With the steady increase in smartphones and e-commerce, successful entrepreneurs understand the absolute need to implement a digital payment system. These systems offer business owners a convenient, efficient, and affordable way to receive payments from customers, but also to connect with banks, suppliers, employees, and government entities.
In addition, digital payment processing can make it much easier and offer potentially high payoffs for entrepreneurs to start or expand their businesses. Shifting from cash to digital payments typically is a simple process with the right payment processing vendor partner.
Higher Profits Through Increased Efficiency
E-payment methods have become a primary reason for the recent growth surge in commerce. Covid-19 pushed many would-be in-person patrons to seek safer ways to make their purchases. In general fewer customers are carrying cash and tend to rely on the use of credit cards or other forms of digital payments. By accepting digital payments like credit cards, e-commerce, etc., business owners can quickly and easily broaden their client base and their revenue base.
Furthermore, digital payments help increase a business owner’s profitability by making financial transactions more convenient and efficient than those done via traditional checks or cash. Paying vendors by check, for example, involves a highly manual and costly process including material costs (checks, toner, postage) and labor costs (signing, stuffing, mailing). Manual billing systems are also prone to errors. Oftentimes entrepreneurs are forced to chase delinquent clients for their payments or vendors for invoices. Conversely, digital payments save money by significantly reducing both labor and administrative costs. In addition, entrepreneurs enjoy the ability to better manage their business and realize cost savings through the ability to track daily sales, view inventory levels, and set up employee or vendor payments.
Better Cash Flow
With digital payment processes like ACH (Automated Clearing House), business owners have the ability to establish specific dates to make and receive payments or fund transfers. This allows entrepreneurs to better manage their cash flow. Below are some examples of ACH transactions:
- Payments transferred from credit card payment processing accounts to a business owner’s bank account
- Customer-initiated direct online payments
- Payments to employees or vendors
- Transfers between a business owner’s bank accounts
An additional benefit of ACH is that it reduces fraud, keeping funds in the business owners’ pockets. Payments made via ACH are more reliable than checks.
Improved Access to Credit
New and smaller business owners often suffer from the lack of access to credit, which essentially is the lifeline for any business. Credit allows entrepreneurs to obtain the capital needed to to simply cover the costs of doing business much less expand their business. It is required for such things as purchasing inventory, hiring staff, and covering other day-to-day expenses.
Without an established credit history, entrepreneurs typically face higher interest rates and other challenging requirements for accessing credit. By establishing a digital payment system, business owners can quickly and easily establish a credit history and therefore gain access to credit that will allow them to grow their business.
How to Set Up Digital Payments at My Business
Setting up a digital payment system can be a relatively fast and simple process. Entrepreneurs start by establishing a relationship with a payment processing vendor. A payment processor provides the hardware and/or software required to handle transactions that allow customers to purchase your goods and services.
When seeking a payment processor, business owners should consider the following issues:
- Do they have a small business-focus?
- Which solutions do they offer? Do these solutions meet your needs?
- What are their fees and are they transparent? Pricing is important but certainly should not be the only criteria for selection. Other aspects should be considered like access to funds and batch processing.
- Which fraud monitoring and prevention tools or alerts do they offer?
- Do they provide 24/7 customer support?
With digital payments, entrepreneurs gain a variety of benefits, including the automation of payments and collections, improved cash-flow, increases in profitability, in addition to an improved experience for their customers, employees, and vendors.