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EDITORIAL How retails can continue to grow as economic challenges tighten

Acquirers need to innovate more say merchants

As Summer draws to a close, the clouds are darkening both literally and metaphorically, with more small businesses than ever starting to look concerned as to what the coming months have in store. 

With a possible recession looming, energy prices soaring and interest rates rising, growing retailers are right to be cautious and concerned: with less in their pockets to spend, shoppers are going to be much more circumspect about what they buy and who they buy from.

This in itself is a worry, but not a situation that many haven’t already been through. There have been crashes, recessions and downturns aplenty across the history of commerce. There is even a Wikipedia page that lists them all – there has pretty much been one a decade since 1930.

The real concern currently, however, centres around finance. The majority of SME businesses, including retailers, are suffering from not having a tight enough grip on payments. Many wait many days, if not weeks, for payments to clear – often with payments going missing altogether – leaving them in a cashflow black hole.

According to the Federation of Small Businesses half of 1300 SMEs and sole traders involved in its quarterly research reported receiving late payment from their clients between April and June of 2022 – with a further one in five stating the issue was worsening amidst macroeconomic conditions.

The result is that they are having to turn to loans, with increasing interest rates, to plug the gap: a strategy that is unsustainable and, as things get tighter, one that soon won’t be available.

However, help is at hand. As said, we have been here before, and there is no reason why a business can’t continue to grow in these straightened times. The key things, recommends one business expert, is to cut costs, look at how to increase use of automation and to look for alternative funding to loans to plug such cash flow gaps – and presumably to invest in the tech needed to make the first two work.

Technology certainly has a role to play and it is likely that we shall see investment in it across ecommerce in the coming months – the question is will it be enough? With the UK government missing in action and the details of the help that it may (or may not) give once a new prime minister is installed yet to become clear, investment in tech and lean business is definitely going to be essential for most businesses.

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