Across the nation, non-essential businesses have been mandated to shut down their storefronts or limit hours of operations to help flatten the COVID-19 curve. And, with limited cash flow, to begin with, more than half of small businesses say they cannot operate with these rules for more than three months. As business slows, it has become imperative to have easy, electronic ways to get paid quickly. Businesses are being forced to turn toward digital interactions and exchanges to keep their operations afloat.
Small businesses and non-profits that typically relied upon collecting payments in-person are scrambling to reinvent themselves. They won’t be able to stop by their client’s office or home to collect payments, especially as people practice social distancing. Lack of cash is the main reason businesses close down, and the pandemic only perpetuates this issue. The average small business has 27 days of cash reserves and ¼ of them have less than 13 days. It’s no surprise that concerns over cash flow continue to grow during this time.
PPP loans may provide temporary support for cash flow, but their influx of funding is not a long-term solution. Businesses will still need the cash to make payments on the loans not forgiven and to keep their businesses running strong as our economy rebounds. Maintaining a way to continue making money is crucial to small businesses’ survival; they need ways to get paid and manage their finances digitally, without high fees or cumbersome processes. Even before the pandemic, 78% of small businesses said they need to accept different payment methods, 75% need to automatically send due date and overdue reminders, and 78% need to view the real-time status of invoices. These needs are especially urgent today.
This is where bankers should step in to help more. They already have relationships and trust from businesses in their communities. Offering a tool that satisfies the needs of a small business owner when face-to-face interactions are limited is important now and in the future. Financial institutions have started helping small businesses in their communities “get paid at a distance”. What started as a way to minimize the spread of germs through electronic payments and communications has become the lifeline for many small businesses and will continue to be after the pandemic. Small businesses are pouring trust in their financial institutions at their moment of need, and financial institutions are meeting these needs.
Bankers involved in these services have uncovered countless amounts of inspirational stories. They can set up businesses to operate online in 24 hours, like the furniture store owner who went from never practicing online commerce to making 10 transactions on his first day with a digital payment form. Churches are posting sermons on YouTube with an online payment link in the comments, social media and/or sharing via their website. And, restaurants are offering curbside pick-up and emailing invoices instead of collecting cash payments or cards. All of this has been provided by bankers, who’ve worked tirelessly to support their communities and have taken steps to protect their businesses’ health and cash flow.
It’s situations like these that can jumpstart projected timelines on digital strategies. COVID-19 has changed the way small businesses transact and interact with their customers, while also instilling a sense of urgency and opportunity for financial institutions to help. The return back to “normal” will look different to all, especially for the 46% of small businesses who believe it will take the economy six months to a year to bounce back. With 96% saying they’ve already been impacted by COVID-19, there is no better time for financial institutions to make a difference than now. Investing in the backbone of local communities starts with giving small businesses faster access to cash.
