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:
- Better cash flow – making it easy for customers to pay is the key to recouping costs and increasing sales
- Eliminates debt recovery – less time spent chasing up late invoices and creating improved relationships with customers.
- Real-time collaboration – improves transaction flow with one integrated system that benefits both parties.
- Less computer hardware – reduces the need for terminals (such as EFTPOS) in the field.
- Security – good payment systems offer anti-money laundering (AML), know your customer (KYC) and two factor authentication (2FA).
Embedding these services into Spenda means cash can be requested, approved and released in real-time.
Contact us to learn more about how you can integrate the right tools and processes in your business to enable smarter payment solutions that help to improve your cash flow.