The habits of B2B payments are shifting. OK, that’s a pretty broad statement. But thanks to some hard data, we can pinpoint exactly where, and how, businesses should expect to see some changes in the way transactions are carried out.
Here are the key stats you need to know this week about where you get your money, where your money is headed, and how it will get there.
Was the bitcoin hype overblown? Maybe, but the technology that runs the whole operation – the blockchain – is ready to see its own rise in star power.
Analysts at Aite Group say capital markets are readying to pump $400 million into exploring and investing in the blockchain by 2019. That’s a massive jump from the $30 million spent on the technology last year.
This year, researchers expect $75 million to be spent on the blockchain by the capital markets. Already, some big names are jumping in.
[bctt tweet=”Researchers expect $75 million to be spent on the blockchain by the capital markets.”]
Most notably is UBS, which just announced plans to develop a virtual currency to help other banks and financial institutions more quickly settle payments on the blockchain. Over in the U.K., financial services group Innovate Finance said it would be launching a lab next month to explore the potential mainstream uses of the blockchain in the industry.
The technology is complicated, but much of its hype has to do with the potential to ease international payments, a feat that could have major implications in B2B trade.
“Conceptually attractive yet hard to tangibly pin down or explain, blockchain has the potential, to some, to be the greatest technology innovation since the Internet,” analysts at Aite said while announcing their predictions. “Could blockchain be the missing technology link that can help financial institutions reduce regulatory and compliance costs as well as generate new revenue streams? “
The Cost Of A Scandal
The Toshiba accounting scandal story definitely has legs, and while the story has been running for several months now, it wasn’t until last week that the Japanese firm finally revealed its losses from the fallout: a $318 million net loss for overstating its profits by $1.3 billion between 2008 and today.
A major corporation fudging some numbers in its books is sure to make headlines, but the average business also has its own accounting scandals to worry about. Expense management service provider Certify came out with new analysis law week that found companies in the U.S. will see $1 billion in losses this year due to expense management fraud, whether it be duplicate reimbursements or inflated, non-descript items on an expense report. Firms are already spending loads on employee expense reimbursements – $186 billion this year, Certify said – so they may want to tap in how to safeguard against fraudulent and erroneous expense reports.
[bctt tweet=”Companies in the U.S. will see $1 billion in losses this year due to expense management fraud”]
Across the pond, alternative lenders are having a field day with their small- and medium-sized businesses, and analysts say its success is changing borrowing behavior among SMEs.
The latest data show that the U.K. saw a new record in alternative corporate finance, with a 9 percent increase in businesses borrowing against physical assets, like inventory, and intellectual property.
In all, businesses borrowed £4.2 billion against assets (about $6.5 billion) as of June 2015, up from £3.8 billion in June 2014.
The stats, provided by the Asset Based Finance Association, reveal that companies in the nation are seeing alt finance as their primary source of working capital needs, rather than a complement to traditional loans, and this change in behavior makes sense for many businesses.
“The benefits of invoice financing are getting increasingly known, but in addition to that, borrowing against hard assets is one of the innovative forms of alternative finance that has really gone mainstream in the last couple of years,” ABFA Chief Executive Jeff Longhurst said.
“For businesses with substantial assets tied up in warehouses, for instance, or in plant and machinery, this can be an excellent way to access lending to drive investment,” he added.
Back in the U.S., the small business lending figures weren’t as sunny. The latest data from the Biz2Credit August Small Business Lending Index declined for both big and small banks, with big banks approving, with both demographics approving 0.1 percent fewer SME loan applications than the month prior. Analysts believe the drop was due to the temporary shutdown of the Small Business Administration.
A decline in bank lending isn’t good news for businesses.
On a global scale, a new report by Clyde & Co. said 77 percent of businesses surveyed report having greater difficulty than the year before to access the type of trade financing they need.
It may come as a surprise, but businesses prefer traditional banks – and the relationships they offer – to access trade financing. But researchers say that while banks accounted for 80 percent of trade financing volumes pre-recession, today they provide just half, fueling about $7 trillion (down from $14 trillion) for B2B deals across the globe. This slump is putting a damper on cross-border trade, researchers said, as alternative lenders aren’t providing SMEs what they need to buy and sell.
That was a lot of data, but to recap, a few key lessons:
Pay attention to the blockchain, because while bitcoin’s 15 minutes of fame may soon be up, the blockchain technology could alter corporate banking for good.
Take close care in managing employee expense reports, unless you want to end up like Toshiba.
In the U.K., alternative lending is booming. In the U.S., not so much. Do SMEs want alt lenders, or traditional banks? The answer seems to be a big “it depends.”
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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