Few SMBs considered integrating digital payments in their solutions before 2019. But an SMB that doesn’t offer its customers the option and convenience of digital payments in 2021 is definitely up a creek without a paddle.
In many countries, customers do not want to deal with businesses that don’t offer contactless payment options. Visa’s recent Back to Business study reveals that nearly sixty-five percent of small business customers want to continue using contactless payments even after the pandemic is over.
Agile small businesses have adopted new ways of doing business not only in the front office through digital commerce, but also in the back office with automated solutions for account payables and account receivables. As these businesses have experienced, and many more continue to recognize, digital payments and digitization of payment processes are not only good for business but increasingly crucial to stay in business, especially with customer-friendly regulations such as PSD2 coming into force.
Here, we talk about five ways digital payments and digitization improve your small business.
Digital payments are faster to process. A PayTech Revolution report by Deloitte reports digital payments to be more than fifty percent faster to process than traditional purchase-order processing. For business owners, faster payment processing directly translates to more control over receivables.
Upon receiving an invoice, a customer’s organization reviews the contents of the invoice, tallies the details with records, identifies potential disputes, and goes through multiple rounds of review before approving payment. Suppliers can make this lengthy process infinitely easier for their customers with self-service portals that allow customers to keep track of invoices and make payments from within the portal after approvals. All the stakeholders can view the invoices and comments in one place, which makes the approval process easy to manage. What is more, multiple payment options notch up the convenience quotient.
Digital payment options and processes eliminate reconciliation effort and reduce manual intervention and errors resulting in a minimum of three times higher cost efficiency than traditional purchase-order process cost. Add to that the cost efficiencies from obviating the need to print and mail paper invoices and checks, and total cost efficiency gains could go as high as 500%. All this cost reduction naturally reflects in improved EBITDA.
Greater visibility into cash positions helps businesses make timely decisions about the movement of funds, and faster settlement with digital payments improves cash flow. Modern accounts receivable solutions that enable suppliers to slice and dice information and glean actionable insights empower business owners to make informed expenditure and investment decisions.
After nearly dethroning cash in the consumer market, digital payments are well on their way to replace check payments and paper-intensive processes in the B2B world. By providing multiple options such as ACH, credit cards, debit cards, and digital wallets, businesses can make it easier for their customers to pay their dues on time. In the Visa study, nearly seventy-two percent of the small and micro-businesses surveyed reported expecting their customers to continue preferring digital payments in the future.
COVID-19 has underscored the importance of digital payments. With multiple secure payment options on the market including Apple Pay, Square, Dwolla, and more, more millennials and boomers have driven the shift to digital payments than GenZ who were the early adopters of digital commerce. A business that doesn’t provide the option of digital payments can easily be said to be preparing to walk the plank sooner than later. Embracing digital business-to-business payments and optimizing the back office is now the clarion call for action.
HighRadius Electronic Invoice Presentment and Payment (EIPP) Software provides tools that automate and speed up invoice communication and facilitate a faster collection of payments, enabling a closer and more convenient relationship with customers. It automates the invoice transmission and payment collection process providing a configurable solution that supports multiple invoice formats and different modes of transmission (fax, email, portal, etc.) depending on the targeted customer, its integration with ERP systems and a rich search capability enables efficient storage and retrieval of past invoices, backup attachments to minimize disputes and short pays. Apart from that it also has some key features that you would not want to miss out: level-III interchange and surcharge; self-service customer portal; invoicing across email, customer portals, post, and fax; advanced deduction management; and lightning e-payments. The result is faster invoicing and payment collection, better customer service, and improved profitability and cash flow.