Finance firms join forces to help tackle SME late payment crisis

Major financial services players are joining forces as part a major Scottish-led data initiative to help tackle the late payment crisis facing many SMEs.

Edinburgh cloud accounting firm FreeAgent together with Equifax and Sage are among the industry partners for the push being led by the University of Edinburgh’s Smart Data Foundry (SDF) which aims to harness the power of financial data for good.

The initiative will focus on the causes and impact of late payments on SMEs as they try to recover from the global pandemic, with the findings helping shape policies and strategies to address the issue.

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The project, which is also being backed by the UK government, aims to help the financial community spearhead a nationwide business recovery in a similar fashion to how the science industry leveraged data to help steer people’s health through the worst of the Covid-19 emergency.

Dame Julia Unwin is to lead the new Edinburgh-led initiative to unlock the power of data to help SMEs.

The drive by the SDF will be led by its new chair Dame Julia Unwin, who was chief executive of the Joseph Rowntree Foundation for a decade.

“The science community has shown how important health data was to manage the pandemic. Our aim is to do the same for the economy by providing financial data,” explained Unwin.

Roan Lavery, CEO and co-founder of FreeAgent, said: “Sticking up for microbusinesses is really important to us and so we’re proud that the insights from the data will help to shape public policy to support SMEs, sole traders and contractors. SMEs account for 50 per cent of the UK’s output. Part of the success of this project is down to the very supportive data community here in Edinburgh and in other parts of Scotland.”

Aaron Harris, chief technology officer at Sage, said late payments can have a devastating impact on the financial health and stability of SMEs and that the data-driven business insights the partnership aims to find will help SMEs and the UK government make meaningful decisions to address the issue.

The collaboration will also look at other significant challenges data can support with such as the transition to net zero.

The announcements come on the back of a successful partnership between the SDF, formerly the Global Open Finance Centre of Excellence, with Royal Bank of Scotland owner NatWest Group. The banking giant shared de-identified data from over a million householders to provide a factual account of the impact of the pandemic on household finances, based on bank transactions. To protect customer privacy, all of the data was de-identified and analysed by researchers in a controlled environment.

Insights from the NatWest data was shared with the UK government at the start of 2021 and continues to be updated.

Simon McNamara, group chief administrative officer at NatWest ,said: “The pandemic continues to be challenging for many, and the impact is unique for each customer, household and business.

“By sharing data with SDF, organisations can collaborate to create better insights for the good of our communities so that we can better support their recovery. We have a crucial role, guided by our purpose, to support our customers and communities to get back on their feet and thrive.”

The SDF has also struck a partnership with fintech Moneyhub to help with research into the financial impacts on citizens due to the pandemic.

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