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“Digitisation and going global – that is the future for SMEs”

Written by Latifa Yedroudj on Thursday, 10 September 2020. Posted in Insight, Financial management, Analysis, Finance

Pranav Sood, VP of Small Business at GoCardless, speaks about how the coronavirus pandemic has transformed the future for small businesses

“Digitisation and going global – that is the future for SMEs”

Pranav Sood explains why digitisation and emerging technology, such as cloud-based systems, will change the way we do businesses for years to come, bringing a rise to partnerships across borders 

“The last few months have posed an unprecedented set of challenges for small businesses across the country. The cash flow challenge is the biggest one they have to deal with. Most have had to significantly reduce operating capacity,” Pranav tells me. “But it’s also important to talk about other things such as adoption and transition to technology.” 

Small businesses make up the backbone of Britain’s economy – and unfortunately, many SMEs have borne the brunt of the coronavirus pandemic which swept through the country, causing massive disruption to cash flow which many companies relied on to keep operations going. Many businesses were faced with unprecedented challenges they may not have been prepared for, such as remote working, adapting to new technology and something which hasn’t been touched on as much as it should have in the business scope - the well-being of staff. “Lots of small businesses are not necessarily accustomed to working remotely,” Pranav said. “And with the need to adapt to new technology, this is not the level of disruption they would have been prepared for – cashflow, revenue, costs, and emotion wellbeing, all contribute to stress and anxiety, on top of the isolation of not being able to see your colleagues, friends, family offering the support you would normally have. These are the three biggest challenges small businesses face – cash flow, adoption of new technology and the health and well-being of employees.” 

GoCardless helps its clients collect Direct Debit payments from their customers in the form of recurring payment for their subscriptions, membership fees and invoice payments, all whilst helping businesses improve cash flow, keep track of payments, and reduce costs. And during the pandemic, businesses needed the help more than ever. “We are a global fintech with one mission – to be the best way to collect recurring payments”, Pranav said. We link together direct debit networks across more than 30 countries and serve up to 50,000 businesses every month in the UK, where we began, as well as in Australia, New Zealand, Canada, to name a few. Our main mission is to help businesses get paid on time and to allow them to have visibility and predictability of their cash flow. We’re seeing the data that enables us to offer some compelling and intelligent products. This year we launched a product called Success+ and over 4,000 UK SMEs are using that product. It uses machine learning to further reduce payment failure, minimising the risk of worry and loss of cash flow from failed payments. We reduce the implication that it has on small businesses and their customer relationships. Our vision is to fix recurring payments, take the pain out of businesses, help them focus on what they do best.” 

However, not all small businesses have faced a downward spiral during the pandemic. Many were able to rise during the storm – and this was done by having the right structures in place and adapting quickly to the changing business scope. Through the implementation of technology such as the use of cloud-based services, SMEs were able to prepare for the challenges of remote working and mitigate instances of security threats, data loss and data breaches that could arise. “Not all small businesses have been equally impacted,” Pranav said. “Some have been able to carry on operating throughout but were only able to do digital-only models. The impact of coronavirus has been unequal throughout the economy. Businesses who were more able to control their outcomes focused on a few things which left them in a good position to bounce back. Firstly, the usage of technology such as cloud-based services was effective in helping businesses restart their operations. Also, the businesses who were able to drive efficiency and scalability in their business models and were able to adopt technology were able to power through. Cash flow has been challenged in a significant way. Some businesses have done a really good job of managing that position and exposure by using tools and tech, whether it be fintech or automation in cash flow. Some businesses have also better managed their relationships with customers. The ones who bounced back would have been the most successful in finding new ways to balance that relationship with customers, such as figuring out flexible repayment options and plans, or talking to their customers to come to a solution to meet the change of needs.” 

During this difficult time, Pranav encouraged small businesses to seek out help from the government and network with other organisations, who can provide SMEs with much-needed advice to overcome the struggles and hurdles they may be currently facing. Pranav also encouraged businesses to invest in new technologies and initiatives and improvise the way they work to effectively scale up their business models and deliver better results. " ‘Digitisation’ is the way forward”, Pranav said and believes SMEs will become more global in the way they trade and grow their business. “The future of SMEs is digitisation as businesses will increasingly be delivering business models online. SMEs will become more international in the way they work, trade and grow their businesses. With Brexit still going on, the future will involve more technology than perhaps we have ever seen before and involves us working more with small and large businesses around the world. I foresee more businesses moving their processes and systems to the cloud.” 

Even though GoCardless has faced several challenges during the coronavirus pandemic, Pranav owes the company’s continued success to its strong and loyal customer base who have benefited from using their frictionless payment services during the pandemic. “We’ve faced challenges at GoCardless during this time,” Pranav added. “But two things have given us comfort. The first thing is we serve the recurring payments space, our revenues are recurring in nature which means we don’t have the same exposure to one-off payments. We’ve been pleased to see the robustness in our customer-base in this period. We’ve seen a lot of positive results in new businesses, several very large businesses using this period to evaluate the process to migrate a lot of their payments to a cloud-based solution.”

About the Author

Latifa Yedroudj

Latifa Yedroudj

Latifa Yedroudj has joined the Elite team to fully immerse herself in the business side of journalism, a strong passion of hers cultivated from young having co-run her mother's start up business since she was 18. Her interests lie in a wide range of subjects, including start ups, business, travel, and anything entrepreneurial she can get her hands on. She has worked for some of the biggest names in journalism including The Guardian and The Mirror. Follow her on @latifayed on Twitter for her latest journo rants.

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