Change is hard, especially for businesses. When it comes to data management, despite advances in data processes, 74% of business users surveyed by the Enterprise Data Readiness Report still use Excel to share and maintain data, and 69% still fall back on email attachments to exchange data, despite how unsecure and unreliable email can be. The same slow adaption to better processes plagues small businesses when it comes to payment processing. Small businesses that are still reliant on older platforms and manual processes to handle their payments experience a number of payment-related pain points. About 60% of businesses say they regularly struggle with cash flow, and 40% say that cash-flow issues have limited their growth, according to a Bank of America survey. Common Reasons for Payment IssuesIn a perfect world, a business would provide a good or service, send an invoice, and receive payment from its customer. But instead of a straightforward experience, businesses hit pain points that include:
- Delayed payments. Freelancers and other small businesses can encounter delayed payments on invoices. There are a myriad of reasons why this might happen, including missing or inaccurate information on the invoice, missing paperwork, or other incidental situations.
- Inconsistent payment methods. Some clients still put a check in the mail. Others prefer bank transfers or platforms such as Paypal or Venmo. Remembering which clients use what payment methods is a logistical hassle and an opportunity for bookkeeping errors. Some payment platforms also restrict types of transactions, industries, or regions. For instance, anyone who wants to accept payment from someone in Russia using PayPal is out of luck right now. PayPal has suspended service there in response to Russia’s war against Ukraine.
- High transaction fees. The client, a payment processor, and/or a financial institution may take a substantial bite of a vendor’s payment, especially if the transaction is small or frequent. The small business then has to raise its rates to cover costs, making it less competitive in the overall marketplace.
- Inefficient invoicing and record-keeping. To pay accurate taxes and understand their financial situation, small businesses need to invoice efficiently and keep accurate records. That’s not easy to accomplish, given the complications that arise from multiple payment methods, delays, and manual processes that are subject to human error.
Common Solutions for Faster PaymentsSmall B2B businesses that struggle with payment processing issues like the ones listed above can benefit from cash management services that provide fast and efficient ways to process payments without major delays, restrictions, or exorbitant fees.Here are a few solutions you can propose to your small business customers to help them provide top-notch payment processing for their customers:
- Faster payments. Faster payments services and transfers drastically reduce payment processing times, and with the advent of same-day ACH, payment delays become a thing of the past.
- Digital enhancements. By prioritizing digital banking, businesses can begin giving and receiving cashless payments so that their payment methods are more consistent.
- Cash management automation. Not only do automated services assist with payment processing, but they can aid businesses with maintaining accurate invoicing and more streamlined bookkeeping. Automated cash management solutions reduce the risk of human error that is more prevalent in manual processes, as well.
By guiding your small business customers in choosing interlocking payment platforms, invoicing systems, and record-keeping software, your CFI can help those customers grow their businesses while also creating closer, more durable banking relationships.
