Q&A with WorldFirst: Supporting SMEs with international trade

Q&A with WorldFirst: Supporting SMEs with international trade

Sumit Arora, Managing Director, UK and EEA, WorldFirst

1. What is the current operating landscape for SMEs in UK and Europe and why should they consider trading internationally to seek stronger growth?

It’s no secret that SMEs across Europe have felt the impact of challenging market conditions more than others, with the cost-of-living crisis and rising inflation rates hitting UK SMEs particularly hard in recent months. Covid debt still poses a challenge, with figures showing that 33% of UK SMEs have debt levels more than 10 times their cash balance, while Brexit continues to make trade in Europe harder. However, our ever-evolving digital world has opened the door to new opportunities to fuel growth, with cross-border ecommerce being one. In Europe, this market was worth €179.4 billion in 2022, and this is without capturing the opportunity further afield.

2. Tell us about some of the trends you have seen in this space over the past 12 months or so.

In light of the some of the challenges mentioned in the previous question, we’ve seen growing interest from SMEs looking to trade with new markets to mitigate challenges in their home countries. For example, research from the Federation of Small Businesses (FSB) found nearly a third (32%) of the UK’s small businesses buy their supplies from the US, closely followed by China (30%). What’s more, the UK’s recent trade pact with 11 Asian and Pacific nations has shone a light on the growth that businesses could experience by looking to these regions. As a result, we’re seeing far more SMEs look to ways in which they can make the decision to trade cross-border a success and reap the benefits of doing so.

3. What are some of the key challenges for SMEs when considering operating with new markets?

One challenge is being able to do business like a local. The importance of this shouldn’t be underestimated, but understandably, an SME can’t be expected to know all of the intricacies of how to do so, like having local sort codes, account numbers and IBANs, etc. Making and receiving payments in local currencies is just one important part of this, so finding a cross-border payment partner who can offer support here is vital so that the business in question doesn’t need to worry about setting up relationships with local banks in each market. SMEs today need an inclusive one-stop platform that can meet all of their cross-border payment and working capital needs with speed and low cost.

4. What specific challenges do payments in particularly pose for SMEs when trading cross-border?

What typically happens at the payment stage is that even when a buyer and seller is on the same platform, the payment will take around two or more days, because it will go through intermediary banks. But the speed of payment is crucial in international trade. Delays in payment processing can lead to disruptions in the supply chain, inventory management issues and cash flow problems for businesses. It can also result in additional costs such as storage fees or penalties for late payments. However, SMEs can see this expediated – in some cases, with the payment being made in a split second – and often, at no extra cost, by working with a partner who takes a ledger-to-ledger (L2L) approach and not needing to go via an intermediary bank.

5. How has WorldFirst adapted its business model to better support SMEs in this area?

We have embarked on a transformative journey, transitioning from a traditional FX business to offering a comprehensive range of services dedicated to supporting SMEs in their global trade endeavours and business growth. To ensure speedy responsiveness to customer needs, we have made significant investments in upgrading our systems, enabling us to facilitate instant cross-border payments in certain cases. Additionally, we have expanded our global coverage, resulting in an unparalleled ability to connect UK and European businesses with Southeast Asia and China, presenting vast opportunities in these thriving economies. We have also continuously prioritised the enhancement of our security and compliance measures; this commitment ensures that engaging in international trade does not expose our customers to unnecessary risks.

6. What are WorldFirst’s plans to continue supporting SMEs with importing and exporting?

With our cross-border payment solutions, multi-currency accounts and foreign exchange services, we are focused on continuing to help facilitate international SME trade. Supporting exporters and importers to enhance ecommerce by enabling businesses to accept payments in various currencies and reduce transaction costs through competitive fees and rates remains one of our key priorities moving forward. Ultimately, we believe our services and partnerships have the ability to foster economic growth, and we’re on a path to doing this, all the while maintaining a strong regulatory framework to ensure payment compliance, consumer protection and financial system stability.