How small firms can manage new payment tech investment costs
The evolution of payment tech continues a pace but small businesses aren’t keeping pace. They are losing out on vital revenue as a result. Urgent investment is required but at the same time cash flow needs to be safeguarded. How can firms balance the two?
Small firm payment tech take-up and the reasons behind it
According to two new studies, small firms are missing out on key sales because they aren’t offering the payment solutions that customers want. A recent survey from Xero shows that only a third of small businesses accept Apple Pay or Google Pay, while almost 50% of gen Z consumers only use their mobile phone to pay for products and services when they’re out of the house.
Furthermore, while almost 90% of consumers prefer to pay using a credit or debit card, only 55% of small businesses offer this payment option. Tellingly, almost 35% of firms that have adopted new payment tech in last year have benefited from an almost 25% uptick in sales, while 25% noted that they had been paid faster.
It is the last figure that is perhaps the most notable, with the issue of payment tech going beyond the retail and leisure sectors, and offering a potential solution to managing the long-standing problem of late payment.
The results of a report from Statista paint a similar picture, showing that 70% of customers prefer to use card or contactless payments instead of cash, with the use of cash falling by almost 40% in the last decade. Critically, it argues that it is essential that firms keep up with new payment trends.
Payment tech investment and how alternative finance can help
If the results of the recent studies are surprising, the obvious question is what is stalling adoption of new payment tech by small businesses. There is mention of a lack of relevance, a lack of demand and a lack of value.
While there is plenty of scope for back and forth with regard to relevance and demand, not least given the research results, the focus on value is perhaps most interesting, as this in essence relates to cost.
Against a backdrop of prolonged austerity and unrelenting pressure on bottom lines, it is hardly surprising that cost is a prominent reason why small firms are proving careful when it comes to investment. Balancing spending on development and managing cash flow has rarely been as challenging.
This is where alternative finance can help.
How are alternative lending services helping small businesses?
While there was some improvement in the second half of 2024, coming into 2025 small business lending from traditional sources remains subdued, with 65% more SMEs experiencing difficulty in accessing finance from high-street banks. As a result, alternative lenders have become increasingly embedded in the small business finance landscape.
Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate. These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.
Notably, the Growth Guarantee Scheme is providing a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.
Small firm finance options for payment tech investment
It is undoubtedly hard for small businesses to find investment capital at the moment, but adopting new payment tech is an important development step, not least as it can help increase sales. And then there’s the potential with regard to late payment.
Firms can ill afford to drag their heels and this is why, in the current finance and lending climate, it is essential that key decision-makers are aware of all the finance options available to them, including the services of alternative lenders.
To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.