PYMNTS.com: Why is Accounts Receivable Automation going mainstream now?
ERIC REMER: About 19.6 million out the 26.8 million small businesses in the United States with less than 20 employees are in services-related industries1. Only a very small portion of these businesses (30%) accept credit card payments and an even smaller portion (22%) accept electronic checks2. Beyond a lack of electronic payment acceptance, most of these businesses (66%) are still using manual billing processes, including handwriting invoices or using word processing or spreadsheets2.
PYMNTS.com: Why are these small businesses lagging behind the times?
REMER: In the past, there have been no good electronic payment solutions for service-related small businesses. Most payment processing solutions have focused on the retail sector.
PYMNTS.com: Where are small businesses turning to find solutions?
REMER: Small businesses know solutions exist for them to accept electronic payments and automate their billing, but most lack the resources, time and expertise to find and vet vendors. So these businesses are turning to trusted advisors, including financial institutions and other well-known small business solution providers, to find the tools and services they need.
These large financial institutions and other trusted advisors have not had the resources, products, or expertise to meet this acute demand from their small business customers. Yet these organizations currently have an unprecedented opportunity to provide the tools and services that their customers and members want. Not only does this provide the financial institution/trusted advisors with an additional revenue stream, but also enables them to provide sticky value-add solutions to their small business customers to establish long-term relationships in their current high-churn world.
Recognizing the tremendous opportunity, American Express, Chase, Vantiv, NPC and Western Union have turned to PaySimple’s custom-branded solution and turn-key outsourcing options to get value-added solutions into market quickly that provide the capabilities their small business members and customers are demanding.
PYMNTS.com: Why is receivables automation now reaching the tipping point?
REMER: With the down economy these services businesses are suffering. 43% report suffering from cash flow issues and 66% say they will need to use personal assets in the next year just to stay afloat3. Small businesses’ outlook is getting worse about the economy and their businesses, so they are actively seeking solutions to gain efficiencies and improve cash flow in order to keep their businesses going.
Beyond their own cash flow challenges, these businesses are also receiving pressure from their customers for flexible, paperless bill payment options such as electronic invoicing, recurring billing and online payments. 88% of consumers now pay bills and transfer money online2, so they have come to expect these payment options from all the businesses they work with.
PYMNTS.com: What’s missing from traditional retail solutions that service-related businesses require?
REMER: Fundamental differences exist between service and retail solution needs. First, service-related small businesses have more than one point of payment collection so their needs go way beyond the typical point of sale system for retail. Services businesses have a diverse set of payment collection needs including multiple payment types – such as credit cards and electronic checks. As well as multiple payment collection points – including mail, phone, e-mail invoicing, recurring billing, online payment collection, and mobile payment collection.
Second, to a small business in the service industry, time translates into actual revenue. Any extra time a services small business owner has to spend on collect payments is less time they are spending on billable hours and conducting services for actual clients. So not only does the solution need to support multiple payment collection points, but it needs to automate as much as practicable to save the business owner real time, directly contributing to their bottom line.
Third, services companies are built on repeat business. Everything about a solution for them needs to be focused on the customer, facilitate great customer relationships and make repeat business as seamless as possible.
PYMNTS.com: Does Account Receivables Automation deliver real benefit?
REMER: In a recent internal customer survey, small businesses are seeing significant tangible results from automating their receivables. According to the survey, 85% of small businesses save time spent on collecting payments by using PaySimple and 56% of customers say that by using PaySimple their payment collection cycle has gotten faster.
PYMNTS.com: What’s next for the adoption of Receivable Automation?
REMER: We believe that adoption and penetration into the small business market has barely scratched the surface, but with the proliferation of services being offered by such trusted brands as American Express, Chase, Western Union, Vantiv and others, we believe the adoption rates of these types of services will begin to grow exponentially.
1. US Small Business Administration (SBA.gov)
2. Intuit Financial Services
3. Discover Small Business Watch