Payment visibility – the critical factor in SME growth in 2022

Jed Rose, general manager of EMEA, Airwallex

As such, mindsets among SMEs have shifted from resilience to resurgence, especially when it comes to growth, and 2022 should prove a catalyst to expansion plans. Our own research points to this – of 500 SMEs in the UK surveyed, 77% said they plan to expand their international presence in the year ahead.

The need for pragmatism

But such enthusiasm is tempered. Driving business growth across markets and across continents demands an ever-increasing understanding of an organisation’s operations throughout a mesh of affiliates, partners, and suppliers. This brings inherent challenges in managing countless transactions                     which flow throughout the network.

When we then consider how these transactions will proliferate once new territories are added to the mix, we see how expansion plans certainly bring huge opportunities – but there remain significant challenges to making the most of them. There’s no better place to witness this than in the lifeblood of any organisation: cashflow.

Transparency is key

The most important aspect of cashflow is visibility into it. However, too often, hidden fees and costs across a wide network brings the opposite: invisibility. 

Tackling this is the number one business priority for organisations looking to international growth through the next year – an issue which rang true for a significant percentage of SMEs we polled. This is exemplified by the fact that 64% of SMEs surveyed feel that businesses without a real-time view of expenses, transfers and all other transactions to track are not firmly in control of their finances.

Supporting growth

The appetite for international expansion is huge among UK SMEs; 62% of those stating they’re expanding plan to venture further into Europe, with 38% going even farther afield. Empowered resurgence really is a key theme for 2022.

But extensive payment fees and foreign exchange (FX) are cited as barriers to these goals. The issue of FX is exacerbated by the fact that many businesses were forced to spin up hyper-centralised operational functions during Covid-19. 

This was fuelled by the potent mix of the closure of international borders and the shift to almost wholesale remote working. There are numerous examples of employees working not just from where they live, but where they grew up – in many instances abroad. This didn’t just rip up office floorplans, it fundamentally redesigned companies’ international footprints.

Increasing cross-border payments

As such, closed borders ironically drove up the need for cross-border infrastructure. From a payments perspective, this brought major FX issues into play – challenges which were accepted as just a part of how a business ran in 2021. Frustratingly, these perceptions remain. 

More than half the decision makers we polled (53%) stated international FX fees are a pain point they find brings too much effort to work around. Over a quarter (26%) labelled them a pain point which can’t be avoided.

When we looked at the actual plans behind growth, sourcing new international customers and new suppliers figured strongly (54% and 45% respectively). Such expansion of the network naturally brings an increase in payments. For many SMEs, it brings a headache in the form of paying international suppliers in local currencies.

Standing firm again hidden costs

Given the enthusiasm to grow internationally, grinning and bearing it shouldn’t have to be an accepted norm. Yet, of the decision makers we polled, over two-thirds (70%) agreed that 'hidden fees' that come with dealing internationally are just a “necessary evil" of doing business across borders

With all the turbulence that SMEs have navigated their way through, and the positive outlook for the year ahead, it continues to be a source of great frustration for too many businesses that there is a lack of transparency with most players in international payments. Expansion should provide synergies such that operating overheads don’t overwhelm a business – particularly as we come out the other side of some of the most disruptive episodes in well over a generation.

‘Necessary evils’ don’t need to be tolerated – and mustn’t be. 

To the contrary, innovative service providers that bring more transparency to businesses and improve their ability to operate globally are in a unique position to support businesses everywhere to seize this unique opportunity of growth as markets around the world enter empowered resurgence.