Ola Polczynski 10 December - 5 min read
Today, cash flow is the leading cause of business failure. In fact, 30 per cent of businesses say they only have enough cash flow to survive for three months or less. Late payments and uncertainty in debt recovery contribute to cash flow problems in SMEs. Not only does restricted cash flow mean businesses need to cover the shortfall of working capital while waiting for payments to process, but it also holds businesses back from growing altogether.
What exactly are Workflow Payments?
Put simply, think about Uber, or any other ride-hailing service you have used. You book a ride on your app, the driver picks you up and upon arrival at your final destination you will automatically be charged to your nominated credit card. It’s the same concept but applied in a business to business context. Workflow Payments enable businesses to automatically take payments following the completion of a job or when a pre-set status is met, removing the need to chase payments. We recently wrote a blog recently explaining what Workflow Payments are, and today we’ll take a look at how it helps to solve cash flow issues for businesses, and in effect, allow them to sell more.
What Workflow Payments does for cash flow
At Spenda, we recognise the significant positive impact that the right payment systems and processes have on businesses. Workflow Payments bring the kind of flexibility that enables businesses of all sizes to better understand and predict their cash flow. They can visualise who they owe money to, who owes them money, and what cash resources they currently have available.
The Business Payments Solutions Provider (BPSP) agreement coupled with the Workflow Payments concept gives businesses an easier way to trade with each other. And under the ‘Intent-to-Pay Framework’, businesses can collaborate on a repayment plan, otherwise known as Buy-Now, Pay-Later, and automate everything so the supplier knows when they will be paid and both businesses have a better view of their cash flow. Our collaboration framework is focused on connecting the buyer and seller through ledger-to-ledger integration to ensure they are working from a single source of digital truth.
Businesses will have the ability to realise faster payment times, along with providing a seamless experience for customers. By establishing the right tools and processes that enable pre-authorisation of credit cards, payments can be processed more efficiently.
Key benefits for businesses include:
Many things need to be operating successfully for a profitable business, but the most important factor is cash flow management. Without adequate cash flow, it becomes difficult to pay suppliers, manage stock and cover the everyday expenses of running a business.
As businesses have started using technology more, online payment fraud has become a common problem. Email payment fraud is one of the most common and costly online scams.
Australian small to medium businesses (SMEs) have a cash flow problem and despite government legislation implemented on 1st January 2021, many may not survive if lockdowns and trading restrictions continue.
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