Unlocking Business Growth: CFOs Embracing Digital Payments for SMB

In the dynamic landscape of current events, Chief Financial Officers (CFOs) overseeing Small-to-Medium-Sized Businesses (SMBs) across various sectors are grappling with a challenge - their conventional approach to Business-to-Business (B2B) payments and accounts receivable management is no longer tenable. This realization has spurred a remarkable trend: 92% of SMBs in the United States are actively transitioning toward digitalizing their accounting processes, with an additional 47% planning to digitize their payment processing. Could embracing digital payments be the way forward?

When traditional methodologies no longer align with business needs, we naturally look for new, innovative solutions. The available technology, such as the digitization of accounting functions and payments processing, empowers SMB CFOs to automate specific aspects of their roles. In this article, we delve into the pivotal reasons driving SMB CFOs to reconsider their B2B payment models

SMBs frequently present customers with multiple payment options- cheques, SWIFT transfers, credit card payments, SEPA, and ACH transfers. Juggling these payments alongside the accounts receivable is not only time-intensive but also rife with potential errors. When it comes to finances, minor numerical discrepancies can snowball into substantial setbacks that are challenging to rectify.

Despite the increased acceptance of electronic payment methods like SEPA transfers, cheques persist as the preferred payment mode among the B2B buyers. Nonetheless, cheques bring forth an array of hurdles that SMBs must navigate:

Increased Processing Costs: Cheques processing means additional expenses for the recipient business. These processing fees, additional to the sale price, vary across banks and accumulate significantly over time. On average, processing 20,000 cheques can incur an extra $30,000 in costs, making cheques five times more expensive than ACH or SEPA transactions, eating into potential profits.

Slow Processing Speed: Processing checks not only means financial toll but also demands time. The interval between cheque receipt and funds clearance in the account can span between 5 to 7 days, which can strain supplier credit terms.

Increased Risk of Errors: Cheques mean manual input, amplifying the likelihood of errors. Handwriting inaccuracies, often a single digit off, can disrupt the process and exacerbate delays.

By transitioning to digital payments, the SMBs can cut the processing times in half, mitigate costs, and increase accuracy.

The "cash-to-cash" cycle, is the duration between purchasing raw materials and collecting payments for finished goods. Any business should strive to keep this cycle as short as possible as this increases the frequency of revenue coming into the business and ultimately increases cash flow. A slow cash-to-cash cycle can lead to operational challenges and liquidity risks.

Digitization speeds up the process of sending and receiving payments and allows you to keep track of payments between suppliers and the business, thus reducing the length of the cash-to-cash cycle.

There’s no doubt that recent world events have led to an uptick in eCommerce and online spending. Just this alone has increased the use of digital forms of payment as cheques are not suitable when purchasing from an online store. By offering more forms of digitized payment, such as debit cards, credit cards, bank transfers, and even digital wallets, customer satisfaction is sure to rise.

Offering multiple digitized payment options benefits the customer and the SMB alike. Customers enjoy greater flexibility, the ability to pay on their own without additional assistance, and transparent pricing with less fees on top of the product cost. In return, SMBs receive happier customers who are more likely to return and give their ongoing loyalty to the company. This mutually benefiting relationship has the potential to increase revenue and avoid the long-term pitfalls of non-digitised payments.

Fraud vulnerabilities loom over SMBs- think credit card scams, check forgeries, internal misconduct, phishing emails, third-party skimming, and more. Among these, cheque-based fraud is still a go-to for scammers.

The most common form of cheque fraud includes counterfeit cheques and forged signatures. In 2018, cheque fraud accounted for 47% of industry losses ($1.3 billion) and for 60% of fraud attempts against a deposit account.

While digitization isn't immune to fraud risks, it offers enhanced securities against threats. Opting for digital payment models bolsters SMBs' resilience against fraud attempts, potentially saving substantial monetary losses.

By embracing digital payments SMB CFOs can alleviate diverse operational burdens, bolstering both individual and overall company efficiency. The ongoing evolution of digital payments technology promises heightened ease, speed, and reliability.

To seamlessly embark on this journey, SMBs can use the expertise of experts in digital payments, like Fyorin. Fyorin is a global company that helps businesses of all sizes digitize their financial operations. Our goal is to let you send and receive payments globally as easily as you would locally thanks to a robust network of over 150+ financial institutions. We offer dedicated multi-currency accounts and corporate virtual cards to better control your online spending, ability to execute a single mass payment for all your client's payouts and unified treasury for diversification of funds and ease of reporting.

We pride ourselves in being the payments and financial operations platform for all your global business banking needs. Check out our solutions today and see how we can help you digitise and scale!