Quick Recap from MBE2MBE 2017


CMSDC

Presented by AT&T, the 2017 MBE2MBE Exchange was held July 18, 2017 at the Chicago Federal Reserve as a strategic collaboration with Business Smart Week. 

As a prelude to a keynote presentation by Stedman Graham and MBE networking, MBE2MBE featured two presentations from Federal Reserve Bank thought leaders.

  • REPORT: THE STATE OF SMALL BUSINESS

Emily Engel, business economist, shared several findings from the 2016 Small Business Credit Survey and the Federal Reserve’s continuous participation.  This is only the second year for the survey, and more participation is needed from minority-owned and women-owned firms as well as rural businesses. 

Abbreviated report summary:

Small businesses reported that although many were profitable and optimistic, a significant majority had faced financial challenges, experienced funding gaps, and relied on the personal finances of the owner to fund basic capital needs.  In 2016, 87 percent of employer firms relied on their owners’ personal credit scores to obtain funding.  Lack of access to credit often inhibits growth.  These issues were even more pronounced for the smallest firms.

Only 30 percent of the firms surveyed were considered “healthy,” according to the following criteria:

  1. (2015) profitability;
  2. Low credit risk (business or owner has good or excellent credit score); and
  3. Growth through retained earnings (rather than owner’s personal funds or credit to fund the business).

Additional reports on the 2016 Small Business Credit Survey will be released throughout 2017.  These will take an in-depth look into specific types of small businesses, including start-ups, minority firms, and micro-businesses.

PHOTO PRESENTATION

MBE2MBE Exchange 2017

  • THE FUTURE OF PAYMENTS: SMALL BUSINESS PERSPECTIVE

Mary Hughes, senior payment consultant (Fed-Minneapolis), shared strategies for improving the U.S. Payments System and how it can impact small businesses.

The Federal Reserve’s Business Payments Coalition recently released the third version of its Small Business Payments Toolkit. This document, available as a free download, encourages the adoption of electronic business-to-business (B2B) payments by small businesses.

Small Business Payments Toolkit

Encourages adoption of electronic B2B payments plus payment/remittance information exchanges.

Download the toolkit.

A. Contents of Small Business Payments Toolkit

  • Payment Types Explained
  • Understanding ACH
  • Working with Your Banker
  • Fraud Prevention & Mitigation Tips
  • Resources

—Glossaries of Payment Terms

—Credit & Debit Card Resources

—ACH Resources

—General Small Business Resources

—Fraud & Data Security Resources

 

B. According to 2014 Phoenix-Hecht Treasury Management Monitor, survey of corporations with annual sales of above $20 million, checks are the leading payment type among businesses.

Checks – 66%

ACH—20%

Wire Transfer—8%

Debit/Credit Cards – 6%

Other – 1%

Recommendation:  Businesses should use electronic payments instead of business checks.

 

C. Using Electronic Payments is a Smart Choice for Small Businesses

 Key Reasons for the Switch:

  • Efficiency

—Lower costs of payments handling

—Free up staff resources

  • Security

— Lower risk of fraud losses

  • Reliability
  • Strengthen customer retention by setting up recurring payments
  • Direct deposit of payroll boosts employee productivity
  • Business growth/ increase revenue opportunities

— Some large trading partners and government contracts require acceptance of ACH payments

 

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