Each year, businesses of all shapes and sizes make the decision to outsource their payment processing duties. According to research recently published by Deloitte, 78 percent of businesses in the world “feel positive about their relationship with their outsourcing company.”
The same study also goes on to cite that cost-cutting, focusing on core components of the business, and solving capacity issues are the top three reasons businesses make the decision to outsource. While outsourcing can be done for almost any task your business does not specialize in, payment processing has gained an increased level of attention.
As long as payment processing remains an essential component of your business, you may be able to benefit from making the decision to outsource. In fact, business process outsourcing (BPO), which includes payment processing, is commonly cited by KPMG as one of the most frequent forms of outsourcing there is.
Even if the benefits of outsourcing payment processing may already be apparent, your business may be unsure where to turn next. In this article, we will discuss how your business can benefit from making the decision to outsource and the components of payment processing that can be outsourced. We will also discuss how to determine which payment processing firm is right for your business.
Why do so Many Businesses Make the Choice to Outsource Payment Processing?
When you started your business, you did so with a specific vision and area of expertise in mind. If your business is like most others, payment processing was an afterthought, rather than an essential component of your business. As you began setting up payment portals, QuickBooks, APIs, and other essential components, you quickly realized you were in over your head.
According to Statista, the global market for outsourcing grew from $45.6 billion in 2000 to $104.6 billion in 2014. By working with an experienced payment processing firm, your business gains access to pre-existing infrastructure, expert advice, and an ability to streamline your internal processes. Your business will also be able to save the amount of time and effort it takes to process a single payment.
With additional time and money in hand, your business can focus on whatever it does best. No longer you will have to take time away from profit-generating activities in order to manually enter payments by hand. Once you have your payment processing system entirely put in place—a process that typically takes 2-5 business days—your business will be able to operate more efficiently and pursue its long-term goals.
Which Elements of Payment Processing can be Easily Outsourced?
The term “payment processing” is used to describe every step of the payment cycle, ranging from delivering the initial bill to when all funds appear in their designated accounts. Most businesses have payment cash flows moving in both directions. Not only will you need to make sure all accounts receivable come to fruition, but you will also need to make sure all vendors are being paid on time.
In most cases, both types of payment processing can be automated. Setting up recurring payments to contractors and vendors using automated check software will ensure you never miss a payment again. Additionally, your payment processing partner will be able to ensure that all incoming payments actually come to fruition (offering multiple payment options, creating synchronized books, etc.). Both of these types of transactions will have a positive impact on your bottom line.
Additionally, utilizing an Application Programming Interface (API) will make it easier to access, control, and automate all payment processing functions from a single location. API represents an organized set of protocols, designed to make the entire payment process much easier. CSV Application Programming Interfaces also make it much easier for your business to integrate the entire system into a single location and continue operating as planned.
When is the Right Time to Outsource?
There is no single “moment” when your business will need to make the decision to outsource. Rather, this choice is often made as a consequence of many “little moments” that have built up over time. If you are looking for any of these key things, then it may be time to make a switch.
1. More Time Throughout the Work Day
As a business owner, your time is valuable. Time spent dealing with business operations takes you away from the revenue-generating portion of the business. That costs you money in the long run. Instead, you should consider using an opportunity cost framework to decide which tasks are worth your time.
Rather than waste your time processing payments, you can outsource those tasks to a payment processing service. That leaves you more time to focus on the activities that move the needle most in your organization.
2. Reduced Cost of Payment Processing
Cost is typically the reason businesses are hesitant to outsource, but this concern doesn’t really hold up on paper. In fact, the best-outsourced payment processing companies will save you money on a per-unit basis.
These specialized companies operate on an economy of scale, meaning costs go down as the company grows. As more customers are added, the marginal costs of processing a single payment decrease. This is especially true for companies that still do a large portion of their payment processing on paper, where costs such as ink and paper can be reduced by buying in bulk.
3. Increased Sense of Professionalism
Maintaining your client relationships and providing a consistent sense of professionalism goes a long way. With outsourced printing services, you can add several professional touches that would otherwise be out of reach.
Incorporating your logos into invoices, customized check templates, sending confirmation messages following each payment, and using stylized documents and templates are just a few of the ways these payments can be immediately improved.
4. Added Security
Any time you are discussing payment processing, security will inevitably work its way into the conversation. Losing financial information or exposing yourself to fraud will disrupt your monthly cash flows. It can also severely damage the relationships you have with vendors and clients.
Professional payment processing services are able to dedicate the time and measures necessary to assure all financial information remains secure. You can expect increased levels of cybersecurity for electronic payment methods. Additionally, a payment processing company can provide security measures like special envelopes and thermochromatic ink for paper check payments.
5. Access to Advanced Technology
Rather than spend your time dealing with time-consuming tasks, you can depend on payment process companies to do the same work in less time thanks to their better technology infrastructure.
Due to their specific area of emphasis, payment processing companies are often willing to invest in the technology and infrastructure that most business owners are unable to purchase on their own. These companies can help you set up systems where your books will be updated in real-time.
It’s much easier to make informed business decisions when your books are accurate and frequently updated. Once your bookkeeping and payment processing systems are entirely up-to-date, you’ll be glad you made the initial investment.
6. Personalized Payment Solutions
It’s much easier to offer personal touches to each of your vendors and clients when you work with a specialist. You can outsource custom payment solutions to a payment processing company so vendors can get paid in their preferred way. It’s a convenient service, considering that some vendors may like to receive payment via a paper check, while clients may like to view their accounts through an online portal.
Instead of tediously tracking down your payment partners and trying to gather this information yourself, these tasks can be easily outsourced to a professional service. Due to their extensive level of industry experience and pre-established protocols, these services can help you get a personalized payment system off the ground and running in a matter of days.
7. Accelerated Cash Flows
In order for your business to achieve a state of financial well-being, it is crucial that all cash flows — both incoming and outgoing — are managed in a timely manner. As time goes on, the risk of accounts receivable (and accounts payable) falling through the cracks will steadily increase.
There are quite a few ways professional payment processors can accelerate cash flows. Setting up instant transfers will help ensure all money is exactly where it needs to be. Additionally, having a company that can collect on accounts receivable will save you from some awkward conversations with clients.
Which Payment Processing Partner is Right for my Business?
Once you have decided that outsourcing is right for your business, you will need to decide which company you should work with. In addition to variables such as cost, client reviews, and website usability, you will also need to consider whether the prospective firm is the right fit for your company.
The best payment processing outsourcing services will be able to offer scalable solutions for your business. For example, in the short-run, your business may simply need a check printing and mailing service. In the future, however, you may want to add additional services such as full API integration or automatic payments. Working with a partner that allows you to only pay for what you need in the status quo—while also being able to make adjustments in the future—will put your business in a position to succeed.
How to Outsource Your Payment Processing
Payment processing is something few businesses are familiar with and can almost always be enhanced by being delegated to professionals. As long as your business is aware of its current wants, needs, and goals, you should be able to find a partner that can meet your needs. For more information on outsourcing solutions, contact SmartPayables at (720) 287-0030.
Founded in 2005, Smart Payables offers a full range of accounts payable payment solutions including outsourced check printing and mailing, document and statement printing and mailing, ACH direct deposits + more. Our highly experienced software developers and intelligent printing teams specialize in secure, enterprise-grade payment options that are HIPAA, SOC 1 Type 2, and ISO compliant. Our mission is to help businesses and large organizations implement secure, innovative technology that will reduce overhead and improve business operations and capabilities.