World Economy

Britain Adopts Flexible Payment System for SMEs

Britain Adopts Flexible Payment System for SMEsBritain Adopts Flexible Payment System for SMEs

Britain's small businesses will be able to fund their growth through a new financing scheme launched Saturday by Worldpay, in partnership with Liberis, the UK's leading provider of cash advances to small businesses.  

Worldpay Business Finance will offer Britain's small businesses the ability to take an unsecured cash advance based on their future credit and debit card sales, providing a flexible way for this key part of the UK economy to grow and succeed, Britain's PRNewswire reported.

Britain's age-old reputation as a 'nation of shopkeepers' was confirmed with figures showing small businesses accounted for almost two thirds of all new private sector jobs created in the last five years. The Department for Work and Pensions shows employment by small businesses has increased by 1,618,000 since 2010.

There are over five million small businesses in Britain, generating over $1.8 trillion for the British economy, said the department in a statement.

"Since 2010, private sector employment has grown by nearly 2.5 million and small businesses accounted for 65% of this," the statement said.

"These figures demonstrate the contribution small businesses have made to the nation's record employment rate of 73.7%," it added.

The figures were released to coincide with Small Business Day Saturday, a campaign celebrating small enterprises and the role they play in strengthening local communities and generating economic growth.

Flexible Payment System

Payments by the customer are made on the basis of a pre-agreed percentage of the business' card transactions, so business owners only pay when they are earning and don't face the stress of having to meet a regular monthly payment if business is quiet.

The flexible cash advance includes no fixed term and unlike traditional "loans" from banks and credit card companies, business owners will not face fines for failing to make a payment. Furthermore, if the advance takes longer to pay off, the originally agreed payment cost remains the same.

Worldpay's move into alternative finance comes as small business owners continue to face significant obstacles in funding their growth. Research shows that 50% of loan applications from first time SME borrowers are rejected.

Dave Hobday, UK managing director of Worldpay, said: "We've been concerned that the lack of affordable funding available to Britain's SMEs is stopping great businesses from growing and thriving. Unlike traditional loans, the flexibility of Worldpay Business Finance means that payments can be structured in a way that better suits the models of small businesses.

"We work with around 280,000 small businesses in the UK and they make up a large proportion of our customers, so we want to help them flourish. By letting companies access cash relating to their future earnings, we are giving them the chance to grow in line with their ambition and potential."

No Hidden Fees

Rob Straathof, managing director Liberis UK, said: "We're excited to be partnering with Worldpay to expand flexible funding to even more small businesses across the UK. We understand how hard small businesses work and how important a fairly-priced and flexible credit solution is to help companies grow. Our flexible payment system means repayments are relative to income and there are no hidden fees or charges."

Government critics claimed Britain's welfare and benefit reforms are forcing some people into self-employment as the only way of generating an income.

Trade union leaders and social charities have been among the critics warning the rise in self-employment was down to people being unable to find jobs or being made redundant.

One of the leading charities, the Joseph Rowntree Foundation warned recently that too many self-employed people struggle to make ends meet.