Running a successful business has, arguably, never been tougher than it is today. Many sectors are fiercely competitive, and some are facing challenges that are both completely new and unexpected
There are also aspects that are within the business owners’ control which work alongside others that are not.
In these situations, it makes sense to take charge of what you can and manipulate it as effectively as possible to one’s own advantage.
In some situations, doing this can seem to be counterintuitive. A perfect example of this comes in the form of payments of money going out of a business. Traditional wisdom would suggest that the longer a business can keep hold of its money, the better for all concerned.
Not only does it mean maintaining a healthy balance in the business account. Hopefully it can also be gradually accruing interest.
However, in recent times the shifting shape of the business economy has led to a refocusing of attention.
So now more and more businesses are starting to see the advantage of paying promptly, whether it’s to settle a supplier’s invoice or to pay staff in a timely and efficient manner.
Why pay now?
There are a number of reasons why prompt payment is quickly gaining ground as a wise business strategy.
For example, businesses in the service sector can earn themselves an enhanced reputation as organisations who pay up promptly.
Insurance companies, for instance, often need to come to the rescue when some kind of calamity has occurred. It may be that building damage needs to be repaired or a body shop won’t fix a car smash until they are paid. By paying out promptly the insurance company gets a satisfied and grateful customer, and one who is more likely to remain loyal to them in the future.
Or, in the case of an online casino, a provider who has fast payout options is always going to give itself a competitive advantage over other, slower paying, casinos. And in a sector that is as competitive as theirs this can be a crucial business strategy.
It’s not just clients and customers who will benefit from prompt payments. Suppliers, themselves trying to run their businesses efficiently and profitably, will be greatly helped if their bills are paid promptly. It could even lead to them offering preferential discounts in exchange for speedy payment, creating the best kind of virtuous circle.
One also has to bear in mind the time, effort and investment that many businesses have to put into chasing up late payments and even using the services of invoice factoring companies to get their money – something that also sees them giving up a percentage of it just for the privilege of getting paid.
One could still argue that, for the payer, it is more valuable to have money in the bank earning interest for as long as possible. But with interest rates low, and set to become even lower in the future, it’s not really an argument that holds much water.
The Zero Hours situation
The last few years have seen the inexorable rise of staff being retained on so-called zero hours contracts. So the work may be there for them, but it may not. While this offers flexibility, it does little for employee loyalty.
With no contractual obligation to keep them, zero hours employees could always be on the lookout for the next gig.
But the one genuine incentive at their employers’ disposal is the offer of quick payment. So this might help to change their perspective of the grass being greener elsewhere.
How to manage faster payments
So, having provided some convincing reasons why faster paying can be good for business, what are the obstacles?
The main one is the slow pace of the traditional banking system. Even when a payment is authorised to be made it can still take up to three business days to move into the payee’s account.
However, a new generation of payment systems has started to appear. These promise to remove all the delays previously encountered, even when paying from one currency to another.
The Blockchain effect
Traditional banks are aware of the shift in the way that money is being moved around and seem to be very conscious that there’s the risk of business customers, in particular, looking for alternative ways to pay and receive money.
So most of the big names are said to be examining ways in which blockchain technology can speed up their own processes without compromising security.
This means that over the coming months and years we may well see a general shift in the time it takes even for big banking multinationals to process payments. Whether the business world will also become more prompt and efficient in its payments we’ll just have to wait and see.
This post was originally published on here
