The UK’s SMEs today operate in one of the most uncertain periods of recent history. It was therefore no surprise two thirds (64%) of UK SMEs said they feel concerned about policy, law and regulatory change, according to a 2019 study by American Express and Oxford Economics.

Running a small or medium sized business is a tough challenge in the best of environments. So, what are the steps that UK SMEs can take to get ahead of their competition and safeguard their operation during periods of economic or geopolitical stress?

Rather than simply battening down the hatches and trimming costs, strategic investment and smart management can help. This is where colleagues in accounting and finance have a critical role to play in helping businesses effectively navigate the current complexities of the business operating environment.

Stay ahead of new technologies

One of the challenges SMEs have to contend with is rapidly changing technology. The significance of this also came through in the American Express study, which found that applying the latest tech is the number one business challenge UK SMEs intend to address over the next three years, with over two thirds (65%) recognising its power to unlock business opportunities.

The study showed that UK SMEs are shifting their focus from infrastructure to more value-added technology, ranking workforce productivity tools as their priority now and in future, followed by faster, more reliable communications systems.

Unfortunately, less than half of UK SMEs deem themselves effective at integrating the latest tech compared to their competitors – this is a potential stumbling block that deserves careful thought before investment is committed. However, the SMEs that are able to use their agility to get on top of the latest technology will have a significant advantage when it comes to future proofing their business.

Streamline payments to get ahead

One-way SMEs can successfully use technology to get ahead of their competition is by streamlining their supplier payments, allowing them greater control of their cashflow. Our research found that 68% of UK SMEs say that cashflow is important for the running of their business but nearly one third (30%) find it difficult to access the finance they need.

Many SMEs rely on old-fashioned payments systems and single funding sources, which can result in delayed payments. This, in turn, means SMEs aren’t certain of when incomes are due to arrive, and therefore can’t maintain an accurate cashflow forecast.

Access to a healthy cash flow not only safeguards against bumps in the road, but it also means companies can remain flexible and nimble in responding to growth opportunities – a critical advantage when it comes to expansion. Moving away from paper payments also saves time, improves efficiency and reduces the risk of human error.

There are a number of funding solutions available in the supplier payments space that make payments easier for customer. These can encourage faster payment and also enable businesses to hold onto more of their cash for longer whilst paying suppliers quickly.

For instance, supply chain financing means that once an invoice is approved, the supplier is paid by a third party, directly according to the buyer’s instructions. The buyer then holds on to its capital, until it receives a single consolidated invoice from the third party at the end of its billing cycle.

Other solutions can reduce billing errors by assigning a single-use account number to each transaction. In these cases, when a supplier charges the virtual account number, the charge is verified against the currency amount and date range pre-set by the buyer. This ensures transaction data is aligned, reducing the risk of misunderstandings or tension between suppliers and buyers, and making for easier invoice reconciliation.

The greater control – and additional visibility over spend – offered by this kind of process is especially valuable in periods of greater uncertainty, where planning cycles are often compressed.

Consider dipping a toe in foreign waters

The process for exporting abroad can seem intimidating, particularly for those broaching it for the first time. This anxiety was reflected in our research, which found that 64% of UK SMEs believe it’s harder to access new export markets than it was three years ago, and only 16% say their supply chain has become more international during that time.

But the benefits of exporting can be transformative for SMEs, and with the right preparation, the risks can be greatly minimised.

Often the most vital step is research. SMEs must take the time to analyse which products they’ll export and where demand lies. A good starting place for this is in researching which markets their fellow UK based competitors enjoy success and then travelling to the markets and assessing the landscape in person.

Once that decision has been made, the next stage of planning is building informed, data-led strategies for contending with the new customers, policies, regulations and cultural or social hurdles, such as language. There are a number of organisations that can help equip SMEs for this. The Department for International Trade, for instance, offers a wealth of useful information about international markets online.

Next SMEs must consider what their best route to market will be. The most effective and simplest way for an SME to explore exporting to a new market is to trial sales of their chosen product there, and a strong digital presence to do this is essential. If selling online isn’t viable, SME’s might consider local agents or distributors, or licensing or franchising their product overseas.

By taking inspiration from these steps, SMEs can help ensure that they’re not only protected in the face of economic or political changes, but also set-up for future success.

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