For better or worse, the concept of a small artisanal firm that turns out products for people in the local area – or even at a national level – is firmly on its way out. These days, SMEs increasingly serve customers across borders and between continents, thanks to the global digital commerce revolution. And as the backbone of any national economy, what SMEs do at an individual level ends up having a significant effect on that country’s GDP. All of which means that providing SMEs with better systems and new opportunities can give a major boost to a country’s economy.

A recent survey of more than 150,000 SMEs across Europe (defined as having revenues of between $30,000 to $3 million) by PayPal found that more than 25 per cent of these firms were exporting internationally. Almost half of these exports (41.4 per cent) were being sent outside the EU, with 57 per cent of online shoppers globally telling Forrester Research that they had shopped online from a market outside their home country in 2018. As the McKinsey Global Institute puts it in its study of international e-commerce, “small businesses worldwide are becoming ‘micro-multinationals’ by using digital platforms such as eBay, Amazon, Facebook, and Alibaba to connect with customers and suppliers in other countries.”

Despite this good news, the fact is that the financial management systems used by SMEs can often be outdated and slow. That such systems hamper the growth of a business in themselves is undebatable. However, outdated financial management can also impede business growth by making it harder for SMEs to access credit terms and financing. A 2020 blog by Banking Circle has suggested that up to 70 per cent of SMEs have yet to take advantage of bank loans to fuel their growth, as just one example.

At the most basic level, upgrading to a standard accounting package such as SAP can make it easier for SMEs to track flows of funds, payment times, and generally manage their invoicing and payments effectively. More than this, better financial management systems make it easier for SMEs to engage with big multinational clients. Crucially, such systems also provide the rich, granular data investors and lenders are looking for when it comes to making decisions about providing working capital, expansion loans or significant investments to SMEs.

My colleagues and I share a passion for working with SMEs to facilitate their working capital: after all, SMEs constitute between 50 and 70 per cent of national GDP in most European markets. We believe that by upgrading their approach to financial management, SMEs will improve their working capital and cashflow, and make themselves more attractive propositions for investors and lenders.