Last editedSep 20212 min read
You can have the best products on the market, but without an efficient business strategy to back it up your company might still struggle. This is particularly important for small businesses that don’t have any capital to waste. One of the primary elements of a business growth plan is a good payment strategy. Here’s what to include, and why it’s so important.
What is a payment strategy?
A payment business strategy involves all aspects of the payments process. This includes thinking more carefully about how and when you make payments to cover business expenses. For example, some businesses may receive discounts from paying bills early. Others will need to think about how they moderate cash flow and time payments for operating expenses accordingly.
In addition to looking at how you pay business expenses, you’ll also need to think about the money flowing into your business. How many payment options do you offer to clients? How do you track and manage late payments? What is the cost of late payments and how does this impact your cash flow over time? These are all questions that should be answered in a comprehensive payment strategy.
Why is a payment strategy so important?
Without a strategy in place to manage incoming and outgoing payments, your cash flow and liquidity might suffer. A good strategy will maximise the potential of every invoice, both in terms of payment terms and timings. It reduces the cost of human error with enhanced payment tracking, flagging discrepancies between invoices and payments.
As payment methods change over time, it’s also important to keep on top of the latest automated methods for managing accounts payable. Cash and paper cheques have given way to online and mobile payments, direct debits, and digital transfers. Rethinking your payment strategy allows you to offer more options to your customers, potentially boosting sales and revenue in the process.
Elements of a good payment strategy
Now that we’ve covered just why a payment strategy is so important, what should you consider when creating one of your own?
1. Efficient business payment methods
If you don’t offer the latest business payment methods to customers, your business could fall behind the competition. This is particularly important for online stores who could lose sales at the checkout stage if you don’t have electronic payments enabled.
2. Greater efficiency with automation
Automated payment solutions should be a part of any strategy, cutting down on time spent with financial paperwork. Automated systems track and time payments, issue invoices, and chase up on late payments. All of this comes at reduced cost, with faster processing times. Repetitive tasks can be eliminated, freeing up employees for higher-value tasks.
3. Greater security with digital tools
Along with greater efficiency, security should also be a central element of any payment strategy. Make sure to put the systems in place to protect payment details, including card processing and bank transfers. An automated system will ensure PCI compliance and data protection.
Positioning payments in your business growth plan
A payment strategy can – and should – be used as part of your wider small business growth plan. For businesses operating on tight margins, there’s little room for error. Streamlining your payment processes with a comprehensive system ensures that you’re not only cutting down on costs and human error but encouraging growth. Track operating expenses carefully so that you’re able to make data-driven decisions.
At the same time, enabling a wider range of business payment methods means that you’re able to work with a wider selection of partners. It also facilitates cross-border transactions for expansion into international markets. This is all good news for growth-minded start-ups.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.