Monday, 31 Aug 2020

COST CONSTRAINTS AND CONTACTLESS TRANSACTIONS: CAN SMES NAVIGATE THE NEW NORMAL?

Almost three-quarters of the year in; more than eight months since the world first knew of a new viral outbreak, the global economy is still struggling to adapt.


Regionally in Asia and domestically here in Malaysia, it is not just the viral pandemic that is forcing businesses to rethink how business is done, from major concerns to the most minute, but global economic volatility and variables such as commodity prices have also added to the chaos.

While larger corporations may have buffers or reserves in place, for small and medium-sized enterprises (SMEs) that may employ less than 50 people or a maximum of 200, the current uncertainty is more than a little unsettling.

The new normal has brought a host of new, disparate and unexpected challenges for SMEs.

While SMEs are in an advantageous position for being small enough to give personalised or curated attention to their loyal customer base -- and more often than not, an SME’s customer base is small but a sustainable stream of revenue -- are SMEs equipped to face specific challenges in this new normal?

We look at some of the more pressing challenges and the possible solutions available.


New Challenges, New Approaches

The first and most pressing challenge, in broad terms, is evident in how many SMEs are looking primarily at cost constraints and financing. 


While some SMEs have put in place meticulous planning beyond a three-month cash flow reserve, there are many enterprises unprepared for economic volatility, disruption and uncertainty.

Bigger businesses have a better chance of surviving; while in some cases this is a perception it is also a result of stability and steady growth that involves money stashed aside for a rainy day. 

However, smaller businesses tend to store just a few months of cash flow (at best), so when an unexpected pandemic hits and normal life is suspended during an MCO, very often, an SME will suffer, as almost 90% of SMEs operate in the service sector. 

If the SME is not listed as an essential service, business is no longer business as usual. From the barber to the independent bookstore and the electronic accessories shop, SMEs had little choice but to shutter, sit and wait.

Furthermore, remote working is not feasible for all SMEs; for instance, the cobbler, the spa, the barber, the print shop or the auto repair shop. SME businesses that require manual document submission, or experience unstable wireless Internet connections are some of the more common problems that mushroom during the imposition of the MCO.

Reportedly, close to 70% of local SMEs experienced more than a 50% drop in business within a week of the Movement Control Order (MCO) being instituted towards the end of Q12020. The results, from an online survey, underscore the fact that SMEs are the hardest hit from the pandemic. 

The consequences can force undesirable decisions to be made by business owners, and such decisions often involve the employees that the business supports. If such disruptions force an SME owner to rethink his or her ability to pay employee salaries, it begs a bigger question of whether the SME is equipped to survive a longer downturn.

In short, SME business owners trying to weather the coronavirus pandemic are facing a financial blow the magnitude of which analysts are unable to comparatively quantify. 

Farther down the discussion of financial constraints is the subject of financing. There are significant funding gaps for SMEs in the market to not only meet short-term financial requirements but also to fund business expansion or finance working capital. 

Traditional financing avenues often bring unnecessary complications in the end-to-end financing application process, ranging from arduous documentation and collateral requirements to long application processes.

Such difficulties are not reflective of the viability of the SME; it is simply that larger and traditional financial institutions’ standardised financing products that comprise higher value or longer-tenure products often do not cater to SMEs’ requirements. 

Thus, with such restrictive factors in place, there are fewer options for SMEs that are looking for short-term financing options and solutions, often with a financing tenure of less than 12 months. For SMEs that do take up larger, longer-term financing options, the result is often the incurring of excessive costs in the form of interest rates. 

The second challenge to SMEs is disruption borne of changing consumer preferences, new products, more agile competitors and technological advancements that makes your competitors more efficient and better-equipped to satisfy evolving consumer appetite and sentiment.

With social distancing and contactless transactions becoming more favoured by certain segments of consumers, SMEs have had to quickly rethink whether they have the tools in place to cater to these consumers.

Some SMEs were quick to respond to the MCO whereby their services introduced and incorporated contactless delivery, whereby the payment is done through cashless transactions and the item is delivered and placed at a convenient spot without both parties having to interact with each other. This took care of the social distancing aspect of the MCO.

The stark reality is simple: an SME must adapt quickly by embracing technological tools to keep up with customer expectations and tastes.

Is your business equipped to face these challenges and does your business have the right tools with which to adapt and transform? 

We explore the possible answers to help SMEs navigate the new normal.


Help: Relief, Aid And Solutions

While avenues such as peer-to-peer financing (or crowdfunding) are being considered (as they seem to remove many complications in the traditional financing application process) there are also other avenues, resources, measures and initiatives to help keep business operations running as well as sustain workforce salaries.

Government-backed stimulus packages include the SME-focused package of RM10 billion to help struggling SMEs affected by the Covid-19 outbreak, as well as the three-month wage subsidy programme worth RM13.8 billion for all companies, with a specific allocation based on company size. 

Additionally, banks and financial institutions have stepped in with relief measures such as six months of deferral or loan repayment moratorium and the restructuring of corporate loans.

Furthermore, grants such as the SME Digitalisation Grant made available by Celcom in partnership with the Malaysian Digital Economy Corporation (MDEC) provides both an avenue of financial aid as well as the impetus for business transformation digitally, a topic covered in further detail below.

This collection of support provides the opportunity for a business owner to maintain cash flow and allow for some breathing space before making tough decisions.

When we look at the challenge of SMEs adapting quickly to unexpected situations such as a movement restriction order, some are more agile than others. 

To meet the challenge of quick adaptation, an enterprise needs to consider technology. 

Technology allows SMEs to not only widen their previously small but loyal customer base, often to include new customers from previously-untapped segments that were unaware of the goods or service offered by the SME (think digital marketing) but also to overcome restrictions such as social distancing so that business may carry on as usual.

For example, if you are a restaurant or cafe, and your means of communication with your customers is via text message, email or phone calls, perhaps it is time to consider communicating with customers online or via a mobile app or to reach out to new customers using a digital marketing platform from a service provider.

Furthermore, with the growing volume of remote ordering and cashless transactions, as an SME enterprise, there is always the solution of cashless payment systems. There are affordable, secure and easy-to-use options such as the Celcom Safepay mPOS where your team can manage every electronic card payment via tablet or smartphone.


Cashless transactions become easier with solutions such as the revolutionary Celcom Safepay POS, a simple-to-use, iPad based POS system for retailers that comes with a cash register, built to meet the evolving needs of enterprise businesses.

Such solutions and alternatives can be useful for businesses that may not have the space or money to have a contactless (e.g. drive-through) service. The acceptance of using remote or online ordering, goods delivery and contactless and cashless services is set to increase, with many converting to becoming permanent customers. 

One way to future-proof your business and to adapt quickly to these challenges is to digitalise your business with accessible, affordable digital tools for which you do not need to have extensive, in-depth tech knowledge to operate or use immediately.

Providers such as Celcom, a Certified Technology Solutions Partners collaborating with MDEC, can help SMEs speed up the digital transformation with not only the widest 4G LTE network that connects businesses seamlessly but also a Business Suite™️ and comprehensive digital services that provide solutions such as electronic Point of Sales (e-POS), Enterprise Resource Planning (ERP), electronic payroll system, and Digital Marketing and Procurement. 

Incorporating this type of quick pivoting and agility through the embracing and integration of technology into your operations can help keep you afloat until your next plan or strategy review. 


It is time to think about digitalising your business to stay afloat in the new normal. 

Talk to a trusted partner today, and grow your business with confidence to weather future storms.

Check out Celcom Safepay mPOS for more information about the product.