Payment Services for Freelancers and SMEs

July 18, 2022

Payment Services for Freelancers and SMEs

In 2021, fintech companies that offer payment services in a digital format, made a big leap in terms of development and popularity. Their peculiarity is in providing in-demand personalised services to entrepreneurs, small businesses, startups, and freelancers. New financial services are a serious competitor to traditional banks, as today, the focus has shifted to the need to integrate various databases, provide services quickly, and consider customer issues individually.

The new type of digital financial services, often called challenger banks or neobanks, are fully online payments solutions built from scratch on new technological platforms, unlike the outdated infrastructure of traditional banks. Typically, modern fintech companies offer higher interest rates, lower fees (or no fees), and a higher level of service and support.

One of the main challenges that small businesses or startups may face during their interaction with a bank is paperwork. Traditional, large banks often require your annual income statements, and data about your shareholders and clients, including whether your clients are international or not. Each of the above steps takes a certain amount of time and paperwork. And this happens because common banks are used to interacting according to templates with larger market players, network companies, and corporations, for which a complete set of documents plays an important role. 

Digital financial services, in contrast to this, strive to facilitate and speed up the process of providing payment services. They either get a banking licence themselves, or operate based on the existing bank, that is, financial services are regulated by the same independent authorities but develop faster and take into account the subtle differences between a freelancer, a startup, and a micro-business.

The focus on specific groups of customers contributes to the development of a revolution in the field of banking. The pioneers of the neobank movement focused on creating more modern user interfaces for banking products based on a fairly simple set of technologies, and also put first-class user support at the forefront. This adds one more level of attractiveness to what modern payment solutions offer.

Demand for SME and Freelance Payment Systems

According to the European Central Bank, in Europe, an astounding 99.8 percent of EU companies are small and medium-sized enterprises. Many of them are startups, sole traders, and entrepreneurs who are the target audience for digital payment systems.

The attractiveness of new fintech companies is not limited to the listed functions; that is, it deals not only with simplifying the opening and maintenance of a payment account. They are also developing additional features and products that can help freelancers and small traders to run their businesses.

Another key advantage of modern financial services over their more traditional competitors is the lower fees charged to customers. Traditional financial services have almost no opportunity to reduce the fees since they cover their high operating costs due to these revenues. 

Not to forget that the demand is caused, among other things, by a wide audience coverage, opportunities to receive customer support at any time online, and more technological and advanced interaction with the common functions. 

We would also highlight several points related to simplifying payment processes and increasing the speed of transactions. And this is not even automation, but optimization, which is closest to the topic of artificial intelligence and understanding your clients to anticipate their needs.

Why Do Freelancers and SME Need a Business Account?

By law, an entrepreneur is obliged to distinguish between their personal business finances. A payment account for business is a special account that can be set up for individual entrepreneurs, freelancers, small and medium-sized businesses, and large companies. 

Such an account allows you not only to store money on it, but also to pay for purchases and services and make transfers to people and organisations. Thanks to business payment accounts, the tax service tracks receipts and monitors the accuracy of tax payments. By having a business account, your small business could also get faster access to business credit cards or loans that you may need to run or develop your business.

Accurate Financial Management

Even when the growth and development of your business add a lot of tasks, it is important to stay organised. You need to be sure that all your business transactions, income, expenses, and taxes are fixed in one place and are in order. The clarity of financial statements can make it much easier for you to run your business. Setting up a business account will help you to track business transactions and separate your personal finances from business ones. 

Simple Finance Reporting

Having a business account makes it easier to pay taxes. You can keep records and track your business expenses without worrying about missing something. This will make the whole process of filing tax returns for your business easier, as you will need to look through all your paychecks to find out how much you have earned. It’s crucial since the incorrect calculation of taxes can lead to severe penalties.

More Professional and Credible Business Transactions

Freelancing is gradually rising from year to year for several reasons. Since the competition grows, it is vital to know how to present yourself correctly. Professional attributes like sending a check from your business account help build a trusting and respectful relationship with your clients. It shows your clients that you are not new to the world of business and freelance.6

How to Choose the Best Payment Solution for a Small Business?

When choosing a business account, you need to consider many variables. The ones you choose to focus on will depend on the type of business you are operating. For example, you may work with a tight monthly margin or you may need additional tax assistance.

To choose the best business account, you need to carefully study the needs of your business.

Asking questions is one of the most effective methods for solving this issue:

  • How long have you been operating in the market as a business? 
  • What is the size of your business? 
  • Is your business well-established?
  • What is your type of business ownership?

It’s advisable to begin by comparing the different accounts available to you. Check out whether the charges fees, are interest rates high or low, and is there any customer support. You may ask:

  • Is there a free service period for businesses that you can use?
  • Will you be charged for opening an account?
  • What is the monthly fee?
  • How much will it cost to make electronic or cash payments to and from your account?

In addition, it is necessary to take into account overdraft charges, both authorised and unauthorised. Most services offer between £25,000 to £50,000 subject to approval. Services may also charge fees for international transactions, for example, for card transactions that are not related to the pound sterling. When deciding which business account is right for you, the best way is to look at a comparison website where your options are outlined clearly.

Read more about E-Commerce Trends to Keep an Eye Out For in 2022 in the UK.

Payment Solution for Freelancers & SME

Payrow offers convenient functionality for freelancers and SME. We invite you to familiarise yourself with all possible options and determine the benefits of using our services. We will surely help you to automate your business and accounting processes with the following: 

  • Automatic Invoicing. Pay for incoming invoices directly and customise the ready-made templates.
  • No Hidden Fees. We guarantee transparent pricing and no hidden fees for international payments.
  • SEPA Transfers. Make Eurozone and international money transfers in two clicks.
  • Automatic statements. Get detailed information on payments for the required period and download statements in a convenient format.

If you would like to receive high-quality service with the opportunity to contact specialists on any issue, ranging from technical difficulties to advice on the implementation of specific services, Payrow company will be happy to answer all your questions and guide you on the best course.

Simplify your business processes and manage your finances with digital payment solutions. Enjoy fast and easy digital payments with no hidden fees thanks to the transparent pricing rule with Payrow!