SMEs in England and Wales: The Different Means of Payment Available
Updated: Nov 19, 2021
Table of Contents
Whatever their size or field of work, when the time comes for enterprises to conduct
business transactions with either a supplier or a collaborator, they are pretty much all in
the same boat. Whether self-employed or a small to medium-sized enterprise, there is
nothing as important as to properly manage expenses by trying to find the best-suited
money transfer method. Different payment solutions are fortunately available.
In these times of globalized enterprise digitalization, new means of payment have arisen to
facilitate business relations. Companies are now presented with a wider range of solutions
to choose from.
Payment solutions for self-employed entrepreneurs in the UK
In a recent April 2021 update, Merchant Savvy pointed out that, out of the nearly 6 million
private businesses operating in the UK in 2020, close to the entirety was composed of
SMEs, 96% of which were micro-sized enterprises employing between 0 to 9 individuals.
And last year alone, self-employed entrepreneurs accounted for 76.3% of said enterprises,
that is, 4’567’775 out of a total of 5’980’520 businesses.
Now, anyone will agree that a 1-man micro-sized enterprise makes administrating a lot
easier. The same goes for supplier or collaborator payments, as not only are transactions
much more limited but way more easily traceable as well. Whereas cash, cheques, direct
bank debits are the most commonly used in-country methods, wire transfers or credit card
transactions are the default international means of payment.
Cash
While ideal for small business expenses, larger amounts can be a hassle on top of a
potential security problem, as « any business or sole trader that accepts or makes high-
value cash payments of €10,000 or more (or equivalent in any currency) in exchange for
goods » is to be considered a «high-value dealer » under the UK’s Money Laundering
Regulations and must consequently get registered.
Cheques
Despite society slowly but surely transitioning towards being completely cashless, small
UK businesses seem to like sticking to the basics. To many, payments by card may be
problematic if not impossible, and once made, electronic payments are irreversible.
That is why cheques have kept all of their popularity, as, along with being processed much
slower and easily traceable, they can be canceled and help you save up on otherwise
unpleasant card payment fees.
Direct bank debits
When it comes to contractual expenses, transaction automation helps small companies and
self-employed entrepreneurs better manage payments. While authorizing monthly
withdrawals when payments are due is certainly advantageous, direct debit requires
routine supervision, as to not let unsuspected frauds go unnoticed.
Credit card payments in Hampshire
Credit cards are among the most widely-used means of payment to date, as they allow for
both physical and dematerialized transactions, the latter being anything internet-
purchase-related. The only two major downsides to credit card usage is exposure to scams
and fraudulent traceability, both of which larger enterprises are particularly subject to.
Visual credit cards
Credit cards are as useful as they are vulnerable, primarily because they remain one of the
most popular ways to buy both products and services on the Internet. One of today’s
available alternatives to decreasing consequent card fraud is the fairly recent arrival on the
market of VCCs. Through renewable ephemeral credit card numbers, a user is given
further financial anonymity, as neither their bank account nor linked credit card details are
displayed.
Biometric Credit Cards
Similarly, the purpose of biometric credit cards is to strengthen transaction security. Once
the user’s fingerprints are registered, the scanning device embedded within the card itself
determines, at the touch of a finger, whether the purchase can be consequently authorized.
International wire transfers from Berkshire
All in all, set aside the many fluctuations in charges and differences between SEPA and
SWIFT-encoded payment orders, international wire transfers are the most popular and
widely used business payment methods today. Said transactions are ordered online,
through dedicated e-banking interfaces that require SMEs’ owners to log in to proceed
with their payments, which can be automated or scheduled if desired.
England’s small to medium-sized enterprises and mid-cap companies
In the UK, SMEs (both micro-sized and small to medium-sized enterprises) gather up to
no more than 250 employees and have, in 2020 alone, generated over 50% of the total
private sector turnover.
In comparison, a ridiculously small percentage of all private businesses are comprised of
large-sized enterprises (0.13%), which made, on their own, the remaining 48% or so of the
total turnover.
While smaller-sized enterprises can and do use the aforementioned in-country and
international payment methods, the latter are understandably more concerned about
traceability-related problems and cost-efficient transaction solutions, especially when said
options prove to be increasingly insufficient to properly monitor and manage large cash
flows. This here is, if any, a very serious consideration, as more and more challenges arise
proportionally to a company’s growing success.
When transfer options are constantly being enhanced or reinvented to match the many
transformations of the way we conceive global trading, it is vital for enterprises that wish
to remain competitive and generate substantial profits to follow suit to the best of their
ability while keeping an eye out for newer emerging technologies.
Cryptocurrencies
That is where cryptocurrencies come into play. This new transactional option has yet to
prove its worth after being both under the spotlight for some years and on the radar of
countless traders. Whether promising or inauspicious, time will tell, but cryptocurrencies
have substantially penetrated the market.
Helping clients circumnavigate business transaction-related uncertainties and hidden
surprises is our job, at Funding Routes. We set out to advise owners of SMEs in Surrey
(England) and Wales on the best available ways to save up on international business
payments. Do not hold back any longer: contact us today!
