Local Literature – Cash Flow

Amidst pandemic, also known as Corona Virus (COVID-19) crisis, digital payment or e-
wallets have been keeping economies afloat and helping people to reduce contact with
the said virus. Same goes with Small and medium-sized enterprises (SME’s) that are
innovating and use e-wallets as a kind of approach for cashless transaction rather than
the traditional one.

In the Philippines, there are different kinds of e-wallets such as PayMaya, GCash,
SMART Money, and Coins.ph. Most use a client-side wallet where it allows th end-user
to manage their account. Some allow the user to load their accounts with money while
others link their credit or debit card information with their accounts. Regardless of the
differences in their features, it is clear that e-wallets provide convenience in terms of
seamless transactions. Given this advantage, it is only a matter of time until it replaces
the traditional means of payment. Visa reported that there was a jump in the use of
electronic payments from 46% in 2015 to 57% in 2017. Oliver Wyman, a management
consultancy firm, predicted that there will be a surge of around 6% in the use of non-
cash payments such as e-wallets by 2022.

Despite this rosy outlook, the Philippines is behind its Asian neighbors. In China, 50%
of its transactions were done through non-cash payments in 2016. In Indonesia, the
non-cash transactions have increased from 27% to 30% between 2012 – 2016. This is
because there are still barriers to the adoption of cashless technology in the
Philippines. One of which is the general fear of falling prey to scammers (Data Privacy
of the Philippines).

On the other hand, SME’s innovated and adopted the used of e-wallet to boost their
performance and business efficiency. The impact of e-business adoption on SMEs'
performance is explained in some research. The usage of e-business is motivated by
an interest in the advantages gained, such as efficiency and ease of winning
competition.

Some of research study states that, digital payment or electronic payment provides
efficiency, convenience and growth to those who adopted to this kind of system. SME’s
that has a financial system adopted to electronic payment/wallet attained business
growth especially during the peak of pandemic where lesser physical contact is
necessary. Insufficient cash flow to retain staff and operations, supplier problems, and
access to raw materials was one of the biggest challenges of SME’s dealt with amidst
pandemic until the current year.
According to International Labor Organization (ILO), businesses were already under a
lot of competitive pressure before the crisis, and the COVID-19 economic fallout,
regulatory restrictions, and health issues added to that pressure.

Disrupted financial flow was the biggest issue. More than 85% said the epidemic had a
significant or moderate financial impact on their business. Only one-third of
respondents claimed to have enough money for rehabilitation. The worst impacted
were micro and small businesses (those with 99 or less employees).

Foreign Literature – Cash Flow

According to the existing panel data of Statistical Data Warehouse (SDW), with
regards on electronic retail payments, from year 1995 to 2009, the market has
migrated away from both cash and checks, according to the findings, and non-cash
payment instruments have greatly expanded across the 27 European countries. It is
also indicated that economic growth has been found to have been slower in less
developed nations with less sophisticated financial systems. Which we can relate as to
SME’s, those who uses e-wallet as a part of financial system achieved a considerable
growth amidst the pandemic.

Due to their ability to facilitate efficient transactions and credit accessibility, card
payments (both debit and credit) resulted as the largest contribution for growth. It was
demonstrated that advancements for electronic payment synchronization and
integration would boost trade and consumption, which would be advantageous to
Small medium-sized enterprises and economy in general.

Electronic payment has a significant effect to Small Medium-sized Enterprises cash

flow. It includes cashless payment with regards to supplier or any transaction or
operation that results to the in and out of cash within the company/ company’s capital.
It also has a significant effect with regards to change to payment system such as debit
and credit cards, mobile banks, mobile wallets which later on increased the
performance of the said business. E-wallets like Gcash, Maya and etc., also reduced a
cost for cash handling, cash management and cash reconciliation purposes.

Foreign Literature – Operation

According to Putri. S  & Sumitra D. (2020), Go-Pay is one of the popular digital
wallets in Indonesia. Small businesses who want to participate can easily
register with the help of the digital wallet service. In this instance, digital wallets
offer small enterprises that are not yet tech-savvy convenience. Small business
owners can easily follow the registration procedure' step-by-step instructions as
outlined on the website of the digital wallet provider. The payment procedure is
also started using a QR Code. The customer will provide a QR Code for the
small business owner to scan after the registration process is complete. The use
of QR Codes in the Digital Wallet service is a reliable and practical method of
transaction payment. Unique features of QR codes allow them to track customer
information. such is the number of scans, the phone model, and the real-time
area code for the phone. This can be utilized to comprehend consumer behavior
so that a marketing plan can be created that is specific to their purchase.
Additionally, it will be quite beneficial for business owners to maintain contact
with website visitors and boost sales. And based on the result of their study:

1. Go-Pay offers a transaction history tool that allows users to access

comprehensive incoming and outgoing transaction details without a time limit.

2. Making the income statements more accurate and managing the funds more
effectively are both highly beneficial.

Local Literature – Operation

Digital payment or E-wallet can increase firm’s profit by allowing more efficient and
cost-effective financial transaction. According to Marrianne A., Camille M., and Shara
V. (2022), e-wallets brought a significant benefit to business operations. It mainly gives
an advantageous feat to reduction of cost and risk, satisfaction of the consumer and
the convenience given of e-wallets. It increases the profitability of business by reducing
the transaction cost by a significant amount that affects the business positively giving a
higher chance of business profit. The further results of the said study are as follows:

1. E-wallets provides a speedy transaction electronically, eliminating the need of

handling physical cash for every transaction made by businesses especially during
the COVID-19 pandemic where health protocols in social distancing and lesser
physical interaction is a must.
2. E- wallets convenience in business operation is advantageous during daily
operating activity such as paying suppliers, their business facilities and also paying
their employees.
3. It also provides security for safer and faster transaction.
4. It also gives a business an appeal to a wider demographic for those who doesn’t
have a cash on hand.
Foreign Literature – Investment

With regards to investment, SME’s investment leverages promising businesses to

catalyze socio-economic growth and entrepreneurship in local communities and
markets. When done correctly and sustainably, such investment also produces
significant returns for their investor and is also have a direct impact on business
growth. According to the result of the study credited to Islam, Muzi and Meza (2016),
reduction of costs and risk of transactions, and satisfying customer request are the
driving factors that push the e-payment or e-wallets to be adopted.

According to Islam and his company, From the results of the primary explanatory,
binary variable of the study, it was evident that there was a substantial positive
association between investment and mobile money use. This outcome is,
nevertheless, subject to variable bias from omitted investment drivers. Their other
explanatory factors maintained the positive link between mobile money use and
investments. As more control variables were used in these outcomes than in the binary
result, they provided a more complete specification.

It was also indicated that small firms or small business are the only one who has an
advantages when it comes to the usage of e-payment or mobile money. Due to its
association between mobile money use and investments, it supported the claim that
using mobile money lowers financial costs while boosting a company's credit
worthiness (Islam, Muzi & Meza, 2016).

Local Literature – Investment

E-wallets provides are considered to be effective and efficient when it comes to activity
that is done by SME’s or small firms. Business firms used E-wallets for it’s availability
which is mainly used to purchase an equipment and machines, personal investment
and cryptocurrency. On the other hand, there is also inconvenience the SME’s dealt
with using e-wallets.

1. The respondents reported that technical issues brought on by a shaky Wi-Fi or data
connection were the most frequent incident.
2. Then come in-app issues like e-wallet providers' monthly transaction volume caps
and application maintenance, both of which can cause transactions to be delayed
or even cancelled.

3. Merchants and customers claim that e-wallet amounts are frequently entered
incorrectly, especially if they have vision issues or are less tech savvy.

4. On e-wallet apps, one company also noticed delayed receipt reflections, while
another dishonest business.

Foreign Literature – Financing

During the outbreak of COVID-19, cashless transaction offers an advantage when it

comes to financial performance of a business. According to the study of Jumbu &
Wepukhulu (2019), Cashless transactions reduced the requirement for expensive labor
expenditures for managing cash and reconciliation of managerial and financial
resources. The result in their study showed that performance increased with lower
expenses and dangers associated with managing cash. Payment made with e-wallets
also offers low recurring cost when it comes to transaction which later affect the
performance . It reflects to have a lower costs and higher sales.

A cashless payment system greatly impacted the financial accessibility of performance

of the supermarkets' finances. Debit & credit cards, mobile wallets, and other financial
advancements in the payment system. The financial performance was greatly
improved by banking and mobile wallets. In contrast to investment, where small
business are the only one who benefits from using e-wallets with regards of
investment, in financing, large company are the one who benefited more from the
transaction which is cashless and also in smaller transaction (Jumbu & Wepukhulu,
2019).

Local Literature – Financing

On the other hand, though e-wallets provides convenient there are some business that
doesn’t want to use e-payment or e-wallets. Ironically to the must and health protocols
that’s implemented during the outbreak of the said virus. Some study present the result
where the SME’s or business firms do not prefer it for lots of reason. According to
Marrianne A., Camille M., and Shara V. (2022), some of the business firm do not use
e-wallets or digital cash, the respondents reason are:

1. Majority of the business firm prefer bank accounts for payments and issuance of
loans.
2. Through the lacks of information offered by e-wallets with regards to loan
3. Some of the business firm eluded the use of it because of security reasons
4. A certain portion of the whole respondents (business firms) stated to have not a
current need to use e-wallets for their activity with regards to financing activity.