Why Small Businesses Should Switch to Digital Payments Asap
Before COVID, most companies were living securely in the paper world when it came to handling their payments and collections. Many had depended on back-office staff for years to stay on top of the continuous flow of checks, statements and snail-mail.
If that method looked old-fashioned before, it seems primitive after the events of 2020.
The economic shutdown rapidly exposed the weaknesses and inefficiencies of non-digital payment systems. Unexpectedly, no one could work from the office and the economic effect resulted in corporations having to reduce their employment needs.
Meanwhile, COVID-19 super-charged society’s move toward digital payments, raising the burden on businesses to adapt to the digital trend or get left behind.
Digital payments rising
The share of U.S. customers using two or more digital payment systems jumped to 58% in 2020 from 45% the previous year, a McKinsey survey found. Worldwide, the digital payments market is anticipated to hit $6.7 trillion by 2023, up from $4.1 trillion in 2019.
The business payments cycle is inevitably speeding up as an outcome of the digital shift. Companies increasingly want payments instantly rather than in the outdated 30 days’ time.
The Federal Reserve, spotting the significance of the technological and cultural variation, has embraced the change with continued campaigns to launch a new settlements system to support real-time payments by 2023-24.
These expansions make it clear that the status quo on payments is no longer a feasible option for companies. Struggle to change by industries has stemmed from a sense of comfort with the old-school procedures and from the expenditures involved in transitioning to new systems.
Smart companies will see this as an opportunity. The pandemic has formed a once-in-a-generation chance for corporations to adopt payment frameworks that will be transformational and supple enough to endure the next crisis. The added bonus is this digital acceptance continues to grow the payments eco-system and will help drive proficiencies inside their own workplaces.
There are three important areas that companies need to be thinking about as they section together their digital outline.
- First, they need digital tools that work together to give a comprehensive picture of their information at any one time. These digital tools should emphasis on both sides of a payment; so ask yourself two questions. 1. How do we pay? 2. How do we collect?
- Second, it’s important for companies to be agile as they move away from the paper age. They need to be ready to go on a dime to meet the quickly shifting expectations from customers, clients and merchants. Payments and collections need to function on multiple rails, with entree to a variety of tools such as digital check deposits, contactless payments, same-day ACH transfers and virtual credit cards.
- Third, companies should be continuously reviewing their controls as they figure out their digital framework and never fall into a “set it and forget it” attitude. A main part of this is ensuring companies have strong fraud protections in place as they transition more into the digital space.