The transaction volumes in the digital realm are estimated to surpass $9 trillion annually very soon(1). The world of today is a world of technology and automation. Because the pandemic doesn’t seem like it will end any time soon, all businesses are quickly moving towards maintaining their bodies in a digital realm.
One of the pillars of being a digital business or at least a business that operates in the modern world is automated business payment. Here are a few reasons why you will need to automate your business payments as part of your new business tactics:
What is Business Payment Automation?
As a business, you are inclined to provide multiple payment options to both your customer and your vendor. As time goes by, more and more B2B businesses and vendors are moving towards using virtual cards. Studies project that virtual card spending is projected to increase to(2) $355 billion by 2022.
Business payment automation is where your business or organization converts all forms of transactions to a digital format & then automates them. Organizations usually hire a professional team or an individual to design and build a complete automated system. This system handles both the incoming and outgoing payments for the organization and does so with quite a level of proficiency.
( Also Read: What is Payment Automation? )
Reasons to Automate Business Payments
The only reasons you wouldn’t want to get an automated business payment system are if you can’t pay the upfront cost or if you can’t find a reliable professional.
Here are a few reasons why you would want to automate your business payments:
Optimizing working capital
Working capital, also known as the working operating liquidity for a business, is essential to the working of a business. There are a lot of ways to easily calculate an organization’s working capital. A simple way is to calculate the difference between the company’s current assets and liabilities.
All companies that have a high payment volume, especially large companies, must expend a large sum of money and resources for calculating and printing cheques & approving payments. The difficulty and number of resources to be used increase exponentially with the number of employees.
A good, automated business payment solution scales automatically. They should be modular too, which means that even if your business changes its divisions, the automation system changes easily.
To put it bluntly, the main reason businesses use payment automation is to save as much money as possible. Although some payment automation models do cost a high premium upfront, the cost is soon offset by the savings. There isn’t a fixed time, but it usually doesn’t take long for the automation savings to exceed the frontal cost as long as your business is doing good.
Some other reasons where you will save money include, but are not limited to:
- Automated process – You no longer need to hire an employee to do your payment biddings for you, the computer system does it automatically.
- Working 24/7 – Human employees can only work so much. By law, an employee cannot work more than 48 hours(3) a week. There is no such limitation for computers. You can make computers work all 168 hours a week and they won’t even complain. For only the meager cost of electricity and internet, you can save a lot of money.
- Accuracy – Automated payment solutions are far more accurate than the average employee, which can help you save a lot of money that could otherwise be a liability due to errors.
As we stated in the previous reason, computer systems can work all the time without any rest, and they don’t complain. This is especially important because businesses don’t only operate during the day. In the world of business, deals can be made even during the eve of the darkest nights.
With an automated business payment system, you have one less thing to worry about as payments can be generated and sent or received in a matter of seconds. It takes almost no time for the computer to generate an invoice, add in potential discounts, personalize the invoice for a particular customer or vendor and then send that invoice to the customer at their preferred address.
Since so much time is being saved, businesses have more time to strike more deals.
In recent months, vendors have begun incentivizing virtual cards and payments made through online transactions. This means that you can always strike a better deal with the vendor if you have a virtual system. Since automated business payment systems primarily use virtual cards or online transactions, you will be able to take advantage of such deals.
Not only does this allow you to strike better deals, but you will also be on the radar for more vendors.
Better cash flow
Automated payments mean that there is no bottleneck at any point in time when handling cash. This means that you have a better cash flow. The only thing that will slow you down here is how fast you strike business deals and how slow your customers, vendors, and other businesses are.
Better cash flow also increases your company’s efficiency considerably. This automatically also indicates a better relationship with your current partners as well as increased visibility for potential partners in both the short term.
Improve checks & balances
All automated business payment systems are designed to log every single transaction they make. This considerably improves check & balance and reduces potential cash frauds. More than 30% of all business bankruptcies are due to employee theft(4).
Automated business payments automatically improve the check & balance of every organization they are implemented in. Because there are no employees involved during the cash process, there are almost no chances that the employee will steal cash from the employer. Over time, your business might even have to pay lesser payments on your employee liability insurance payments.
Increase employee retention
Automated business payments considerably improve employee retention for various reasons. Studies indicate good retention can maximize company profits up to 4 times too(5). The main motivations for an employee to retain their position in a company are credit & payment.
If payments are being done on time, employees are more likely to stay in that business or organization. Automated business payments ensure that all payments are sent on time, and even if an error occurs, the problem is isolated and taken care of quickly.
All business-to-business, business-to-vendor and business-to-employee relationships are based on the whole idea of making payments & promises meeting on time. Automated business payments ensure that at least one of the two most important things are automated and being completed on time. This leaves the organization with more time to focus on the other part of the deal.
Even vendors, at the end of the day, want to get paid on time without having to go through any problems.
Automated business payment systems are becoming steadily more popular and should eventually be implemented by all businesses. Although the cost of implementation is good, automated payment systems may be high up-front, they still show a lot of potentials.
We hope that this article has helped you understand some of the reasons why we think you should have an automated business payment system for your business.