Sobering numbers came out this week via a Mastercard survey of small business owners suggesting that COVID-19’s economic destruction of the small business sector is rampant and ongoing.
Per the survey, 38% of respondents in the US and Canada are seeing cash flow problems due to cash and checks taking too long to process and customers making payments late. If their numbers don’t pick up, these businesses will be left in a lurch — nearly half (48%) of the surveyed owners said their business is just one missed payment away from closure.
A 48% clip of businesses on the verge of going under is far from ideal.
In years not plagued by a pandemic-generated recession, only about one-third of owners are concerned about losing their business — a 2019 survey by software firm Proof Factor found that 31% of entrepreneurs feared going out of business. Back in 2011, a Gallup poll saw 36% of small business owners voicing similar sentiments.
However, some hope remains. To combat payment woes, small businesses are turning to a new frontier: digital payments.
According to Mastercard’s latest survey, 64% of small businesses are actively discouraging clients from using cash and checks. Instead, small businesses are looking towards the speed and efficiency of digital payment methods: 57% have indicated that since the beginning of the pandemic, they’ve increased usage of digital services for business-to-business (B2B) payments.
“The pandemic has made it painfully clear how labor-intensive current business payment processes are, especially for small and medium-sized businesses,” Mastercard’s executive vice president of new payments Ron Shultz said in a statement. “With cash flow more critical than ever, weâre seeing an accelerated shift to digital B2B payments as businesses of all sizes look to safeguard their operations today and prepare for the future.”
The survey considered the responses of 1,000 small business owners in the US and Canada between July 13 and 17. For the sake of the survey, Mastercard defined small businesses as having fewer than 100 employees while maintaining an annual revenue between $50,000 and $1 million.
Digital Is “The New Normal”
Despite the worrying numbers about potential business closures, businesses polled by Mastercard seem bullish about digital payment methods.
In fact, two-thirds of respondents said that the necessity for digital solutions is actually an upside to COVID-19. On top of this, 81% said that customer satisfaction levels have risen due to digital payment methods.
The pandemic as a whole has also caused a big shift to digital products; Mastercard found that 76% of businesses have been prompted to become more digital in a world defined by social distancing. 82% claim that COVID-19 has changed how their business sends and receives payments.
Mastercard notes that “positive sentiment, increased customer satisfaction and continued exploration” indicates that digital payments will stick around post-pandemic. The numbers from the survey back this up — 70% of owners are open to investing in technology that will push their payment systems forward while 73% feel that digital payments will be “the new normal” for their business in the future.
How To Accept Digital Payments
If you want to accept digital payments at your business, but don’t know where to start, Merchant Maverick can help. Check out our guide to B2B payments to learn how digital payments can help your business. For the scoop on accepting payments digitally from customers, take a peek at some of the best point-of-sale systems for a cashless society.
For more on payment methods in general, visit Merchant Maverick’s in-depth look at alternative payment options. Small business owners on the go may also want to learn how to accept credit card payments via their phone.
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