Money is the lifeblood of every business. One late payment can mean ruining a partnership, losing customers, or worse.
By Marwan Forzley
It’s hard to keep track of every dollar coming and going in your business. Small business owners have a lot to do, and can’t always find time to focus on payables and receivables.
Thankfully, there are payments providers working to relieve small business’ daily financial issues. Here’s how bad payments can hurt your business, and how payments processors can help.
Knowing how much money businesses have at any given moment is crucial to keeping operations steady. If you don’t know how much money you have, how can you order more supplies, hire employees, or pay your bills?
Especially with global payments, banks and large financial institutions, who are notorious for charging outrageous service fees, and inflating their foreign exchange rates. If you’re expecting to pay $10,000 for some supplies, you have to prepare for the fees attached. If not, you might be out a business partner or two.
Luckily, there are options. Banks may be the most popular way to send global and domestic payments, but they certainly are not the only option. Many payments processors provide transparent, flexible pricing to their users to make sure businesses know exactly how much they’re spending to send money.
Banks won’t offer you the preferred rates the big guys get. Payments processors just might.
Forget the fees, what happens if you money doesn’t arrive at all?
Payments sent over the SWIFT network (the communication network used by most large financial institutions to process global payments) have been known to get “lost in the system” en route to their destinations.
Each SWIFT payment “touches” multiple banks on the way to its destination. With each institution the payment goes through, the higher chance it gets lost in thousands of other payments.
Losing payments is devastating to a small business. The money is gone, business partners aren’t paid, and everyone is getting impatient. On top of that, to find your money after sending, many banks charge a “tracking fee” on top of other service charges.
Many payments providers were built in order to sidestep this outdated money transfer method. Technologies such as multi-rail, blockchain and other more reliable networks help ensure your money arrives on time and in full.
Supply Chain Delays
A consequence of lost payments and high fees is a delay in your supply chain – either domestic or internationally. If your supplier isn’t paid, you don’t get the products you need to send to your customers, which means loss of revenue. This can quickly lead to a domino-effect where bills and employees aren’t paid, and a business’ doors can ultimately close.
Transparency is the answer. If you’ve sent a payment that has yet to arrive, your supplier or business partner may be hesitant to send you your product.
Many of today’s payments providers have seen the issue with these opaque processes and work to rectify them. The ability to see and track your payments progress is just one way payments providers allow small business owners to better communicate with their partners and plan accordingly.
Many of these issues have revolved around keeping suppliers and business partners happy. We have definitely established how bad unhappy suppliers can be for the health of a small business.
Especially for global businesses, establishing trust with partners halfway around the world away can be difficult. Even in our evermore connected world, business owners are still required to prove they are trustworthy. One of the best ways to build credibility is with timely payments.
Nothing says “partnership” like getting paid when you’re supposed to. Other business owners know the struggles that come with sending and receiving money, so being able to confidently pay them on time with no issue is a trust-building exercise like no other.
Business owners have too much on their plate. Let alone keeping track of money going out, how can anyone be expected to make sure their records and numbers are accurately reflected for tax reasons? Does anyone have time to meticulously pour over financial numbers?
Many business owners don’t have the luxury of a dedicated accountant or bookkeeper to do this for them. So, they rely on spreadsheets that are very prone to human error. One wrong date or number, and your crucial tax information is all wrong.
The further along payments processors get, the more robust integrations occur with accounting software. All business owners have to do is connect the provider to their favorite software, and all information and data is automatically integrated and reconciled.
No wasted time, and no more miscalculations. Just simple, straightforward finances.
Marwan Forzley is the co-founder and CEO of Veem, a global payments company helping small businesses transfer money internationally, and author of “Small Business in a Big World: A Comprehensive Guide to Doing International Business”.
Money stock photo by ElenaR/Shutterstock