Macroeconomic factors are making successful cash flow management even more challenging for small businesses — 97% percent of small business owners are worried about inflation, including the cost of materials, equipment, and labor, according to the Intuit QuickBooks 2022 Small Business Insights report.
For some, these headwinds have already resulted in cash flow challenges with 23% saying cash flow is a “major” problem, compared to just 12% in late 2021.
Continued innovation in real-time payments technology is critical to helping businesses improve their cash flow, especially in this current economic environment. Here are three ways faster payments help small business owners stay cash flow positive as they run and grow their businesses.
Faster access to money
Perhaps an obvious reason, real-time access to money enables business owners to address both immediate needs and future plans. If payments take longer to process or even if they’re late, the lack of access to crucial business funds can hinder efficiency and productivity, possibly creating long-term business impacts. In a recent QuickBooks study, 72% of businesses said that payment processing impacted their ability to grow, and 89% said that late customer payments have set back their company’s long-term growth goals. But innovations like instant deposit are allowing businesses to access funds faster so operations can keep moving forward, paying invoices on time, restocking inventory, running payroll, and more.
Critical time savings
Despite recent fintech innovations that give small businesses powerful technology that can simplify their day to day, when it comes to their finances – and specifically payments – many are still plagued by manual administrative processes. More than two-thirds (65%) of small businesses say they spend a shocking 14 hours per week on average completing administrative tasks related to collecting payments. But by rethinking the payment workflow and designing it in a way that works for small businesses, the industry can alleviate this pain point, eliminate time spent chasing payments, and allow businesses more time to focus on growth. Auto-pay capabilities and seemingly simple innovations such as optimizing the copy in an invoice email subject line can have meaningful impacts in reducing the time to get paid and helping small business owners stay cash flow positive.
Greater accuracy and clarity around business performance
Cash flow – whether positive or negative – is directly tied to the health of a business. Ensuring payments are instantly and automatically accounted for is critical for business owners to know where they stand at any point in time. Payments solutions that offer features like auto reconciliation can be a game changer and provide a holistic and accurate view of how your business is performing. Total clarity around money in and money out is paramount to truly understanding a business’s cash flow position.
Juliana Berger is the Director of Product Management for Intuit QuickBooks Payments.