Skip to content

Business Guidance

Optimizing Cash Flow Through Payment Solutions

By Roberto Salinas | Johnson Financial Group

4 minute read time

Emerging Technology

It is amazing what technology has done for businesses of all sizes. Automation for efficiency, accuracy and timeliness can take repetitive work out of your accounting team’s hands and provide the control business finance managers require. “Slow manual work and errors from the absence of automation are the main roadblocks to an efficient financial month end process,” say almost 90% of CFOs in a survey by SaaS provider Trintech. Payment systems from credit card processing, purchasing card programs, and other payment services can be integrated into most ERP and accounting software systems. In fact, in a recent article from our Chief Technology Officer, Tim Brown, he highlights that the changing landscape of technology can have a significant impact on whether a business will have long-term success vs. missing out on those efficiency opportunities. So, let’s take a look at what is happening in payments.

The Rise of Real-Time Payments

Several years ago, Real-Time Payments (RTP) changed the payment landscape. Today, you have likely heard of person-to-person payment apps like Venmo® and Zelle®. RTP is now becoming a reality for some businesses too. Just like your own personal finances, businesses can review their current cash position, as checks are replaced by more integrated and automated payment solutions.

With checks being the costliest of payment options for businesses to maintain, they continue to decline as a payment solution each year. The COVID-19 pandemic may have caused staff to spend fewer days in the office to print and send checks, or to receive and post payments. U.S. Mail delays and an increase in fraudulent payments may also have impacted check usage. So what options do businesses have for payment solutions?

Purchasing Card Programs

We continue to have conversations with our clients about a better way to look at payments, starting with a purchasing card program. One of the timeliest discussions has been around supply chain delays. Businesses are experiencing delays on their order turn around, which could be putting a strain on cashflow, personnel, and customer and vendor relationships. The stress of their timely payment receipt, keeping current with suppliers, satisfying customer demands, and working capital has become an issue for most, if not all, businesses. A purchasing card program can help free up capital in the supply chain with the statement cycle and grace period for payment. A purchasing card offers businesses flexibility, security, and without the substantial cost of other payment options.

Contrary to checks, purchasing card programs allow for alternate, secure, one-time use payments. These payments are set with specific available time frames and limits and integrated with your software. Not only can administrators and signatories have more control of these payments, oversight is readily available to manage and monitor activity and spend. There’s a notion that setting up a card program requires a lot of initial coordination. However, your banking and card program partners can assist you by simplifying the upfront set up, creating more ease overall, while giving you back time in the long run.

Here are some of the benefits of a purchasing card program: 

  • A card that allows a 14-day grace period for payment
  • Web-based back office controls
  • No fees*
  • Integration with accounting packages
  • Use of department cards, virtual and ghost cards
  • Rebates

*add on services and features may apply

Businesses can earn a rebate for spend that could turn payables into a revenue generator. Also, by paying suppliers with cardless accounts, it may reduce fraud while reducing check processing costs, including check stock, stamps, envelopes, stop payments, and time. All without the additional process and expense of fraud prevention products, like positive pay and debit filters.

Within the web-based tools, there are reporting and spend management tools, like general ledger, cost center and accounting codes to quickly and accurately allocate spend.

Starting with a purchasing card program is really a business’s most efficient way to make payments. 

Automate with ACH

If a purchasing card program is not a viable solution, businesses can still automate payments and integrate with their software utilizing the least amount of resources to get the job done.

ACH time savings include: 

  • The ability to create electronic payments and receivables 
  • Faster turnaround times for returns and inaccuracies
  • The capability to send significant amount of payment data at a lesser cost than a check 
  • Added security with every transaction encrypted

ACH can be used for payments, payroll, expense reimbursement, tax payments and receivables. By integrating the ACH process into your software, these payments can be set up as an automated process. Whether single or recurring payments, all the controls used for check processing can be done virtually via web-based tools with the addition of encryption and dual authentication.

Businesses large and small, or anywhere in between, can benefit from a conversation about a payment strategy and improving cash flow forecasting. The ultimate goal should be maximizing your investment opportunity, while minimizing costs. Connect with a Treasury Management Consultant at Johnson Financial Group to learn how your business can experience the next generation of payments.