Why Businesses Should Automate Payment Methods

Here's an obvious fact related to your business. If you don't get paid, then you don't grow. Plus, your survival rate significantly decreases. Needless to say, subscriptions and other payments are necessary.

Unfortunately, situations stop this. For instance, people forget to pay a bill. Or your company joins half of the U.S. population and becomes the victim of financial identity theft.

Fortunately, there are ways to minimize these risks. It's through the use of automated payment methods. Here are a few reasons why businesses should utilize this form of transaction.

Subscription Control

Subscription control is the method behind automatic payments once a trial has ended. Either it ends the sample period or enacts the installment program the customer agreed to. One way to do this is through a free virtual card.

Online financial institutions like Otto offer this method of control. It's comprised of a unique digitally created 16-digit number tied to your business. The real card number is protected, so you have more control over its usage. Overall, it helps to maintain your database of active/inactive subscriptions.

Faster Cycle Payments

Money moves in a circle for businesses. Funds come in from customers. In turn, they are utilized to pay suppliers for their services. They provide the tools and inventory necessary to keep customers happy, so they make regular payments. And so on.

When you set up an automatic means of pay it speeds up the cycle. Thus, you see a quicker return on your investment. Furthermore, you avoid late payment fees due to slower invoice processing.

Reduced Errors

At the minimum, there are three common errors concerning manual payments. First, the customer forgets to pay. Second, they pay the incorrect amount. Third, they accidentally double their payments.

All three of these are eliminated through an automatic payment method. As a result, the funds are available to make payments to the parties that keep your business going. Plus, you maintain a positive relationship with your customers. To put it another way, they aren't upset that they lost money because they duplicated their subscription payment.

Reduce Fraud

Fraud and other forms of criminal activity related to financials have never abated. With technology, cyber extortionists have found new ways to disguise themselves to inflict monetary damage. Through automatic payments, this is severely curtailed.

There's little chance someone can fake an invoice. Let alone additional sensitive information. With automatic payments active, confirmation emails go out to ensure you are the person who ended the contract. This helps loss prevention officers track criminals down.

Increase Information Flow

The more customers engage in automatic payments the better opportunity businesses have to gather accurate data. They collect information on pay cycles, average amounts, and the number of people who start or end a contract. From this, they compile a good deal about their financial future.

For example, the information predicts cash flow. It details what subscription packages are and aren't selected. From this, your financial officers have the power to adjust those packages to increase revenue.

Fewer Inquiries And Credit Hits

Obviously, when customer invoices don't get paid you don't receive money. In turn, you don't pay your vendors. They send frequent inquiries on payment status. If you go over a period of days, then your credit agencies are alerted.

This doesn't happen as much when you have automatic payments. Yes, there are times when expected funds don't come in because a customer cancels the program or changes the date. However, these are minor inconveniences that are counteracted by regular payments. As a result, your vendors are paid on time.

Less Expensive Transactions

Paper checks and credit cards have higher processing fees. Sometimes as much as $20 per transaction. This takes a lot out of your revenue stream.

Automated electronic payments have less expensive fees. In fact, depending on the financial institution, some are zero. Thus, the overall percentage of fees taken out through automated payments is negligible.

Needless to say, there are several positives to automating your payment methods. The next step is to make the move toward the process. Speak to vendors to determine who best fits with your business and your subscribers.

Views: 27

Comment

You need to be a member of RecruitingBlogs to add comments!

Join RecruitingBlogs

Subscribe

All the recruiting news you see here, delivered straight to your inbox.

Just enter your e-mail address below

Webinar

RecruitingBlogs on Twitter

© 2021   All Rights Reserved   Powered by

Badges  |  Report an Issue  |  Privacy Policy  |  Terms of Service