Nearly half of all UK small firms are failing to properly control their cash flow because they do not use a business payment card, a new survey has revealed.
The research, undertaken by credit card giants Visa, found that 36 per cent of small companies hadn’t even considered using a business card, despite the savings in time and money the process brings.
Despite the rise in popularity in plastic transactions, a massive 98 per cent of small firms still use cheques as a payment method, while cash is used more than business cards, despite the problems of record keeping.
A further 28 per cent of entrepreneurs used their own debit or credit card for business payments, despite the “potential confusion and risk” of doing this, Visa said.
Visa said that firms could save time and money by using a business card instead of relying on paper-based methods, which can be hard to keep track of.
The research also found that around a half of small firms use cards to pay for travel and entertainment, while just five per cent used plastic to purchase insurance, professional services and utilities.
Mark Giffin, of Visa, said that the good news was that there are definitely savings to be had within the small business sector.
“Our research shows that 40 per cent of small firms in the UK have taken out a business loan or utilised a business overdraft facility in the past 12 months.
“Business loans are often used to solve short-term cash flow issues. This can attract substantial interest charges which may be avoided by using a business payment card with up to 45 days of interest-free credit.
“Traditionally businesses have used cards primarily for travel and entertainment and this trend seems to be continuing.
“However the benefits of smoothing out cash flow, greater visibility of transactions, lower costs and reduced administration are applicable to all purchases, including cheaper online purchases, fuel for company cars, insurance or utility bills,” he said.
