By Penny Parisi, KeyBank Vice President, Business Banking Relationship Manager

Running a business is already an incredibly challenging task, and coupled with a shaky economy, rampant inflation and high interest rates, small business owners have faced serious difficulties over the past few years. However, despite rising inflation, heightened concerns due to the election year and increased operating costs, many small business owners note that they’re faring well. This confidence could point to the fact that we are on our way out of the downturn and turning the corner towards better economic conditions. In fact, according to KeyBank’s 2024 Small Business Survey, 65% of small business owners feel confident that they could fund their operating expenses with the cash they have in reserve for one month if an unexpected need arose at their business.  

Preparing for Unexpected Costs

Following the strained economic conditions of the past year, and after navigating trials from past economic downturns, small business leaders have prepared themselves for unexpected costs and additional challenges. According to the survey, business owners have taken actions such as implementing cost-cutting measures (32%), increasing cash reserves (30%) and exploring alternative financing options (22%). 

What’s Next for America’s Small Businesses

While business owners remain optimistic for improved financial conditions, many are concerned with potential shifts due to the election year. The top potential policy change most small business owners are paying attention to is taxation (38%), with employment and labor laws (25%) and healthcare policies (25%) tied for second. Fraud prevention is also top of mind for business owners this year. As operations continue to shift in favor of digital tools and remote work, many are more vigilant and focused on putting measures in place to prevent potential cyberattacks. Unfortunately, this concern is well founded following recent data breaches at hospitals, cellular providers and many other high-profile organizations.

In fact, 44% of business owners cite payment fraud such as unauthorized transactions or unauthorized electronic fund transfers as their biggest concern, with 37% also citing identify theft, 28% citing malware and ransomware attacks and 27% citing phishing and email scams. As technology continues to evolve, many business owners are wondering how they can best protect themselves and their business from falling victim to these cyberattacks.   

Bank services extend beyond just traditional checking accounts and, as no two businesses are the same, maintaining a strong relationship with your bank can lead to uniquely tailored solutions and strategies. 

Working with a Trusted Advisor

Banks are at a pivotal moment to help their small business clients navigate cash flow and business operations concerns. While small businesses are expecting challenges this year when it comes to managing cash flow effectively, more than half (52%) of small business owners are confident that their banks understand their cash flow concerns. However, some business owners feel that banks do not fully understand the challenges they are up against – with almost 20% unsure if their banks understand their cash flow concerns. 

Small business owners who have taken that next step to work with their bankers have received valuable guidance. They noted the top three pieces of advice they have received are: to cut costs by reducing discretionary spending (34%), establish an emergency fund (22%) and diversify revenue streams by introducing new products or services (20%). 

Working with a trusted banker can ensure that small business owners have the resources they need to overcome economic challenges and help their business run better. 

Penny Parisi is Vice President, Business Banking Relationship Manager for KeyBank in Central New York. She can be reached at [email protected]. This material is presented for informational purposes only and should not be construed as individual tax or financial advice. KeyBank does not provide legal advice. All credit products and SBA Loans are subject to approval, terms, conditions, and availability and subject to change. KeyBank Member FDIC, SBA Express Lines of Credit ARE NOT FDIC INSURED OR GUARANTEED. Key.com is a federally registered service mark of KeyCorp. ©2024 KeyCorp. CFMA #240520-2610679

The Cost Savings of Digital Payments

Digital payments are a key fixture in the revolution of convenience. Businesses that can’t accommodate this change risk losing revenues to competitors who can. Fortunately, the costs of integration have fallen dramatically, putting it well within the reach of all businesses.

Advantages of Digital and Electronic Payments

Digital payments are noncash transactions using credit cards, debit cards, pay/prepaid cards, Automated Clearing House (ACH)/electronic checks, wire transfers, Real-Time Payments, and mobile wallets.

Access is one of the greatest advantages. Digital and electronic payment platforms provide 24/7 access for customers to make purchases. Companies can generate sales past regular business operating hours. Payments can be accepted globally and from different currencies. By default, digital payment platforms will automatically convert payments to U.S. dollars (USD). Businesses can also opt to accept payments by cryptocurrencies like bitcoin and ether, which are pure digital currency. You can broaden your reach online. Businesses that sell membership or subscription services will find automated recurring billing options extremely convenient, which is standard on most digital payment platforms.

Customer and Database Management

Since data is tracked and accumulated, many digital payment platforms provide customer and database management tools in addition to analytics and reporting. Online marketing and promotional campaigns through e-mail and social media can now generate return on investment (ROI) by providing the links to your e-commerce site. The beauty of this database is the composition of hot leads that are familiar with your products with proven purchase histories. Companies can cultivate this relationship into sales.

Cost Savings

Enabling electronic payments cuts down on administrative and office supply costs. Transactions are performed and tracked online and often batched to a spreadsheet and saved on a flash drive or via the cloud. Receipts are generally delivered via email and short message service (SMS) notifications. This enables companies to save money on materials (paper, envelopes), postage (stamps), printing (paper invoices), and storage expenses. Additional savings may arise in labor costs since fewer humans are involved in handling payments.

The low costs to implement, coupled with opportunities to boost sales by reaching a larger audience, make implementing digital/electronic payments an absolute necessity for businesses to stay competitive in today’s marketplace.