How do digital bill payment solutions help maximize cash flow?

Maintaining a strong cash flow is critical for every business, large or small. Fortunately, digital bill payment systems can assist companies of all sizes and sectors with keeping good cash flow and excellent financial health by balancing incoming and outgoing money.

What is cash flow?

The total sum of funds going in or out of your organization is referred to as cash flow. The distinctive challenges faced in the last 18 months emphasized the importance of cash flow, particularly for small and medium-sized firms (SMBs). 

Many small businesses were obliged to change their business strategies in response to changing market circumstances and constraints as a result of declining sales. Such shifts and turmoil, however, needed cash reserves to assist them to survive the storm.

According to a recent poll by Goldman Sachs, 44% of small U.S. firms have fewer than four months’ reserve funds, leaving them with minimal maneuverability should a crisis emerge. A worldwide pandemic aside, even a leaky pipe or an unanticipated mechanical problem may potentially swiftly destroy such a business’s cash flow.   

While cash flow difficulties have many solutions as causes, new technology can ultimately come to the rescue.

Do Not Fear – Fintech Is Here!

If you drove out for drinks with friends anytime in the last decade and realized you forgot your wallet at home, you’ve undoubtedly paid someone back using one of the numerous peer-to-peer mobile payment applications out there.

For business-to-business transactions, you’re probably familiar with less convenient options like paper checks.

The good thing is that financial technology is continually changing, and online bill pay services that were formerly only accessible to enterprise-level organizations are increasingly becoming accessible to enterprises of all sizes. Implementing such technologies may assist your firm in avoiding some of the most prevalent cash flow challenges.

What should you look for in digital business bill payment solutions to improve cash flow?

You can save time by using a digital business bill payment solution. Apart from that, unlike a big, fat physical book or a box packed with paper invoices, digital technologies, like Denarii, are meant to handle expansion and develop the necessary processes from the get-go. These are the essential digital characteristics that can assist you to keep a good cash flow:

Payments scheduled in advance are available via a plethora of online bill payment services. This tool allows you to manage all your payments in one sitting, allowing you to stay organized and efficient. Paying just on time ensures you avoid incurring overdue fees and penalties. Paying even a minute early might deplete your cash reserves. Timely payments also help sustain the connections with suppliers you work so hard to develop, which translates into appealing payment terms and rates. All of which further strengthen your cash flow.

Tracking capabilities

Using a digital bill payment solution means you can see all your payments in one place. This lets you keep track of funds coming in and see the status of each payment on a single dashboard. Using the same tool for accounts receivable makes it even easier to plan ahead and know how much cash reserves you have to play around with at any given time. 

Choice of payment methods

Alternating between payment methods is a great way to maneuver cash flow obstacles, and it’s also super easy when you’re using the right tools. Digital bill payment solutions often offer free bank and ACH transfers, helping you save on fees whenever possible.

Some tools also offer the ability to pay business bills with a credit card, even if your vendors don’t typically accept cards. This way, your vendors get paid right away, in whatever form they prefer, while your business enjoys additional float until the card’s next billing cycle. You also get to collect card rewards and cashback for significant expenses, which means additional savings, boosting your cash flow.

Fast pay options, such as push-to-card, are also available for those last-minute payments you had to put off until that check finally came in the mail.  

Approval workflows

As your business grows, you may find that managing your bills is no longer a one-person job. Whether you assign an employee to it or hire an external accountant, you’ll still need to keep an eye on the comings and goings in your bank account to avoid surprise payments depleting your cash. 

Imagine, for example, you have an abnormally high electricity bill that you’re planning to put off until its due date. You’re expecting to have more funds coming in by then, and you also have more urgent bills to pay now. An employee who lacks this overview might choose to pay the bill early and get it out of the way, unaware of its cash-draining potential. 

Fortunately, many digital bill payment solutions have built-in approval workflows that allow you to collaborate with others without losing control over the process. These tools let you invite users and assign roles and permissions. You can also use them to set thresholds for payments requiring approval, so you won’t have to deal with every dime spent.

In summary

A good digital bill payment solution harnesses the power of technology to help businesses maintain financial health and preserve cash flow. Such tools are now widely available to smaller companies, combining the convenience of consumer payment apps with the business platform for B2B transactions.

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