Here we look at different ways you can make electronic payments for B2B expenses. But is it really worth it? Read here for pros and cons of electronic payment.
Non-cash transactions between 2014 and 2015 rose 11.2 percent, the highest growth of the past decade. That’s because electronic payment is easy, seamless, and can be completed from nearly anywhere in the world.
This makes it even easier to complete tasks like paying vendors on time, or make multiple transactions in one afternoon without ever leaving your desk.
Here we will be diving into the ins and outs of electronic payments and discovering which method is right for you and your business.
How Does an Electronic Payment Work?
Electronic payments are easy and seamless ways to pay your vendors from practically anywhere. While there are a number of ways to pay your vendors electronically, most of them involve creating an account with an online payment platform.
Once you’ve created your platform, you may have to add in some additional information. Depending on the payment type this information can include the vendor’s name, email address, account, and routing number. Once the information is set in place you can usually set the system so the payment is automated each month.
Who are Electronic Payments Best for?
Considering the fact that electronic payments come with extra details like transaction fees and charges, electronic payments are best for smaller businesses with a limited number of vendors to pay.
With a larger group of vendors in place, the transaction fees can quickly add up, making the process not worth the convenience. However, if you are working with roughly 10-12 vendors to pay each month, especially if the vendors are located elsewhere, electronic payment may be the choice for you.
Types of Electronic Payments
There are a wide variety of electronic payment platforms and methods. These methods include:
ACH Deposit and EFT Deposit (read more about the difference between the two).
Paypal: One of the original electronic payment platforms. Paypal has had some controversy due to its rates, however, they have more than redeemed themselves with features like instant deposits for only 25 cents.
Swipe: Swipe was one of the first electronic payments that allow clients to pay with their physical atm card. This means vendors with stripe can charge you for the order in person from their tablet or smartphone.
Stripe: Stripe is another payment method with a similar set up to Swipe. However, Stripe offers slightly more competitive fees and rates.
Braintree: Braintree is an online payment portal that allows invoices to be sent and paid online.
Dwolla: Dwolla runs as a similar payment method, except it does not require that the person receiving the payment has an account. Instead, the money is sent via email and deposited directly to a card or account.
Each platform and method comes with its own requirements, fees, and limits. So it’s best to look into these options before choosing one as your ideal payment option.
There are a number of benefits associated with electronic payments. Read on to learn more about why we love payment portals and websites.
If you travel often for your work or have a team that’s spread out all over the world, electronic payments are the only way to do it.
Electronic payments allow you to seamlessly make a deposit to a payment portal account without having to worry about additional transaction fees for foreign currency.
Run into a problem with payment? Need to pay someone while standing in line at the store? Electronic payments allow you to be the master of multitasking in your business.
Since most payment platforms offer apps that allow you to make payments, you are able to pay your vendors from practically any device that has internet.
Can’t remember whether or not you paid a specific vendor? Or maybe it seems like an order cost more this month than it did last month? If you’re not good at keeping records, shedding light on these areas can be a problem.
Fortunately, electronic payments allow you to have records of all payments at your fingertips within minutes. In some cases, you can even search the name of specific vendors to make it easy to find all history of payments.
While there are many benefits that come with electronic payments, that doesn’t mean it comes without its downside. Here we dive into some of the disadvantages of electronic payment.
Practically every form of electronic payments comes with its fees, and sometimes there will be multiple fees charged per transaction. The cost of these fees will vary depending on the payment platform you choose to use.
While this may not be a problem for smaller businesses, businesses with a higher number of vendors may notice those fees add up quicker than they would like.
The phrase “instant payment” is a double-edged sword for electronic payments. While you can instantly deposit money into a payment portal, it can take days for the money to actually hit the vendors account.
Some payment portals take as much as 3-5 business days before the money actually arrives in a checking account, assuming it was immediately withdrawn. This can cause a problem if your vendor has a penalty charge for late payments.
Just because you love a payment platform, doesn’t mean it’s for everyone. Most vendors have their preferred method of payment, so it’s unlikely that they will go and open a new account with your payment portal choice simply because it’s more convenient for you.
For this reason, electronic payment is often limited to more common payment methods like direct deposit, Paypal or Stripe.
Streamlining Your Business
There are a number of moving parts in every business, fortunately, tools like electronic payment and paystub creators make it easier to streamline your payroll process.
Remember, it’s about working smart, not hard. With the help of the internet, it’s never been easier to be your own boss while handling it all.