When you first started your business, you probably imagined yourself following your passion, not going over financial blogs in search of ways to improve your payment and accounting processes. But, here we are.
No matter your industry or the size of your operation, if you’re a business owner, you (or someone on your team) spend a significant amount of time on paying the bills and handling incoming payments—aka accounts payable and receivable (AP and AR).
As you may have noticed, business-to-business (B2B) transactions are notoriously cumbersome. While you’ve likely been paying all of your personal bills digitally for years, business payments are still typically done manually, with checks remaining the most prominent payment method. The thing is, if you know how to operate a smartphone or a computer, you can start managing your business payments online as well.
How managing your B2B payments online can lighten the load
Shifting to digital AP and AR management can mean healthier cash flow, improved relationships with vendors, and ultimately, better payment terms. Managing your payments online doesn’t require a financial investment or much training, even for the least tech-savvy among us, and can significantly improve the way you run your business.
Still on the fence? Here are seven reasons that will help tip the scale in favor of switching to a digital payment solution.
1. It saves time
Processing bills and invoices, sending out checks and bank transfers, correcting errors caused by manual repetitive labor, and keeping track of the whole process can be extremely time-consuming.
Using an online payment tool for your accounts payable and receivable (AP and AR) can free up hours for your team each week, which can be better spent growing the business and doing what you love. Instead of stuffing checks into envelopes, walking to the post office to mail them, or frantically searching for that paper invoice you misplaced, you can handle all your bills in one sitting, right from your desk.
2. It minimizes human error
Manually handling payments is both inefficient and prone to error. When it comes to bills and invoices, such errors can also be expensive for your business. For example, when you type your bank details repeatedly to send to customers so you can receive payment, an occasional typo will inevitably occur, meaning your payment might not arrive. Make the same mistake with your vendor’s details and you risk entering the late payment zone.
Going digital, on the other hand, means you only need to type in your information once so mistakes are less likely to occur. Your data can sync with your accounting software so everything is up to date, including the payment status of each invoice, its due dates, and payment details.
3. It improves security
“Where’s my money?” is a question that haunts every business owner from time to time. One of the best things about digital payments is they are trackable at any moment and visible on a single dashboard, so there’s no need for guesswork. This makes it a lot easier to stay top of your funds, check the status of every single payment, and edit or cancel as needed.
Additionally, unlike checks or cash, digital transactions can’t be intercepted or lost, so you can rest assured they’re actually coming.
Online payment tools also use the latest technologies to ensure the safety of your transactions. Up-to-code encryptions and security protocols minimize your exposure to fraud and misconduct and ensure your money reaches its destination and your sensitive information is safe.
You also have someone to turn to, if something does go wrong.
4. It increases cost-effectiveness
Manually processing a single bill can cost your business up to $21. We know that sounds like a lot, but there are tons of hidden costs that add up like work hours, transaction fees, and physical goods, including checks, paper, envelopes, etc.
The good news is that there are digital payment tools out there that charge no subscription fees and offer free payments via ACH bank transfers. This means you can eliminate many of the costs related to making a payment.
It’s worth noting that even services that come with a fee—such as sending your vendor a check or fast payment—are often far cheaper when done digitally.
5. It enhances flexibility
What happens when you want to pay with a bank transfer but your vendor only accepts checks? Chances are, you’ll be paying by check. After all, you don’t want to damage your relationship with vendors, even if that means using an inefficient and inconvenient manual payment method.
But, what if you could pay how you want and still use your vendor’s preferred delivery method? Online payment services let you do just that. They offer better choices for each party, allowing everyone to maintain their workflows. For example, you can pay by ACH bank transfer, and your vendor will still receive a check. The service will simply mail it to them, so you don’t have to.
6. It promotes cash flow health
A healthy cash flow always requires a delicate balance to pay just in time, avoiding both late payments and early payments that could drain your reserves.
That’s much easier to do when you use a tool that gives you a clear picture of what’s happening in your account in terms of money coming in or out. This visibility lowers the risk of accidentally making a large payment a day before you expect to get the money to cover it.
With an accounts payable tool you can even schedule payments in advance to go out in time, not a minute too soon so you don’t have to worry about it later.
And, there’s an added benefit if you’re also using an online tool for incoming payments. Giving your customers an easier and more convenient way to make payments, means they are more likely to pay on time, or, perhaps even sooner. In other words, in a fraction of the time it would typically take a check to arrive you could already have the money in the bank, cushioning your cash flow.
7. It unlocks credit card payments
For a fee, digital payment tools let you pay by card even if your vendor doesn’t accept plastic. Paying with a credit card is not just more convenient. It can also be a cash flow lifesaver as it allows you to enjoy some extra breathing room. Your vendor gets paid as soon as your payment is processed, but you get to hold on to your cash for up to 60 days longer, depending on your card’s billing cycle.
Additionally, paying by card means collecting cashback, miles, and other perks on (sometimes massive) transactions that would otherwise go unrewarded. This could save you a ton of money on future business trips and purchases required to further grow your business.
Hop on the online payments train
Old habits die hard and many small business owners are weary of making any changes to their workflows. But, the advantages of digital payment tools are too big to ignore. The sooner you embrace them, the better off you and your business will be.
If you’re looking for an AP tool that offers all these benefits and more, check out Melio. With no subscription fees and a signup process that takes just a few minutes to complete, there’s no reason not to start paying all your business bills online today.
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