Running any type of business brings with it some inherent risks. However, what keeps most business owners up at night is cash flow, and making ends meet. There are so many ways that things can go wrong, from customers not paying on time to outside market factors that you have no control over.
While you may always have periods when money is tighter than you would like it to be, there are ways you can significantly reduce your risk. One of those is offering electronic bill presentation and payment (EBPP) solutions to your customers. When you send bills and receive payments electronically, you can reduce the financial risk to your business considerably in several important ways.
Improved Cash Flow
The most important reason to use an electronic bill payment system is that it can improve your cash flow. This happens in two ways:
- Reduced expenses. Mailing invoices costs money. Between printing and postage costs, your business could be spending thousands of dollars each year in an effort to get paid. Electronic options take mailing and postage out of the equation, at least for the majority of your customers who will opt in for the service.
- Faster payments. According to one study, more than 50 percent of people who receive electronic bills make or schedule payments on the same day, and electronic bills result in a 15 percent reduction in missed payments. By sending bills via email, you reduce the chances that they will be lost during delivery, and since most people open emails much sooner than snail mail, your bill actually gets paid on time and you don’t have to spend time and energy on collections. In fact, with most systems, you can send automatic reminders and follow up messages to ensure timely payment.
In short, EBPP solutions save money on expenditures, while also increasing income, making it a win-win for everyone.
Reduced Risk of Fraud
Fraud is a major concern for all merchants these days, and with good reason: According to the Association for Financial Professionals, more than 70 percent of all businesses report being the victim of payment fraud at some point. The vast majority of payment fraud occurs around checks, with issues ranging from check theft from unmonitored processing departments to checks submitted with fraudulent account numbers and signatures.
With electronic bill payment services, the risk of fraud is reduced significantly. Not only do you not have to deal with paper checks, but a PCI-compliant EBPP system includes fraud prevention tools. Not to mention, with a system, you are likely to have fewer accounting errors due to manual entry of payments, which reduces costs and time spent conducting investigations.
Small businesses need every competitive advantage they can get, and electronic invoicing and payment can give you a major advantage over the competition. The option to receive and pay bills online is convenient to customers, and when they don’t have to write a check, they tend to be more satisfied with your company. Not to mention, most people expect to be able to pay online these days, and not offering the option to pay electronically can put you at a major disadvantage to your competitors that do offer the service.
For all of the advantages that electronic payments have for your business, there are a few disadvantages. One major drawback that some businesses mention is the lost opportunity for branding and marketing. When bills are mailed, it’s easy to add promotional materials to the envelope or print offers and marketing messages on the bill.
Those opportunities are all but lost when you send bills via email, but some businesses have found success including them with the emails. And of course, with the money you’re saving by not mailing bills, it’s possible to increase spending in other areas to recapture those marketing opportunities.
Reducing risk is a major priority for many small-business owners. By making your invoicing and payment process as streamlined and safe as possible, you can feel confident that your customers will not only pay their bills on time, but be more satisfied with the process as a whole, both of which can reduce your risk and allow you to focus on other key concerns for your business.