If you aren’t paying much attention to the system that’s facilitating your payments, then there’s a good chance some money is slipping through the cracks. Every Supplier/Distributor has the freedom to conduct business as they see fit, whether that be fielding phone calls all week to manage orders from their buyers or sending out manual invoices at the end of each month to collect a check.
Like many other facets of the hospitality industry, outdated processes tie down wholesalers by limiting the speed at which they can grow their business. One of the more glaring inefficiencies lies in the common practice for processing payments between Suppliers and their buyers.
Modern day norms for payment processing consist of manually issuing invoices and writing checks. Whether you’re on the buyer or supplier side of the coin, there are better ways to go about settling your invoices.
Because you, the Supplier, is the entity that receives payments, you bear all of the risk when things go south. When your primary method of collecting bills is through collecting checks, there are a lot of ways things can go south.
According to the Association for Financial Professionals, 60% of organizations were exposed to fraud during the year 2013. Out of all of those cases of fraud, 82% were caused by faulty checks. Whether you’re having your clients mail in checks at the end of the month or your delivery folks make their rounds and pick up payment, too much can go wrong in the time it takes your clients to write the check to the time you cash it. By switching your payment systems to accept credit card payments, you are protecting your business from the following risks:
Insufficient funds or stopped payments – bounced checks
Incorrectly filled out checks
Lag time in bank response
More time wasted collecting payment by your drivers or sales reps
Switching to a credit or Automated Clearing House (ACH)-centric style of payment processing allows you to allocate risk away from your business. Credit card processors are able to absorb financial regulations and liabilities, streamline transaction processes, and intervene with any technicalities. Not only that, but adopting card payment and ACH functionalities makes debt collection exponentially easier. Providing your Clients with multiple methods to accept a wider range of payments offers a convenience that impacts your bottom line. When cards are used as a payment, studies show that purchase amounts increase by 12% to 18% on average. This heightened revenue will more than offset any processing fees you are being charged (typically between 2% to 4%).
ACH payments make up more than 25 billion transaction each year, and is the only payment option that is seeing year over year growth exceeding 1 billion transactions more than the previous year.
According to a 2014 RPMG purchasing card survey, credit card transactions currently make up over 50% of all B2B transactions. Card use doubled between 2012 and 2014, and it’s projected to increase annually by 10% over the next 5 years. As a Supplier / Distributor in the foodservice industry, optimizing your payment processing methods will be key to attracting new business and improving upon existing relationships with your buyers.
If you are ahead of the curve and already receiving payment via credit card and ACH, it’s important to review processing costs annually. Many businesses are processing cards at outdated and higher rates, resulting in thousands of dollars detracted from their revenue stream each year.
BlueCart, the all-in-one business management platform for Suppliers and Distributors, has just added on Payment Processing onto its utility belt. With Payment Processing loaded into BlueCart’s app, restaurants and Suppliers alike have synchronized another system into their business management strategy
About the author: Will Harmon is a marketing associate at BlueCart, an online and mobile ordering, inventory, and operations platform for the hospitality industry. When he’s not busy being a social media guru and creating content, you can find him learning about procurement practices and up and coming restaurant trends.