SMEs in England and Wales: The Different Means of Payment Available

Updated: Nov 19

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.


Businessman using app online payments system

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.


Graph Analysis

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.


Credit card with glasses on laptop

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

International wire transfers

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.

Gold and silver coins Bitcoin

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!



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