Entrepreneurs receiving loans and support from The Start-Up Loans Company will now also be offered a cost-effective way to take card payments and grow their business, backed-up by first rate customer support through WorldPay’s Pay As You Go (PAYG) Card Acceptance Service.
Geraldine Wilson, managing director, Micro Merchants at WorldPay, commented: “89 per cent of adults in the UK have at least one debit or credit card and one in three UK consumers carry less than £5 cash. This means that businesses which are still unable to accept card payments considerably risk losing out on custom.”
WorldPay PAYG allows sole traders and small businesses in mobile professions (such as mobile hairdressers, plumbers and photographers), who would traditionally need to rely on cash, cheque or bank transfer to quickly, easily and cost-effectively take card payments using their smartphone. The service is specifically designed for sole traders and small businesses with 1 to 5 employees and has no minimum commitments.
James Caan, entrepreneur and chairman of The Start-Up Loans Company, commented: “The Start-Up Loans Company was created to provide young entrepreneurs all the support and expertise they need when it comes to setting up their own businesses. We’re continually looking to partner with innovative businesses that can help entrepreneurs to increase their chances of success and improve the service they offer their customers. WorldPay is a great example of a large enterprise that recognises the importance of entrepreneurs and small businesses, as well as understanding the challenges they face. We’re looking forward to being able to offer this additional service and help even more young entrepreneurs succeed in building their own businesses.”
Proof that businesses are finding it increasingly difficult to collect their cash is provided in new statistics – published for the first time – from the Credit Services Association (CSA), the industry body representing the UK debt collection industry.
At the end of September 2012 (Q3), the amount outsourced by businesses to third-party debt collection agencies stood at £1.145 billion, an increase of 12 percent on the previous Quarter (£1.021 billion) and more than £216 million higher than the figure recorded at the end of 2011 (£0.928 billion).
The volume (ie number) of debts had also increased from 595,901 in Q2 to 616,078 in Q3, a comparatively modest increase of three percent that still suggests that the size of individual debts is increasing.
Michelle Moore, B2B Collections Portfolio Director for the CSA says that the rise in volumes and values shows that more businesses are turning to third parties to recover cash that is rightfully theirs: “What seems clear from these figures is that businesses are increasingly seeing the use of third-parties not as a failure on their own part to collect the cash, but rather as an integral part of their credit management strategy.”
Michelle believes that businesses are no longer convinced of the argument that using a third party impacts on the ongoing business relationship: “The only good customer is a paying customer,” she says, “and while there is a perception that using a third party can impact future trade, the reality is somewhat different.”
The Government through the Department for Business Innovation and Skills (BIS) has been especially vocal recently regarding the issue of late payment, and convincing big businesses of the importance of signing up to the voluntary Prompt Payment Code (PPC).
“There comes a point when a late payment turns into a potentially toxic bad debt, and that is when an external debt collection agency is at its most effective,” Michelle adds. “Outsourcing debts to a third party tends to make those debts more ‘serious’ and are often satisfied more speedily than when a company is chasing overdues themselves.”
Elsewhere, the CSA has reported a further rise in both the value and volume of consumer debts being passed to Debt Collection Agencies (DCAs) or sold to Debt Buyers for collection. As at the end of September 2012, the total now stands at £62 billion, a rise of four percent from the previous Quarter (Q2) and an increase of 14 percent year-on-year.
The number/volume of debt has also increased, albeit marginally. The total number of debts awaiting collection stands at 33.2 million from 32.4 million in the previous Quarter and 31.8 million in Quarter 1. The average individual account balance, however, has fallen by more than £150 from £1,189 at the end of Q2 2012 to £1,036 at the end of Q3.
The statistics provide a mixed picture, according to Sara de Tute, CSA President: “Although the figures have remained relatively stable Quarter on Quarter, both the volumes and values are significantly increased compared to the same period a year ago, and that is a concern. There is anecdotal evidence from our members, however, that consumers are increasingly looking to pay their debts down ahead of Christmas, and this may account for the drop in the average account balance.”
Small businesses could save themselves nearly £16.5billion a year by taking simple steps to cut costs, without impacting on service or staff, according to new research by Clydesdale and Yorkshire Banks.
Despite rising fuel and energy costs, more than half of all Small and Medium Sized Enterprises (SMEs) admitted to reviewing their day-to-day costs only once in a calendar year. Those same businesses admitted they could probably be getting a better deal if they tried but lack of time, or misplaced loyalty to their current suppliers meant they were unlikely to do so.
Surprisingly, nearly one in seven SMEs admitted to never regularly reviewing the costs for their largest areas of expenditure.
Electricity and gas prices have risen by 69 per cent and 87 per cent respectively since 2005, and the Government predicts prices will rise a further 26 per cent by 2020 compared to today’s prices. The average price of motor fuel has risen 44 per cent in the last seven years.
More than 40 per cent of businesses said that, excluding salaries, materials and supplies represented the most significant cost for them last year. Fuel, IT, rent and energy bills were also significant and, together with materials, represented around nearly half of all SME expenditure.
Earlier this month Clydesdale and Yorkshire Banks introduced a series of measures designed to help businesses grow by lowering some of their costs – introducing fee-free lending for growing businesses and a new switching package with free day-to-day banking for businesses with an annual turnover up to £2m.
Paul Shephard, director for business and private Banking at Clydesdale and Yorkshire Banks, said:
“Keeping a watchful eye on overheads is crucial to ensure business growth and profitability. With difficult trading conditions it can be easy to lose sight of some of the simpler ways of helping your business, but regularly reviewing costs should be top of the to-do list for any SME owner or manager.”
Last year, those SMEs (businesses with less than 250 employees) that reviewed their regular costs saved, on average, £11,385, by adopting straightforward measures such as implementing energy-saving policies or moving to a paperless office. And with the UK’s average yearly salary just over £25,000 – those cost-savings could be ploughed back into the business in the form of new jobs.
Paul Shephard continued: “Small businesses are facing daily cost increases, energy bills alone have risen by more than three quarters. Even relatively simple measures, such as making sure computers are switched off at night, rather than left on standby; all go towards bringing costs down.”
With Christmas approaching, and all expectations pointing to another bumper season for ecommerce and credit card transactions, fears are rising that most UK businesses are taking inadequate steps to safeguard customers’ credit card details.
Analysis by Ground Labs, the identity protection specialists, has found that the vast majority of UK businesses hold consumer credit card data unwittingly. Holding credit card details in this way is a breach of Payment Card Industry Data Security Standards (PCI DSS) compliance obligations and can attract up to a £500,000 fine by the Information Commissioner Officer (ICO) in a case of a data breach.
Latest figures show that £341 million was stolen in the UK in 2011 through credit card fraud. There is a global black market for credit card data and hacking incidents have risen by 19 per cent in the past six months. The UK is consistently among the top three most targeted countries and in August 2012 suffered 69 per cent of worldwide phishing attacks.
Retention of credit card data is an issue for businesses of all sizes. A random survey of security experts who use Ground Labs software across more than 100 consumer-facing businesses found that every one of them had credit card details unwittingly stored on IT equipment. On average more than 1,000 credit card records were found by Ground Labs’ software within each business sampled.
Even businesses that claim to be compliant with agreed global standards for credit card data security hold rogue details, the Ground Labs survey has found. There are various possible reasons for this, all linked to standard computer processes such as browser caches or email duplications.
Amongst the worst examples uncovered was a company that firmly believed it had no records. It was found that the business actually held more than 20 million credit card numbers on servers throughout its network.
“We have more than 1,000 businesses across the UK and Europe that have used our software and every single business found erroneous card records in its IT systems”, said European director for Ground Labs, Mohamed Zouine. “What we have found is that even those businesses that believe that their systems are clean are carrying records that could be easily acquired by hackers.”
Many UK businesses have adopted an open mind, accepting there may be hidden data, and have already taken steps to identify and resolve any possible problems. Ground Labs is advocating the use of a simple software programme called Card Recon as part of the standard systems maintenance routine to detect and remove credit card details.
Mohamed Zouine added: “We believe a routine check should be as frequent as anti-virus checks. There are many ways in which card details can remain on business’s IT infrastructure unwittingly. Transaction logs sent back from banks, browser caches, email duplications and more can hold sensitive data that has a black market value in the wrong hands and can be used to defraud consumers.”
Zouine added: “The issue for small businesses is that they are far less protected than large corporations. It is relatively easy for an entrepreneurial thief to steal IT equipment or hack in to a business and retrieve valuable credit card data.”
The software is also beneficial for consumers. A similar routine test of 50 PCs and laptops found that all but one of them held credit card details without the owner’s knowledge. “It is surprising to learn that many businesses continue prompting customers to email their credit card information as part of completing a transaction such as a hotel reservation for example,” Zouine commented.
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