SMBs are already dealing with inflation but now must bear the brunt of higher interest rate hikes too.
It’s an economic one-two punch that forces legions of entrepreneurs and small business owners to swallow higher loan and supplier costs when they’re already struggling to grow revenue.
The combined reality of the two has raised businesses’ appetite for anything that can optimize cash and cash flow.
“[Small businesses] are trying to manage all the different increased cost elements, as well as the uncertainty of the future economic outlook. They are really relying on optimizing their cash flow to drive as much efficiency as they can,” R.J. Ancona, VP and GM, B2B product, partner and client management, GMNS at American Express, said in a recent PYMNTS interview concerning this heightened priority. “Cash flow is king, so [SMBs] are depending on partners to extend working capital. They’re depending on the ability to make digital payments and receive those payments,” he said, noting that there are still a lot of unknowns as SMBs look toward the future. “[SMBs] also rely on a lot of the automation and partnerships they have in their ecosystems to help them manage [uncertainty],” he added.
Unlike larger companies, small and medium-sized businesses (SMBs) may need help accessing capital in the first place. In addition, cash flow concerns can lead to SMBs needing more time to pay their suppliers — further impacting their creditworthiness and ability to access capital.
Ancona said one way out of that cycle is to start with the basics — such as managing AP/AR processes efficiently. That begins with payment digitization — using modern technology to track and pay instead of paper checks. For Ancona, payment digitization offers more than convenience; it can unlock cost savings for SMBs facing a new year of uncertainty.
Automation Helps SMBs Leverage Cash Flow to Weather the Tide
Automation is critical, said Ancona, to SMB efforts to optimize their buying and supplying journeys and their ability to drive efficiency across the entire organization. “Customer conversations that I’ve had show that a majority of CFOs are embracing automation because they see a way for that payments ecosystem to work in their ERPs, to work in their ordering systems and to allow them to focus more of their time on bringing in new business,” Ancona said.
Automation can streamline AP/AR processes and provide more real-time visibility into revenue and outflow levels, which can help SMBs optimize cash flow and navigate a challenging economy.
“Whenever I leave my customers with a best practice, it’s always about finding the balance of creating value for everybody in your ecosystem, whether it be in your supply chain, your payment terms, or extending cash flow,” said Ancona. “It’s not easy to make everybody happy, but I think that finding that balance through automation and through some of the new tools that are out there is game-changing.”
Amex Sees Automation as Central to Its SMB Payments Value Proposition
According to Ancona, Amex sees its role in helping SMBs modernize payment processes and improve cash flow as central to its business strategy.
“It’s been great to see the buyer and supplier side of American Express — the issuing and acquiring side of our B2B network — come together (as we) invest in new partnerships and capabilities which allow all of that to drive efficiencies for a small business,” Ancona stated. “At the core of that is automation: AP automation, AR automation and everything in between.”
