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When you’re building a startup, every minute and dollar counts, so finding ways to enhance is key. One area where you can make a big impact is your payment processes. Surprisingly, about one third small businesses still manually handle ad hoc payments, although they make up a large portion of their revenue. Outdated systems like these can result in inefficiencies that hold you back, but adopting revolutionary payment strategies can keep your operations efficient and money flow regular, giving you the fuel to grow.
By optimizing payment processes, your startup can save 60% to 80% on payment processing costs. This can increase money flow and unencumber funds for other critical areas similar to product development and marketing.
Automate your liabilities process
Think about the time you spend sorting invoices, looking for approvals, and manually scheduling payments. Automating this process can save you time by keeping the whole lot on track and on schedule.
Manual payments can result in errors, delays and missed payments, which in turn can strain supplier relationships. By automating AP, you can streamline your payment flow. Businesses can save as much as 80% on processing costs with AP automation, which also reduces invoice processing time by over 70%. In the case of a startup, it isn’t just time saved – it is time invested back into the company’s development.
Some platforms offer AP automation tools that permit you approve and schedule payments, track invoices, and receive real-time updates. Automation will not only reduce human error, but also provide a single source of truth for all accounts payable data.
Use real-time payments to keep up money flow
There is nothing as satisfying as receiving payment immediately after the job is accomplished or the product is delivered. Real-time payments make this possible, so your startup can transfer money at the speed of your work. Gone are the days of waiting three to 5 business days for an ACH transfer; now your funds will be available in seconds. This is especially useful when every day counts, similar to during the growth phase.
From 2023 85% US firms plan to adopt real-time payments inside the next yr, and almost 99% of enormous corporations (with revenues between $1 billion and $9.9 billion) expect to make use of real-time payments inside the next five years. With platforms like FedNow service® and RTP® network, real-time payments develop into a reality, helping businesses maintain regular money flow and invest in growth faster.
Optimize payment methods for your customers
One of the easiest ways to hurry up your money flow is to make it easier for your customers to pay. Offering multiple payment options – similar to quick payments, bank cards, same-day ACH transfers and digital wallets – removes friction from the payment process, which implies faster payments and happier customers.
Imagine that your customer desires to pay immediately and you only accept bank cards. They may delay payment or even rethink the purchase altogether. Giving customers alternative ensures payments arrive faster and with fewer barriers. Look for platforms that allow integration with multiple payment methods. Many of those platforms could be customized to your payment schedule, giving customers the flexibility they should pay quickly.
Implement money flow forecasting tools
Forecasting money flow is essential when planning for growth. By accurately forecasting money inflows and outflows, you can make informed decisions about spending, hiring and investing. 82% of enterprises failure as a result of poor money flow management, which makes money flow forecasting a critical tool for any scalable startup.
Let’s say yours money flow forecast shows a shortage in the next quarter. Instead of being caught off guard, you can prepare by cutting down on unnecessary expenses or finding short-term financing options.
Use platforms that provide integrated forecasting tools. These tools use historical data to assist you make accurate forecasts, allowing you to plan ahead and make proactive financial decisions that keep your small business on track.
Take advantage of early payment discounts and negotiate with suppliers
Saving on expenses could be just as effective as generating recent revenue, and one technique to do this is by benefiting from early payment discounts. Many suppliers offer discounts if you pay your invoices by a certain date, often a 2-3% discount if you pay inside 10 days. For a cash-strapped startup, these savings add up quickly. Additionally, establishing solid relationships with suppliers through consistent and early payments can lead to higher terms and loyalty.
For example, a seller offers a 2% discount on a $5,000 invoice if you pay inside 10 days. By selecting this selection, you will save $100. Apply this to multiple vendors and invoices and you can achieve significant annual savings.
It’s value having a quick conversation with your suppliers to see if they provide early payment discounts or if they’re open to terms that fit your cashflow needs. Showing a commitment to quick payments can open the door to future advantages, whether that is additional discounts or more flexible payment terms when you need them.