The pandemic has accelerated the transition to cashless consumerism and this is a trend that small business have to adapt to, in particular as they target post-lockdown recovery. The question, how can they afford it?

A new study from UK Finance has revealed that the number of payments made using notes and coins fell by a whopping 35% in 2020, with the number of people leading a “cashless” life at almost 14 million. Five in six payments do not involve notes or coins.

What’s driving the cashless trend and who’s leading the change?

The main driver behind the acceleration of this trend is Covid-19 and transmission concerns related to the handling of cash. As such, it seems safe to say the use of cash will continue to fall for 2021 as consumer buying behaviour remains largely unchanged.

Notably, in the retail and hospitality sectors, there has been a clear move towards card-only payments, with some businesses refusing to accept notes and coins altogether. Ikea and Nando’s are among the market heavyweights to make such a switch, while BrewDog has rolled out a similar policy for parts of its business.

While the return of cash should not be ruled out, in particular should the move out of lockdown be successfully completed this summer, it is clear that spending habits have undergone a huge shift and that the use of cashless payment will only increase. And this has significant implications for small businesses.

Why cashless payment tech is so important to smaller firms

The second half of 2021 is shaping up to be a critical time for smaller firms – lockdown restrictions are being lifted, government emergency support schemes are ending and there is an immediate need to ramp up sales and generate much-needed profit. To do so, it is vital that they can take cashless payments.

However, cashless payment technology requires investment, both in terms of point of sale payments and the link to e-commerce platforms and the use of digital technology. For small businesses already operating on the thinnest of margins, finding this capital is far from easy.

So, how can smaller firms afford to have cashless payment systems in place? Alternative finance can help.

Cashless payment and how alternative lenders can help

With regard to alternative finance, in the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic, services such as invoice finance, asset finance and peer-to-peer lending, are proving a vital source of capital for small businesses, both for maintaining cashflow and for essential investment.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery and regrowth.

Furthermore, alternative lending is playing a prominent role in the government’s headline emergency support scheme, the Recovery Loan Scheme (open until the end of 2021). Invoice finance and asset finance between £1,000 and £10 million per business are available under the initiative. This profile is helping cement the reputation of alternative finance in the business sector.

Cashless payment tech and small business finance options

Now is an incredibly challenging time for smaller firms to invest in new equipment and digital infrastructure, but they cannot afford to miss out on the revenue generated by cashless payment technology. As such, it is critical that business owners are aware of all the finance options available to them, from government support schemes and mainstream banking facilities to the services of alternative lenders.

To find out more about A&T Business Associates services for commercial property investors, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.