Running a business means putting in a lot of effort to stay in business. And doing so is a challenge many small and medium-sized businesses (SMBs) face, made worse by delayed payments and manual processes.
Delayed payments can hurt small businesses’ cash flow, which can have downstream effects on their ability to reinvest in their businesses and compete with larger peers.
So when it comes to rethinking payments for small businesses and turning them into a growth engine, Lorenzo Soriano de Teresa, senior vice president of merchant services at American Express (Amex), has one word of advice:
“Automate, automate, automate,” he told PYMNTS during a recent conversation centered around findings from the latest “B2B & Digital Payments Tracker® Series,” created by PYMNTS Intelligence in collaboration with American Express. “The right automation solution, or the right partner, can help businesses move beyond their current payments concerns to realize tangible benefits.”
Yet small businesses, which have limited resources compared to their larger competitors, often face significant obstacles when integrating automated payment processes into their existing systems.
The idea of overhauling a company’s traditional payment methods can seem daunting, but as Soriano de Teresa emphasizes, the transition doesn’t have to be daunting.
Upgrading to automated payments is easier than many small businesses expect, he said, noting that modern, validated financial solutions are designed to seamlessly integrate with existing software, mitigating much of the complexity involved in such a transition.
“For small and medium-sized businesses struggling with late payments, implementing what we call an accounts payable (AP) and accounts receivable (AR) solution is crucial and the payoff is well worth it,” he said.
Read more: Small businesses and the challenges of prolonged payment delays
Cash flow management can drive growth
In the business world, digital transformation is no longer a luxury but a necessity, especially for small and medium-sized businesses looking to improve back-office efficiency.
Integrating automated payment solutions helps SMBs address key pain points like late payments and cash flow visibility while maintaining strong relationships with vendors and customers. Simplifying business-to-business (B2B) solutions through automation also streamlines operations and improves financial health, Soriano de Teresa said.
“Paper checks and manual payments are prone to human error. Late payments reduce cash flow and can create issues with cash flow management,” he said, noting that businesses of all sizes face similar challenges with manual tracking, invoice reconciliation, cutting paper checks and other outdated accounts payable and receivable workflows.
Automating these processes gives businesses greater visibility into their financial position, helps ensure payments are made in a timely manner, and reduces the risk of human error that comes with manual payment methods. This increased visibility enables small businesses to more effectively manage their cash flow, meet their financial obligations, and invest in growth opportunities.
Additionally, automation helps ensure payments are made on time and maintains good relationships with suppliers, further building trust and credibility.
The benefits of automation are clear, Soriano de Teresa said. AMEX research shows that businesses that implemented automation solutions during the pandemic reported improved cash flow management and faster payments. This return on investment (ROI) highlights the value of implementing digital payment solutions.
Key takeaways for small businesses
SMBs don’t have to navigate this transition to automation alone: there are many partners and solutions available to help implement these changes seamlessly.
Soriano de Teresa said Amex is investing in partnerships and developing proprietary solutions to expand automation for its small business customers. By working with fintech companies, Amex is providing small businesses with tools to streamline the payment process. These partnerships allow businesses to adopt embedded payment models, making transactions more efficient and convenient than manual payment methods.
The payments sector will continue to evolve in the future, with new innovations focused on making it as seamless and integrated as possible. For SMBs, this means now is the time to consider an automated payments solution. Having an automated payment system in place will position your SMB to take advantage of future advancements in the sector as technology evolves to make B2B payments even more efficient.
To that end, AmEx is embracing a three-pronged strategy to stay at the forefront of the digital payments revolution — building on new innovations, partnering with fintechs and making strategic acquisitions — and this investment in digital solutions will continue to drive the next wave of advancements in B2B payments, Soriano de Teresa said.
The message from industry leaders like Soriano de Teresa is clear: the time for automation is now, and the rewards are worth the effort.
Read more about: Accounts Payable, Accounts Receivable, American Express, Amex, AP, AR, B2B, B2B & Digital Payments Tracker® Series, B2B Payments, Cash Flow, Cash Flow Management, Commercial Payments, Digital Payments, Featured News, Lorenzo Soriano de Teresa, News, Payments Automation, PYMNTS Intelligence, PYMNTS News, pymnts tv, Small Business, SMB, Video
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