Businesses prioritise growth as their top goal. Many people interpret this as expanding business operations, setting up more departments, and hiring more people. This, however, is not always the case with small businesses. The key issue small businesses struggle with during the initial years is achieving operational efficiency.
In 2020, Dun & Bradstreet conducted a study in which it surveyed 250 randomly selected small business owners with annual revenue between Rs 1 billion and Rs 3 billion across 7 major Indian cities to understand the impact COVID-19 had on their businesses.
Out of the 250 small business owners, 82% digitised their daily operations during the pandemic. Of this 82% of business owners, 54% said that digitising helped reduce costs.
Out of the many ways, payment processing is one of the most effective and easiest ways businesses can bring their operational costs down. It also helps in delivering a great experience to customers.
Enters automated payment processing
Payment processing is often overlooked by online businesses because it operates largely behind the scenes. However, just because it is not as visible as other aspects of your business does not mean it is any less important.
When it comes to closing a sale, your payment processor is your last line of defence. It can either finish the pass started by your high-converting website or drop the ball, allowing good sales to slip away.
You may not know that integrating the right payment solutions to automate online payments for your business can even save you money in unexpected ways.
What are payment solutions?Payment solutions are electronic devices and software that allow small and local businesses to accept payments. Point-of-sale (cash registers) and online or mobile payment systems are two examples of payment solutions. Customers can pay online, in person, over the phone, or with cash, credit, or bank transfer. Businesses may require one solution or a combination of several options to allow customers to pay using their preferred method. |
Interesting Read: Payment Gateway Vs. Payment Processor: What’s the Difference?
Payment solutions that lower operating costs
Payment service providers assist online businesses lower operational costs by enabling payment solutions on mobile and web applications built on unique platforms.
Automated payment solutions primarily reduce costs associated with payment requests, settlements, and reconciliations.
Some of the payment solutions that can lower operational costs through payment automation are:
1. Solutions for all platforms/channels
A good payment gateway enables businesses to accept online payments on their website or app. It also offers checkout solutions that offer tailored experiences to the website and mobile app users.
In addition to the above-mentioned solutions, Paytm Payment Gateway also:
- supports recurring payments for businesses that operate on a subscription model;
- enables instant refunds;
- generates payment invoices;
- allows businesses to create and run bank offers & cashback; and much more
2. Solutions that do not require any coding
Small businesses usually do not have the time and resources to invest in or build sophisticated payment infrastructure. They need a no-code payment solution that is easy to integrate and helps them enable online payments in a jiffy.
Payment Links are the ultimate solution that makes payment processing easier for small businesses that do not have an app or a website. By sending payment links to customers, online businesses can reduce job costs and collect money directly into their bank accounts.
3. Solutions that support omnichannel payment processing
The process of accepting multiple payment options and integrating them into a single, consistent customer experience is referred to as omnichannel payment processing.
When your customer is ready to pay, they are presented with a variety of payment options based on their preferences.
QR code-based payments, which can be made with a simple scan, are among these payment solutions. All in-store payments by customers, as well as customer doorstep payments, can be digitised at the point of sale. Paytm also offers a range of such payment solutions.
4. Solutions that automate cash outflows
A company’s cash flow is its foundation. As a result, even if the business owner isn’t directly involved in the daily payments and approvals processes, they have an impact on them.
Cash outflow automation is when a company uses technology to automatically trigger payments and invoicing.
A cash outflow management system handles payments to vendors, approvals, billing customers, and other tasks electronically for the business. This makes life easier not only for the accounting team but also for the business owner.
5. Solutions that automate payment settlements
Unlike cash, digital transactions may take longer to settle, occasionally more than three or four days.
From the standpoint of a business, the time lag between accepting an order and receiving payment for it affects cash flow. This is especially true for Indian SMBs that rely on consistent cash flow to run their businesses. This is where a payment solution that enables timely settlements is necessary.
Interesting Read: Best Payment Gateway Features to Consider for Your Business
How do online payment solutions lower operational costs?
The payment solutions explained in the previous section of this blog highlight a few unique cost-cutting benefits that businesses can obtain.
From the standpoint of cost and management accounting, these solutions assist businesses in cost optimisation by tackling the following:
1. Lowers direct cost
Paper-based payment processes are the most common but most expensive. From office expenses such as the chequebook to bank fees and the cost of resources involved, the operating expenses per transaction far outnumber those of an automated payment process.
2. Saves time
Manual payment methods are time-consuming due to processing and settlement delays, not to mention the resulting late fee, which affects the profit and loss statement.
Daily financial transactions and recurring payments are automated with automated payment solutions, saving money from a cost accounting standpoint.
Employees involved in carrying out these processes can advance to more strategic roles and help the company grow.
3. Prevents fraud
Payment fraud is rising rapidly, but few payment solution providers offer adequate safeguards against both criminal and “friendly” fraud.
That means businesses lose money somewhere along the way, whether it’s when the order is placed or via costly chargebacks after a sale.
Choosing a payment provider with intelligent fraud-fighting tools built right into the platform can reduce these losses.
Using advanced fraud technology reduces the number of fraudulent transactions that are processed significantly. Also, receiving timely notifications regarding disputes can prevent chargebacks entirely.
To avoid unnecessary declines, your payment provider must also assist you in adjusting your fraud rules.
4. Enables scalability
The various volumes of business can be handled by automated payment solutions. As a company grows, so does its transaction volume.
Manual processes would increase variable costs and have an impact on profits and losses due to resource and time requirements. Payment automation ensures that your processes grow with only a marginal increase in cost and a net profit impact.
On a concluding note
As a company’s gross profit grows, practises like payment automation can help keep the income statement profitable while saving money. So wait no more. Integrate your preferred payment solutions today to meet your cost-cutting goals.
