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In light of Donald Trump’s dramatic withdrawal from the Iran Nuclear Deal, Katina Hristova examines how the pullout can affect the global economy.

As with anything that he isn’t fond of, US President Donald Trump hasn’t been hiding his feelings towards the Joint Comprehensive Plan of Action between Iran and the five permanent members of The United Nations Security Council plus Germany. Pulling the US out of the agreement on the nuclear programme of Iran, which was signed during Obama's time in office, is something that Trump has been threatening to do since his 2016 election campaign. And he’s only gone and done it. Earlier this month, he announced America’s immediate withdrawal, saying that the US will reimpose sweeping sanctions on Iran’s oil sector and that “Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States”. And as if this isn’t alarming enough, President Trump has also said that the US will require companies to ‘wind down’ existing contracts with Iran, which currently ranks second in the world in natural gas reserves and fourth in proven crude oil reserve, in either 90 days or 180 days. This would hinder new contracts with Iran, as well as any business operations in the country.

Since Washington’s announcement, signatories of the Iran Nuclear Deal, still committed to the agreement, have embarked on a diplomatic marathon to keep the deal alive. On 25 May, Iran, France, Britain, Germany, China and Russia met in Vienna in a bid to save the agreement.


So how will this hurt the global economy?

Deals worth billions of dollars signed by international companies with Iran are currently hanging by a thread. The main concern on a global scale is that the US’ decision threatens to cut off a proportion of the world’s crude oil supply, which has already resulted in an increase in oil prices, with crude topping $70 a barrel for the first time in four years.

Additionally, European companies like Airbus, Total, Renault and Siemens could face fines if they continue doing business with Iran. Royal Dutch Shell, who is investing in the Iranian energy sector, is potentially one of the biggest companies to be affected by Trump’s withdrawal which could put billions of dollars’ worth of trade in jeopardy. As The Guardian points out: “In December 2016, Royal Dutch Shell signed a provisional agreement to develop the Iranian oil and gas fields in South Azadegan, Yadavaran and Kish. While drilling is still a long way off, sanctions are likely to put any preparations already being made on ice.”

French company Total, who’s involved in developing the South Pars field, the world’s largest gas field in Iran, is in a similar situation.

Airbus and Boeing, two of the key players in the international aviation industry, have signed contracts worth $39 billion to sell aircraft to Iran. As The Guardian reports, the most significant deal is an agreement by IranAir to buy 100 aircraft from Airbus.

A spokesman from Airbus said that jobs would not be affected. “Our [order] backlog stands at more than 7,100 aircraft, this translates into some nine years of production at current rates. We’re carefully analysing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations. This will take some time”. Rolls Royce is also expected to be indirectly affected if Airbus loses its IranAir order, as the company is the key engines provider to many of those aircraft models.

Another European company that will be hurt by the sanctions announcement is French Renault and PSA, who owns Peugeot, Citroën and Vauxhall. When sanctions were lifted back in 2016, Renault signed a joint venture agreement with the Industrial Development & Renovation Organization of Iran (IDRO) and local vehicle importer Parto Negin Naseh, worth $778 million, to make up to 150,000 cars in Iran every year. This is one of the largest non-oil deals in Iran since sanctions on the country were lifted. Last year, local firm Iran Khodro also signed a deal with the trucks division of Mercedes-Benz, with car production scheduled for this year.

Iranian firm HiWEB has been working alongside Vodafone to modernise the country’s internet infrastructure, but it looks like the partnership will have to be reconsidered.

The consequences

The White House and President Trump appear aware of the danger that a rise in oil prices on an international level pose to the economic growth of the Trump era, however, they also seem ready to embrace the economic and geopolitical challenges that are to follow. Although the consequences of US’ Iran Deal pullout are not perfectly clear in the short term, they will undoubtedly become more visible as sanctions take effect. The deal has its flaws, however, completely withdrawing from it and threatening the US’ closest allies can only compound those issues and create new ones. It is hard to predict what will unfold from here and where Trump’s strategy will take us. The one thing that is certain though is that the world doesn’t need more hostility.

Beijing recently retaliated the US’ extensive list of around 1,300 Chinese products it intends to slap a 25% tariff on.

The White House claims the intentions surrounding these tariffs are to counter the ‘unfair practices’ surrounding Chinese intellectual property rights.

In response, China has escalated the trade war to an extent none expected, targeting over 40% of US-China exports.

However, the question is, will these tariffs, from either side, affect the backbone of their nation’s economy? What else might be impacted in the long term? This week’s Your Thoughts hears from the experts.

Roy Williams, Managing Director, Vendigital:

In order to mitigate the impact of tariffs and maintain profitability, it is essential that businesses with global supply chains give thought to restructuring their operational footprint and where possible, pursue other market or supply chain opportunities.

With China warning that it is ready to “fight to the end” in any trade war with the US, UK businesses should be in preparing for a worst-case scenario. In addition to China’s threat to tax US agricultural products, such as soybeans being imported into the country, the EU has warned that it may be forced to introduce tariffs on iconic American brands from US swing states, such as oranges, Harley Davidsons and Levi jeans.

In order to minimise risk and supply chain disruption, businesses that trade with the US should give careful thought to contingency plans. For example, importers of US products or raw materials should review supply chain agility and may wish to consider switching to alternative suppliers in parts of the world where there is less risk of punitive tariffs.

On the other hand, for exporters from the UK looking to reduce the impact of tariffs, it will be important to focus on the cost base of the business and consider diversifying the customer base in order to pursue new market opportunities. To a certain extent, this is likely to depend on whether businesses are supplying a commodity item, in which case the buyer will be able to switch to the most cost-effective source. If a buyer does not switch it may indicate they have fewer supply options than the supplier may have thought.

Businesses with products involving high levels of intellectual property and high costs to change are likely to hold onto their export contracts. However, they could face negotiation pressure from their customers. They should also bear in mind that barriers to change will be lost over time and customers can in almost all cases find alternatives, so preparation is key.

Access to reliable business management data can also play an important role in mitigating risk; helping firms to identify strategic cost-modelling opportunities and react swiftly to any new tariffs imposed. In this way, enabling businesses to access real-time data can help them to continue to trade internationally, whilst keeping all cost variables top of mind.

While a trade war would undoubtedly introduce challenges for businesses with global supply networks, it could nevertheless present opportunities for those that are well prepared. For example, with prices of Chinese steel likely to fall dramatically, UK importers of steel could consider striking a strong deal before retaliatory trade measures are introduced.

George S. Yip, Professor of Marketing and Strategy, Imperial College Business School, and Co-Author of China’s Next Strategic Advantage: From Imitation to Innovation:

The US has had huge trade imbalances with China for years. So why retaliate now? Yes, President Trump is a new player with strong views. But it is no coincidence that the US is finally waking up to the fact that China is starting to catch up with it in technology. This catch up has many causes:

So, it is no surprise that the US tariffs apply mostly to technology-based Chinese exports such as medical devices and aircraft parts. In contrast, China is retaliating with tariffs primarily on US food products. While such tariffs will hurt politically, they will not hurt strategically.

Rebecca O’Keeffe, Head of Investment, interactive investor:

President Xi’s speech overnight appears to have struck the right tone, providing some relief for investors who have been buffeted by the recent war of words between Trump and China over trade. While there was already an overwhelming sense that Chinese officials were keen to achieve a negotiated settlement before the proposed tariffs do any lasting damage to either the Chinese or US economies, today’s speech was the clearest indication yet that China is prepared to take concrete steps to address some of Trump’s chief criticisms. The big question is whether President Trump will now take the olive branch offered by Xi’s conciliatory approach and dial down the rhetoric from his side too.

Corporate profits have taken a back seat to trade tensions and increased volatility over the past few weeks, but as the US earnings season starts in earnest this week, they will take on huge significance. Equities received a huge boost when the US tax reform bill was signed into law in December and investors will want to see that this is feeding through to the bottom line to justify their continued faith. A good earnings season would do a lot to regain some equilibrium and provide some much-needed relief and calm for beleaguered investors.

Richard Asquith, VP Indirect Tax, Avalara:

Last week’s Chinese tariff escalation response to the earlier US import tariffs threat was far stronger than many would have expected. It now looks likely that the world’s two most powerful countries, and engines of global growth, will enter a tariff war by June.

China’s retaliatory tariff threat last week is targeting products which account for about 40% of US exports to China. However, the US had only singled out Chinese goods accounting for 10% of trade. This makes the next move by the US potentially highly self-harming since, if it matches China, it will mean big US import cost rises on foods and other key Chinese goods. It will also mean less vital technology access for China.

The Chinese have also shrewdly singled out goods produced in the Republican party’s heartland constituencies. This will close the US government’s options on further measures. The Chinese have also refused to enter into consolation talks in the next few weeks until the US withdraws its initial tariff threats. This type of climb-down is unlikely to be forthcoming from the current US administration.

Whatever the outcome, China is now seeking to paint itself as the champion of globalisation and liberalisation of markets. It has already offered lower import tariffs on cars, taking the sting out of US claims of unfair protections to the domestic Chinese car producers.

This all means that we are in a stand-off, and the proposed tariffs from both sides are locked in for introduction in the next two months. This could be hugely damaging for a global economy recovery that is, after many years turgid performance, looking very positive. Global stock markets are already in flight at the prospect of no quick resolution and the fear of a reprise of the calamitous 1930s Smoot–Hawley Tariff Bill escalation.

We now have to see which side will blink first.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

With this week’s market commentary from Rebecca O’Keeffe, Head of Investment at interactive investor, Finance Monthly learns about global markets, the US-China trade war and about recent activity in the M&A sphere.

A turnaround in Asian markets has seen US futures rise and eased the pressure on European equity markets. The last two months have seen global sentiment become more fragile, but the one thing that has kept markets going is the reliance on investors to buy on the dips. The last week had undermined that position in what was a worrying sign for the wider markets, but investors appear to be feeling slightly more resilient this morning.

Steve Mnuchin has taken on the unenviable task of attempting to resolve the trade dispute between the US and China via negotiation – however, he may be trying to reconcile the irreconcilable. The idea that, as one of the largest holders of US treasuries, China will be expected to help finance the growing US fiscal deficit but is also expected to reduce its trade surplus with the US by as much as $100bn to satisfy Trump’s demands appears to be a major contradiction. The question for investors is whether this adds up.

Another day, another flurry of activity in what has become one of the most vitriolic and antagonistic hostile merger bids since Kraft purchased Cadbury in 2010. GKN and Melrose investors have just three days to wait until the final count is in and much will depend on short versus long term investors. This bid has raised several questions about the difference in UK takeover rules versus other European countries and, irrespective of the result, may provide a catalyst for the Government to review the current rules to make sure they have the right balance between competition and protection.

The international community’s anti-money laundering watchdog is on UK soil putting the country through its paces.

Inspections of Britain’s defences against terrorists and money launderers by the Financial Action Task Force (FATF) are relatively rare but hugely important. The last evaluation was in June 2007 and negative findings can severely impact the country’s reputation in the war on terrorist financing and the laundering of criminal proceeds.

During the two-week visit, the UK has to prove to officials from some of the other 36 participating FATF countries that it has a framework in place to protect the financial system from abuse. The top secret inspectors have an “elaborate assessment methodology” but those involved are not allowed to talk publicly about the visit. The results of the inspection will be presented at an FATF Plenary session in October.

Julian Dixon, CEO of specialist Anti-Money Laundering (AML) and Big Data firm Fortytwo Data, comments: “AML supervisors are going to be on high alert this week because it’s not just public sector bodies who are inspected, but private organisations too.

“It’s also extremely timely, given the recent poisoning of ex-Russian spy Sergei Skripal, his daughter Yuliain and a policeman who came to their aid.


“The UK has been accused of being a soft touch for gangsters, politically exposed persons (PEPs) and criminal gangs, a theme that recently entered the popular imagination because of the TV series McMafia, written by journalist Misha Glenny.

“It’s unclear if this still holds true in the UK today, and that’s what the FATF are here to find out.

“It is up to the country being inspected to prove they have the right laws, systems and enforcement in place and the potential for reputational damage is high.

“After a recent inspection of Pakistan, FATF gave the country three months to prove it is doing enough to stay off an international watch list of those failing to curb the financing of terror groups.”

(Source: Fortytwo Data)

E-commerce has experienced exponential global growth over the last decade. A wider array of markets has encouraged greater competition and provided more opportunities for online merchants to reap the rewards. However, staying ahead of the competition in such a climate is easier said than done and, if not approached properly, going global can put merchants at risk of falling behind. With this in mind Finance Monthly hears from Ralf Ohlhausen, Business Development Director at PPRO Group, who sets out ten simple steps to help make a success of going global.

1. Assess cross-border market opportunities

Consider the barriers to trade in the regions that interest you, making sure the benefits of doing business in the area outweigh the costs of meeting market needs and expectations. Also, don’t dismiss high-growth markets, such as Vietnam and Poland, which might be relevant for your business, but not the regions that spring to mind when looking for new sales opportunities and cross-border expansion.

2. Know your market and audience

This is important not only in terms of what you sell and to who, but also in terms of the most relevant payment preferences. Online casinos do not accept credit card payments due to the fraud potential, while travel websites need to offer customers the option to pay via credit card due to the high value of the transaction. Sale conversions are linked to the provision of appropriate payment methods – and payment behaviour varies by demographic, just as purchasing behaviour does. In many cultures, younger people are more likely to use non-traditional payment methods, but if your target audience is primarily older, this may not be relevant. Do your research by considering all important marketing segments before you begin to trade.

3. Plan your marketing strategy

If you are new to a region, you need to raise your profile and gain customer trust to convert browsers into buyers. Consider your target market carefully. For example, a German national buying furniture online would rather not pay for a new sofa in advance, but wait for delivery and then pay directly from their account. Think about the behaviour of your target customer and which marketing strategies will resonate most successfully with them. If this is out of your remit, then working with a local marketing partner will provide the necessary knowledge to attract and retain business in the region, supporting long term growth.

4. Plan your market entry

The best marketing plan in the world will fail if not supported by a well thought through market entry strategy. Consider the best way to set-up shop in a new region, as it will differ depending upon your business model and regional knowledge. Do you need to use a partner to begin with, to sell via an online market place, auction site or through an established local vendor? If so, for how long? Or can you go it alone from the start?

5. Consider your market share and positioning

Your current market/s may be crowded or dominated by one or two big names. If you enter an emerging market with a carefully tailored and localised offering, you could grab a large slice of that niche before others do.

6. Review payment methods

When it comes to payment options, decide how much risk you are happy with. Some payment methods may be convenient for customers, but carry a greater burden of chargeback/refund risk or other cost to the vendor. Such risk can often be mitigated, for example by offering less riskier forms of payment, such as SEPA direct debits, for goods below a certain value or to trusted customers. So-called ‘push payments’, which are proactively sent by the client, are less risky in terms of chargeback but their use must be balanced with local preferences. Examples of push payments include giropay in Germany and iDEAL in the Netherlands.

7. Personalise your e-commerce offering for local needs

Make sure customers are only offered the products and payment methods relevant to their location, in a regionally-appropriate format. There are several ways of doing this, including local versions of websites and identification of site visitors by location (e.g. according to their IP address), which then dictates the pages and payment options available. You should offer each visitor at least three, or ideally around six, of the most popular payment options in their location, to maximise your chances of making a sale.

8. Do not leave it too late

Online retailers wanting to take a share of emerging markets need to act now, while the trend towards internationalisation is in its infancy and market niches are free.

9. Compliance matters

As a business, you must comply with a multitude of legal, financial and customs regulations of the markets you trade in. It is therefore crucial to keep abreast of and respond to any regulatory changes in a timely fashion. This generally demands external expertise, particularly as the penalties for non-compliance can be extremely tough.

10. Consider third-party support

When making a foray into a new market or region, it is important to keep on top of commercial and regulatory barriers and implement the best alternative payment methods. This is fundamental to the success of your business expansion. However, very few retailers have sufficient expertise in-house to manage all of these matters optimally, so finding a partner who can support you on your global journey can be the key to success.

While the prospect of ‘going global’ is still new for some, it’s vital for merchants to break into new regions quickly, armed with the best strategy and proposition to seize the opportunities, before the competition swoops in. Only by taking this approach can merchants win new customers and multiply their bottom line, building new revenue streams and expand into new regions. Global success is only a few steps away, and now is the time to go for it.

Today’s trading days are the middleman’s realm, where platform-based business rule exchanges and trade, removing much control from businesses and investors; but it hasn’t always been like this. Below Finance Monthly benefits from expert analysis from Sascha Ragtschaa, CEO and Co-Founder of Chainium, on the matter of trading control.

Pulling the Trigger

Sourcing information on a global business takes seconds. In fact, the ubiquitous Google now processes over 40,000 search queries every second. This equates to over 3.5 billion searches a day and an almost inconceivable 1.2 trillion searches per year worldwide[1]. However, pulling the trigger to invest in a global business is a whole different ball game.

Expensive, intricate and restricting, buying and selling shares between businesses and investors has significantly fallen behind advancing developments within the wider financial sector. Especially when you compare it to the latest cryptocurrencies, with the famed Bitcoin hitting a high of close to $20,000 in December last year, prior to its recent readjustment.

Disruption of the Status Quo

As one of the most vital areas of the market economy, it is essential the equity market drags itself into the 21st century and puts its businesses and investors in complete control. The simple truth is that when the global equity market was created two hundred years ago with the founding of the London and New York Stock Exchanges, the world was a very different place. Whilst middlemen can help investors identify the most cost-effective option, they can severely lengthen the exchange process and be expensive.

To become relevant for the modern investor, a certain amount of disruption of the status quo is required. The sector needs to ensure that trading becomes a more seamless experience and is put back into the hands of businesses and investors for full control.

Regaining control

The solution for this could well be the blockchain. The technology that underpins the main cryptocurrencies such as Bitcoin and Ethereum has the advantage of being transparent enough to ensure democracy and visibility, whilst being secure enough to protect businesses and investors alike. The technology is an enabling force for removing the middle layers, administration and reconciliation steps required in today’s global equity market solutions. This means that businesses and investors can be connected directly, leading to a rise in empowerment and the eliminating the need for middlemen.

To become truly transformative in 2018, any new equity market solution needs to be built with business and investor control at its core. The recent string of high profile data breaches – coupled with the impending Global Data Protection Regulation (GDPR) which comes into force on 25th May – have heightened the awareness among consumers regarding information security; especially when payments of any kind are involved. Blockchain can not only protect the individual, but also allow for enough transparency to ensure equity decisions, voting and resolutions are fully transparent in the process.

Removing the shackles

In order to be fully accessible, a modern equity network must be well tailored to suit the needs and interests of both investors and business owners. By democratising equity, it can bring influence and power back to the individual investor through de-centralisation, blockchain technology and crypto payments. Meaning the network becomes entirely distanced from traditional stock exchanges, government regulation and the institutional and corporate stranglehold.

Back to basics

This back-to-basics approach to raising capital reduces bureaucracy; with blockchain technology removing duplication and eliminating errors. This allow investors and businesses to exchange digital share certificates for fiat or cryptocurrency in a transparent, tamper proof and immutable distributed ledger. No intermediary or other reconciliation steps are involved in transactions, cutting through hundreds of legacy systems and solutions from the old world.

Business owners, of private and public businesses, can now sell shares directly to investors. Cutting out the middlemen in issuing and trading shares helps to give complete control back to the businesses and investors alike and help them become indelibly linked.

A transformation is needed

Giving trading control back in the hands of the companies and investors utilising the equity market is essential when it comes to promoting innovation and reinventing the processes involved in trading shares. No more trading through banks, brokers and intermediaries. No more share registrars, transfer agents or middlemen.

We have seen AirBNB, Ethereum and Uber all become the pinnacle of digital transformation in their very own industries and with the help of new technologies, we are now seeing the same beginning to happen in the global equity market too. By removing the multiple barriers to investment means that the next Apple, Google or Microsoft won’t be left on the scrapheap, but receive the investments they need to thrive.


If cash is in decline, how does the future look for finance?

Once the preserve of banks, states and major institutions, the world of finance has seen big changes in its product offering. A huge growth in tech companies creating ways to make spending easier for both consumers and institutions has seen a shift away from banks ruling the finance industry. Cryptocurrencies have gone even further, removing the need for major institutions to even get involved with both positive and negative results.

Money comparison experts Money Guru have analysed the growing payment trends, how tech and finance have formed an unlikely partnership, and what the future has in store for our spending.



Following a weekend at the Oscars, a frozen UK and a tax based feud between Europe and the US, Finance Monthly hears from Rebecca O’Keeffe, Head of Investment at interactive investor on the latest global markets news.

Global equity markets are fragile, and investors are wary as the increasing rhetoric over the weekend on tariffs and a potential escalation of a full-blown trade war make it possible that things could get very ugly very quickly. History has not been kind to investors during periods of protectionism and recent tweets suggest that President Trump is leaning in rather than stepping back from threats to unleash a global trade war.

This all makes it very difficult for investors to know what to do. Any global company could instantly and significantly suffer if its principal products suddenly become subject to retaliatory trade restrictions. Downside risks are therefore widespread and elevated, and it will be tricky to find sectors or companies that offer a genuine safe haven against such risks.

The major headache that the EU faces on trade is not the only issue facing European investors this morning as Italy looks to have taken a step to the right and moved towards populism and change. The complexity of the Italian voting system makes it very difficult to establish what happens next and when, but neither of the anti-establishment Five star movement or League parties are an attractive option for markets or the euro. Against this negative backdrop, investors can only be grateful that German coalition talks finally reached a conclusion, with Angela Merkel managing to hold on to her position as long-serving Chancellor, albeit in a fragile alliance.

Companies are losing out on $20bn globally in unclaimed VAT, research by recovery experts, VAT IT reveals.

The figure is largely due to the complex and time consuming European rebate system, resulting in businesses not claiming back money that is rightfully theirs.

The company says the global figure is a result of more than one-fifth of companies who incur VAT in foreign countries claim they are unable to recover it, due to procedures being too complex and burdensome.

Global business travel is worth $1.4trillion, with 5% relating to reclaimable VAT. Industries such as engineering, pharma companies and IT firms are among the worst affected, as well as large companies with complex global structures. VAT IT has argued that the eye-watering figure is serving to restrict company growth and investment.

European Managing Director, Ann Jones, said: “Companies are effectively leaving fortunes in the hands of overseas treasuries which they could – and should - rightfully reclaim. This is money that bosses have said goodbye to, but which could be reinvested across businesses. Much of the reason for this is down to nothing more than a lack of knowledge and the difficult-to-manage reclaim procedures designed to hinder - not help - companies in this process.”

“These problems extend across Europe, US, Africa and Asia. Of course, foreign governments do not wish to give up VAT so easily, so firms must step up to the plate themselves. The findings come at a time when cash flow issues are becoming increasingly problematic for UK companies, as the impending exit from the Single Market and Customs Union creates increasing financial uncertainty.”

CEO of VAT IT, Brendon Silver, said: “Reclaim procedures are long, complex and time consuming when undertaken in house but this isn’t just a bureaucratic issue, there’s a shift that needs to be made in the general attitude businesses have towards their tax reclaims. We have seen that despite the directive stating that any refund due must be made within six months of the date of submission, many administrations do not respect this deadline. It becomes clear that when some companies wait up to two years to receive a refund, they are simply just putting off claiming in the first place.”

(Source: VAT IT)

The late payment culture knows no borders. The proportion of UK invoices being paid late - and the amount of time taken to settle them by EU and US firms - has risen dramatically between 2016 and 2017.

Findings from business finance company MarketInvoice reveal that 73% of invoices sent by UK businesses to EU firms were paid late, up from 40.4% in 2016. Across the Atlantic, the number of invoices paid late by business in the US increased from 45.7% in 2016 to 71% in 2017.

Tellingly, the number of days taken by EU firms to settle invoices (beyond payment terms) has soared 30-fold between 2016 and 2017, increasing from just 0.3 days to 9.1 days. Similarly, US firms are also taking longer to settle their bills (beyond payment terms), up from 7.1 days (in 2016) to 19.5 days in 2017.

German firms were notable late-payers. They took 28 days (the longest all of countries surveyed) on average to settle bills to UK firms. Interestingly, in 2016 they settled their bills 0.5 days early. Also, the proportion of invoices paid late has almost doubled from 38.3% in 2016 to 62.8% in 2017. French firms took 26 days (compared to 6.1 days in 2016) to pay their bills and businesses in Ireland took 13 days (compared to paying 0.1 days early in 2016).

It’s not only UK exporters that are suffering. UK businesses operating at home were also hindered by late payments. Businesses took an additional 18.4 days to pay their invoices in 2017, compared to 5.9 days in 2016. Also, the proportion of invoices paid late increased from 62.3% to 66% (2016 vs 2017).

The research examined 80,000 invoices issued by UK businesses sent to 93 countries. Overall, 62% of invoices issued by UK SMEs in 2017 (worth over £21b) were paid late, up from 60% in 2016. The average value of these invoices was £51,826 and three in ten invoices paid late took longer than two weeks from the agreed date to settle, with some taking almost 6 months to be paid.

Bilal Mahmood, MarketInvoice spokesperson commented: “UK exporters are being squeezed globally as more of their invoices are being paid late and taking longer to be settled. Businesses respect long payment terms, but late payments are unacceptable.”

“The new trading environment in 2017, with Brexit negotiations on-going in the backdrop of global economic uncertainty, could have caused some consternation amongst late-paying firms around the world. This is not an excuse to not honour their payment terms.”

“UK businesses need to understand what measures they can take to reduce the risk. These include making T’s & C’s clear from the outset, chasing payments down and enforcing the right to claim compensation from late payments.”

(Source: MarketInvoice)

From IoT to peer-to-peer offerings, the PPRO Group - specialists in cross-border electronic payments - have predicted key online payment trends for the year ahead. With digitisation in the world of payments progressing by leaps and bounds, the following seven developments are expected to make waves in 2018.

  1. Internet of Payments

According to Gartner, the number of devices connected to the Internet of Things (IoT) is set to increase from 6.4 billion in 2016 to 20.8 billion in 2020. Consumers are increasingly expecting their IoT devices to enable more than just carrying out tasks automatically; they also expect them to facilitate payments. For example, consumers with connected fridges can expect to see depleated items restocked and automatically paid for. Visa is also working with Honda to develop technology that can detect when a car’s petrol is low and enables users to pay for a refill using an app that is connected to the in-car display.

  1. Context-Based Payments

Anyone heading to the checkout, whether with a real or virtual shopping basket, often takes a moment to decide whether their purchase is really worth it. Integrating payment into the context of the shopping experience and transaction can help remove this barrier to sale. It renders the POS almost invisible, while the payment process runs automatically in the background of a shopping app being used.

Wireless payments – a concept already being implemented more frequently online – will also be used in brick and mortar stores. Customers will, in the future, no longer need to reach for their cash or a credit card; instead, they can pay wirelessly in passing – whether from their smartphone via Bluetooth, using the RFID chip in their debit card, or automatically by facial or voice recognition. This will make the transaction seamless, and leave little time for consumers to rethink their purchase.

  1. Peer-to-Peer Payments

In 2018 payment processes will be increasingly integrated into peer-to-peer (P2P) systems. In India, for example, WhatsApp users can already use P2P payments to send money to friends during online chats. Apple is also implementing this feature with Apple Pay Cash. The new voice input technologies, such as Alexa, Siri and Cortana, mean that P2P payments and banking transactions can also be carried out using voice commands.

  1. Real-Time Payments

The push pay model makes real-time payments possible. Thanks to the SEPA Instant Credit Transfer (SCT Inst) scheme, the requisite European infrastructure has been in place since 21st November 2017. In Germany, it is already supported by the UniCredit Bank, the Deutsche Kredit Bank, and many savings banks. But it will probably be some time before the majority of banks are using the new system – perhaps not until participation becomes mandatory.

In 2018, however, additional German participants are expected to join the scheme as market pressure increases. It will be interesting to see the extent to which SCT Inst will open up new payment methods and how much retailers, in particular, will take advantage of the speed and reliability of real-time transfers to convert their processes to genuine real-time transactions.

  1. Partnership between Banks and Fintechs

The technical specifications (Regulatory Technical Standards, RTS) defined by the European Commission for the new Payment Service Directive, PSD2, represent a major compromise between the interests of the established banking industry and the European FinTechs.

From the FinTech point of view, it would have been better to offer them the same as banks, and a free choice of using APIs or access via online banking. This would have resulted in good APIs being used while poor ones were ignored, creating a kind of self-regulation. At least, however, the new version is less of a threat to the European FinTech sector than the original version issued by the EBA at the end of February 2017. This is expected to result in a solid foundation which will foster increased competition and security in payment processes, which will provide both retailers and consumers with more choice and information monitoring.

  1. Decentralisation through Blockchain Technologies

The technological basis for Bitcoin and other cryptocurrencies will facilitate the creation of more innovative financial solutions in 2018. Institutions will use blockchain technology to establish direct connections, thus eliminating the need for intermediary or correspondence banks.

Nasdaq has already created a platform which allows private companies to issue and trade shares via blockchain. Here, the complete trading process – from execution to clearing to settlement – takes place almost in real-time, while the technology allows traceability. Blockchain can also be used by regulators as a completely transparent and accessible recording system, thus making auditing and financial reporting considerably more efficient. The number of uses for blockchain is constantly increasing and, although the technology has not yet actually achieved breakthrough status, like many radical technological shifts, it needs time to establish itself.

  1. Commercialisation of MNO Wallets

More than two billion people globally currently do not have access to financial services. In many countries with low financial inclusion, peer-to peer-payments through mobile wallets or mobile network operator wallets (MNO wallets) are the norm. With growing popularity of e-commerce in these countries comes the commercialisation of such wallets for B2C payment methods. There is a clear shift from P2P payments to B2C payments seen in many Asian, African and Latin American countries.

(Source: PPRO Group)

You wouldn’t think that poverty stricken lands in the huge continent of Africa are actually rich with communications technologies, and in particular mobile phones. Below, Michael Brown at Credit Angel sheds a light on what this looks like, and how in fact, the proliferation of mobile technology is helping eradicate poverty in some areas.

The mobile market has thrived for some two decades now, and all signs point to further expansion. The industry will continue to grow globally, as consumers seek further convenience in their day-to-day lives.

It’s also a lucrative market financially, for banks, monetary institutions and innovators. Alongside mobile growth, financial technology (FinTech) is thriving alongside it as a natural consequence of increasing users and use. And payment systems that prove both convenient to the consumer and profitable for the providers will only expand until the next big innovation comes along.

However, alongside the global appeal of profit and convenience, the mobile market is thriving as an enabling tool in parts of the world where profit does not come first.


It may surprise people to learn that mobile phones are thriving in parts of rural Africa. In villages distant from major towns and cities, where most people do not have bank accounts or secure ways of storing their money, it’s here where perhaps the biggest benefit of mobile use can be found. In fact, whilst the West has been dipping its toe into the combination of mobile and FinTech, rural African communities have been miles ahead in their acceptance of the new technology.

The lack of a bank account is clearly a security concern for all individuals. Any income made by those in rural settings once had to be carried or guarded by the individual. Cash, as we know, is perhaps the least secure of currency forms worldwide. It’s easy to steal, and virtually impossible to claim back once lost. Such a rural economy makes life incredibly difficult for everyone. Not only is there little money to go around in the first place, but any amount lost or stolen can quickly mean extreme poverty for individuals.

The Contactless Revolution

Whilst the West has been debating the safety of contactless cards in recent times, the United Bank of Africa (UBA) had already mobilised the facility across much of Nigeria. Most of us have reaped the benefits of contactless payments when we’ve found ourselves short of cash and far from a bank. But the UBA extended the benefits to include the likes of public transport and even taxis, and all this whilst Western buses remained cash-only, and Uber was nothing more than a German word meaning ‘above’. The gradual shift from contactless cards to mobile payments is simple common sense – why carry two devices when one will do?

The African economy as a whole is reaping the benefits of making its citizens mobile. In a society without landline telecommunications, it’s estimated that the continent gains a 0.5% rise in gross domestic profit, every time it enables a further 10% of its population to access mobile technology.

Beyond FinTech

The mobile market is thriving in rural Africa, and not just for directly-financial reasons. As farmers the world over know, the weather plays a huge part in their success. Instead of having to play a guessing game and potentially losing one’s whole crop and income, rural African farmers are using their mobiles for weather reports via the internet.

With such information at their fingertips, farmers know the best times to plant crops, sow seeds and harvest. The situation of families having no products to sell and thus no food for themselves has been greatly reduced as a result. Judge this against a rural economy in which around half the people are small-scale farmers and the difference mobile phones have made in fighting poverty is clear to see.

The introduction of mobile devices to the region have also helped with healthcare. Many people are too distant from hospitals and surgeries in emergency situations, meaning a high mortality rate, particularly amongst the young. Infections and diseases that are easily-treatable often claim lives in rural Africa, and it’s often for reasons of accessibility and remoteness. Many can now contact healthcare professionals for diagnoses and advice thanks to their handheld companions.

It’s a similar situation regarding education. There are now apps set up allowing teacher-pupil communication online, as well as online course, not dissimilar to the Open University. The economic opportunities for those living in rural economies have been increased tenfold, and the figures say it all. Mobile payment app M-Pesa is one company that has invested in rural Africa, and its innovations have brought nearly 200,000 Kenyans alone out of poverty over the last decade.

The Future

The relationship between FinTech and mobile tech is inexplicably linked, and the two are set to continue to grow together. Given that the number of mobile users will increase as time ticks on, this naturally means an increase in app-users and all other mobile mod-cons.

It’s estimated that 90% of smartphone users will have made a mobile payment by 2020. The world as a whole is moving away from cash-based transactions towards more convenient, secure and profitable ways of paying.

FinTech in Africa shows how a cashless society can work, as well as the untold benefits and freedoms such a set-up can provide for the individual. As it stands, the introduction of mobile phones to rural Africa ranks highly amongst factors credited with reducing poverty in the region, and it may well prove to be the number one factor in years to come. Discover more about mobile innovations and the future of spending.

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