Limited Payment Options in Electronic Invoices? You are Limiting Your Business!
Gone are the days when trading and bartering used to be a simple process. Today, you have to embrace as many technologies and features as possible to ensure the growth and success of your business, such as electronic invoices, ERP software, etc.
While you should be using software automation in your business processes such as invoicing e-invoicing, accounting, logistics, etc. you also need to realize the significance of the payment options you are offering to your dealers.
It’s not an exaggeration to say that offering only a few accounts payable options to your customers is actually counterproductive. The following are some of the main reasons why:
Payment Delays in Paper-Based as well as Electronic Invoices
Let’s consider an example in which a customer Sandeep joins your distribution network. Things are going well with him, and for an entire week you have processed his orders and send the correct invoices for the same, ideally issued in electronic data. Now, it’s time for the completion of the invoicing process. He asks you how he can transfer the funds and you then provide your bank account number along with the IFSC code. Now, with this information, he can either send the money directly into your bank account by paying a visit to his bank (which isn’t quite popular of a method anymore), or transfer the funds through a NEFT transfer/IMPS transfer, etc. as per the structured invoice data issued.
Now, here is the problem- Sandeep didn’t know you offer only few payment options, and none of these is satisfactory to him. He was expecting a payment gateway service through which he could pay with his credit card. However, it’s not available with your invoicing services, and the money has to be paid still. So, what happens now?
Sandeep could either ask someone to make the payment on his behalf or simply go to the bank to directly deposit the money. Either way, it’s going to take time, which means a high DSO (Days Sales Outstanding) ratio for you.
High Transaction Charges a Deterrent
When it comes to running a business, all expenses and electronic invoices are important. Thus, it’s natural for your customers to use a payment method that has the lowest transaction charges. However, if the payment channel of their preference is not available, then they are forced to pick the one that comes with transaction charges that are higher than the ones they are comfortable with.
Now, in this situation, it’s possible that the customer will continue doing business with you with whatever accounting system you are using, but after a while, the high transaction fees may compel them to switch to another distributor. After all, a business is largely about how the costs are managed.
A Sign of Professionalism
By offering a variety of payment methods to your customers not only you make it easier for them to send the money, but you also show that you mean business and take your work seriously.
The Advantage of Alternatives
With each payment method that comes with the electronic invoices, there is a possibility of a transaction failure. For instance, if it’s Sunday or an odd hour, then a NEFT transaction may not go through even if the you have the structured invoice data issued. This is because it only works during the working hours of the banks and is irrespective of the invoicing software used.
Let’s say that you want a certain payment as soon as possible as you have to process a certain large order of your own, but the customer can only do that with NEFT. If it’s the weekend, then you are pretty much doomed, isn’t it? However, if you offered other payment options like UPI under a better invoicing process, then you could have received the funds as it works 24/7. Now, wouldn’t that be a lifesaver?
Offering many payment options and maintaining the best electronic data interchange standards for your dealers opens many doors of opportunities for your business, there are no two ways to it. Besides, accomplishing something like this isn’t that difficult or costly even if you don’t have an enterprise-level accounting system or an invoicing software. So, what’s stopping you take an initiative today itself?