SMEs in 2020: B2B payments, data privacy among 5 issues to stay in focus

Several B2B payments and lending companies, over the last one year, emerged with solutions around banking, expense management, accounting/book-keeping, and Accounts Payable/Accounts Receivable (AP/AR) automation.

Slowly, but steadily, businesses are adopting software-as-a-service (SaaS) tools to manage their businesses better and move towards real digitisation away from manual and clunky processes to more elegant and friction-free processes.

Investors have taken notice of this opportunity in the B2B space and have stepped up their investments. A recent report by Venture Intelligence said that B2B fintech has secured $657 million in India so far this year, compared to $617 million by B2C fintech. Keeping this business payments transformation in mind, here are the top five topics that will be in the limelight in 2020:

1) Uberisation of B2B payment flows and credit disbursement for SMEs

By using digital platforms, SMEs put themselves in a better position to access credit and manage their cash flows. Additionally, the use of digital platforms provides them end-to-end reconciliation further helping in book-keeping and accounts.

Also Read: How EnKash helps SMEs, start-ups get interest free credit

2) Data privacy

With more and more businesses opting for digital workflows, regulators and financial institutions have been introducing new ways of storing data in a secure environment. This data needs to be utilised effectively so that they can forecast new trends and patterns that could help them strategise and grow.

3) Lending

SME lending will be driven largely by fintech platforms and therefore partnerships between banks and fintechs will gather a faster pace. And with Data Registry likely to take shape in 2020, digital lending to SMEs may see exponential growth.

4) GST payments

With more data available, specific short-term lending can be disbursed to businesses who want to make timely GST payments to the authorities. This can be done seamlessly via B2B platforms that allow SMEs to not only automate their payments but also make GST through the same platform. This results in no hassles for filing GST payments, especially when GST is payable on accrual.

Also Read: Dues of 1 lakh vendor MSMEs under threat as supplier firms face insolvency: FISME

5) Taxation

Small businesses are always challenged on the taxation front from the calculation of the advance tax to the filing of tax returns. With payables, receivables, invoicing and banking turning digital, enhanced elegant platforms that provide multiple services including B2B payments and digital accounting in an integrated platform, may ease taxation-related issues for small businesses.

With these changes becoming a reality in 2020, the Indian SMEs will break the cycle of stagnation due to lack of working capital and get into a period of faster growth.

(The author is Director & CFO at digital payments solutions firm PayMate)