Over the past few years, the market for outsourced payment processing has been significantly expanding. Outsourced payment processing companies offer businesses value in a wide variety of ways, ranging from cost reduction to expertise to everything in between.
According to some recent estimates, more than 80 percent of businesses would recommend their outsourcing partner to another business. Additionally, due to various technological advancements, working with a digital payment processing firm is something that is now easier to do than ever before.
While your business may be aware of the potential benefits of outsourcing, it can be difficult to determine when it is the appropriate time to “make the leap” to hiring an outside firm. Hiring a firm too early may impose unnecessary expenses on your business. At the same time, hiring a firm too late will likely cost your business money and force you to miss out maximizing your potential.
In this article, we will discuss how businesses can determine when it is the appropriate time to outsource their payment processing needs. By paying attention to just a few key details and understanding the current dynamics of your business, you can be one step closer to achieving operational excellence.
Identifying your Payment Processing Needs
In the United States, more than 140 billion noncash payments occur every year. Collectively, these payments have a value of nearly $200 trillion. Clearly, payments play a major role in our economy and likely have a major impact on your business’ overall well-being. But in order to know which payment processing service is right for you, you will need to begin by identifying your current payment needs.
Payment processes can be categorized in multiple different ways. When speaking with a payment processing partner, they will likely ask about both your preferred payment types (printed checks, digital checks, etc.) and the volume of payments you make on a monthly basis. From there, they will also inquire about things such as projected accounts payable, the types of companies you partner with, and various other details. Once each of these factors has been effectively accounted for, the company will be able to create a custom payment processing plan that is right for you.
The Benefits of Payment Process Outsourcing
As you will find with many industries, the world of payment processing has witnessed a recognizable shift away from in-house processes to using outsourced payment processing plans. There are quite a few reasons why your company might want to consider outsourcing its payment processing needs.
Reduced Cost: because they operate on an economy of scale and already have the necessary infrastructure in place, outsourcing can help reduce the amount it costs to fully process any given payment.
Added Time: instead of spending hours of your precious time with tedious tasks such as payment processing and statement generation, you can dedicate yourself to the components of your business that actually generate revenue.
Advanced Technology: with an advanced payment processing portal, it is easy to manage and track each of your payments from anywhere in the world. Having a portal tailored to your specific business will enable you to significantly improve your day-to-day operations. This is especially important for digital businesses operating in the rapidly expanding eCommerce space.
Access to Expertise: while many components of payment processing are somewhat intuitive, there are some situations where you may want access to a certified expert. By having a reliable partner by your side, you’ll need to be less worried about whether you are making the right decisions.
Additionally, most payment processing firms will allow you to incorporate special details such as your company logo or a branded font. With these special touches, your business will appear to be much more professional. Consequently, this will have a profound impact on the way your business communicates with suppliers and other relevant parties.
Conducting a Detailed Cost-Benefit Analysis
Before making any major decisions about the future of your business’ operations, it will be crucial to conduct a detailed cost-benefit analysis. When conducting this analysis, be sure to do so using an opportunity cost perspective. Not only should you account for the amount of money you spend dealing with payment processing; you should also account for the amount of money you could be making if you were to have more time in the day to focus on revenue-generating portions of your business.
- During the cost-benefit analysis, be sure to ask yourself the following questions.
- Which payment processing systems do we currently have in place?
- How much do these systems cost on a monthly basis?
- How much time per week do I spend dealing with payment processing?
- What is the total cost of developing a digital payment processing system?
- How can a digital payment processing system add value to my business?
- Do the benefits of making a change outweigh the cost of keeping things as they are?
While the results of this analysis will vary by business, you will likely find that outsourcing your payment processes can easily be justified on paper. No longer will you need to spend long nights manually generating payments by hand. Instead, you’ll be able to use your time much more wisely and add value to your business. Also, read this guide on the 5 ways to outsource payment processing.
Partnering with an “A La Carte” Payment Processing Company
If your business is still young and growing, you may be hesitant to outsource any of your essential operations. After all, making a change and surrendering authority is certainly a major commitment. In order to make the transition between your payments being processed totally in-house and totally out-of-house a little bit easier, you may want to consider partnering with a scalable payment processing partner that offers their services a la carte.
With the right payment processing partner, you will be able to pay for the systems and degree of payment processes you need without paying for the components that are reserved for larger businesses. As your business grows and increases its reach over time, you’ll be able to easily make adjustments and change your approach to payment processing when necessary.
Conclusion – When To Outsource Payment Processing
Generally speaking, nearly all businesses—from sole proprietorships to Fortune 500 companies—can benefit from outsourcing a portion of their business. Payment processing is one of the most important components of your business. It is also among the easiest to outsource, especially in the digital era. After conducting a careful cost-benefit analysis, you may be surprised to learn that the time to outsource your payment processes is now.
Smart Payables is an outsourced payment processing service serving Fortune 500 companies and small businesses. For more information about how or when to outsource your payment processing, contact Smart Payables at (720) 287-0030.