Do you know how much it costs your business to receive every dollar?

It’s time to talk about the real cost of getting paid–and why businesses across the United States are needlessly losing out every time they receive money. It’s a shocking thought, but it places you, as finance leaders, in the enviable position of being able to deliver tangible savings with minimal disruption.

The problems of getting paid today are mostly down to the payment methods we’ve always relied on, which are costly, outdated, and often cumbersome. CFOs aren’t strangers to the high fees card payments incur, or the inherent problems of cash and checks. The challenge is the perceived potential disruption of shifting to new payment processes–both for customers and accounts teams– leading to the status quo being maintained.

In this article, I’ll show you why this should be viewed as an untenable position, and why CFOs have the potential to bring about tangible results when it comes to cutting costs and growing revenue.

It’s your cash, so why not keep more of it?

When we consider how most businesses in the United States collect payments from their customers, it’s clear that there has been very little in the way of pressure and initiative from merchants to adopt more innovative methods. 

A significant challenge is that payments are dominated by “push-based” methods, such as checks, credit and debit cards. With the customer in charge of how and when they pay, merchants have to trust that the correct amount of money will arrive on the agreed day of settlement. Unfortunately, this is often not the case, with many payments arriving later than agreed and others failing altogether, either due to human error or failures that can occur due to card expiry or the issuing bank blocking the transaction. 

Even for payments that are successful, the majority of methods come with an associated fee for the merchant, with credit cards running as high as 3%. If we imagine that a business receives one thousand $100 credit card payments per month, the fees across a year amount to $36,000. 

The financial impact of payment failures must also be considered. With more than 50% of businesses reporting that 7% of customer card payments fail, we can add $700 per month in lost cash to our scenario. Though this may not cause immediate cash flow issues, Forrester data shows that 10% of these failed payments turn into bad debt.

Even when push-based methods incur no fees, as is the case with checks and cash payments, the admin costs associated with chasing late, erroneous, and failed payments quickly add up. This is then compounded by the inability to use and invest the outstanding funds, which is why getting paid faster is also a key factor in keeping more cash. 

You can be heroes

It goes without saying that there isn’t a boardroom in the country today that would not be amenable to greatly reducing the costs associated with collecting revenue. CFOs are in the position to deliver this and much more and they only need to change one small thing: the way their business receives payments. 

With Pull-ACH, businesses take control of payments by delivering a faster, cheaper and more reliable model through seamless automation. With Pull-ACH by GoCardless, faster means reducing the time it takes to get paid to as little as two days, enabling businesses to utilize more revenue for business growth—and earn more interest on that revenue. CFOs can be confident that the correct amount is taken from the correct customer account on the correct date against the correct invoice, and with all the right references included, providing assurances around cash flow and reconciliation. There is also the added benefit of removing payment processes from customers, as they no longer need to proactively manage payments. 

By adopting Pull-ACH  by GoCardless, businesses can expect to pay as little as 0.5% fee on payments received. Stacked up against credit card fees, this method saves a staggering 83% of the cash lost through receiving money. If we return to the scenario explored earlier, what would have once cost a business $36,000 per year now only costs $6,120. You don’t need to be a CFO to be excited by those savings and the prospect of getting paid faster, but it helps to be the one delivering such results. 

Ultimately, time is your biggest asset, and you can’t be wasting it waiting to receive, or chasing payments. So, now you know how much you’re losing every time you get paid, it’s time to have a conversation about making one small but significant change. Can your company afford to wait any longer?