCommerce sales and enhancing the customer experience. Companies can easily integrate new systems depending on their business needs, including stock management, product review capabilities and payment gateways. If a customer is struggling with the prospect of late payment, an eCRM system can help you quickly find their details to understand how you can help them.
Offer tailored discounts to customers
Upgrading legacy processes to a streamlined content management system can help to deliver a better customer experience and has the potential to grow the business.
For example, during the current cost of living crisis, many customers may be more mindful of their spending. If a business can easily offer tailored percentage discounts and promotions, it could prove beneficial for the business.
While improving business opportunities, an eCRM solution will hugely benefit the overall customer experience, with the majority of consumers finding digital interactions less stressful and more convenient.
Maintain positive cash flow
As mentioned above, with the right systems in place you can minimise the chance of late payments to improve and maintain positive cash flow. With a consistent source of income, businesses can reliably predict revenue streams.
Improving cash flow takes time, especially when facing debt or a backlog of late payments, but with a more streamlined ecommerce system in place and a variety of flexible options that may be available will support rectifying these issues.
As the cost of living crisis continues, late payments will, sadly, only become more of a problem as people struggle to balance rising interest rates with paying for everyday essentials. With a fully integrated and adjustable digital transformation in place, businesses can ease cash flow worries and focus on more value-add activities.
For more information, please visit: https://remarkable.net/commerce-platform/
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It indicates how much more expensive a set of goods and services has become over a certain period.
Cash flow refers to the total amount of money being transferred into and out of a business, especially as affecting liquidity. Positive cash flow means more money is coming in than going out.
Buy Now, Pay Later (BNPL) is a financing option that allows consumers to purchase items and pay for them over time, usually in installments, without incurring interest if paid on time.
Flexible payment options allow customers to choose how and when they pay for products or services, which can include installment plans or varying payment dates to accommodate their financial situations.
SMEs, or small and medium-sized enterprises, are businesses whose personnel numbers or financial turnover fall below certain limits, playing a crucial role in the economy by providing jobs and innovation.
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