Is Your Old POS System Keeping You From Improving Cash Flow?
In today’s challenging economic climate, many businesses are looking for ways to increase cash flow; according to a recent report, an integrated point-of-sale system can help. Sage North America recently announced high-level findings from Aberdeen Group’s published third annual payments report, titled “Global Payments: Maximizing Cash Flow with Electronic Payments and Process Automation.”
According to the report, leading companies are employing electronic payments and process automation to streamline and accelerate finance processes, reduce operating costs, and improve visibility, control, and efficiency to provide a foundation for increased profits.
“Despite the reign of the paper check and manual-based processes in business-to-business transactions in the U.S. and many parts of the world, economic and efficiency gains from automating the financial supply chain — from invoicing through payment settlement — are key motivators for demand and supply to align,” said Nasreen Quibria, senior analyst at Aberdeen and author of the report. “While the adoption of electronic payment vehicles requires businesses to alter their payment behavior and restructure their financial processes, companies that can make the shift will gain competitive advantage.”
Reflecting the unpredictable economic conditions of the past year, Aberdeen found that companies are focused on maximizing cash flow and taking a holistic approach to transactions — examining the flow of funds into Accounts Receivable (AR), and outflow of funds from Accounts Payable (AP).
In its survey of more than 160 companies worldwide, Aberdeen found that businesses adopting electronic channels have been able to achieve a 16% decrease in accounts receivable (AR) processing cost, and a 14% decrease in accounts payable (AP) costs year over year. Due to this fact, companies selling accounts receivable are enjoying larger profit margins and happier customers.
“Aberdeen’s report shows the value that systems interoperability with electronic payment networks has for both buyers and suppliers,” said Greg Hammermaster, president of Sage Payment Solutions, the payments division for Sage North America. “We believe this interoperability is critical toward achieving three major payments objectives for every business: improving cash flow, reducing costs, and maximizing the utility of their ERP environment.”
The Aberdeen survey identified two main pressures creating the need for improved payments processing:
- Corporate mandate to reduce overall payment transaction costs, such as staff and processing (65%); and
- Stakeholder demand for improved operational efficiency, such as reduced reliance on paper documents (47%).
Also, according to Aberdeen, 50% of best-in-class companies integrate their electronic payment solutions with their accounting, enterprise resource planning (ERP), or other financial systems. At the same time, 39% of best-in-class companies identify a lack of integration between electronic payments and accounting systems as a barrier to increased electronic payments.
Last month, Sage introduced Sage Exchange, a new secure,Payment Application Data Security Standard (PA-DSS) certified payment platform that will allow businesses and organizations to accept all forms and methods of payment, with seamless data integration to a wide range of Sage business management software products and third-party business solutions. Seamless integration between payment applications and back-office software can improve an organization’s cash flow and forecasting, while eliminating manual data entry and the risk of errors.
“Integrating electronic payment networks with back office ERP systems is a challenge faced by all businesses,” added Hammermaster. “Sage Exchange overcomes this challenge by tightly integrating Sage’s accounting and ERP solutions, on both the AR and AP sides, with the most widely used electronic payment networks, including credit and debit cards, electronic check, ACH, and even private label networks. While electronic payments data integration is the foundation, exponential value will be gained through a suite of connected services focused on streamlining the financial supply chain. Sage Exchange is set to deliver on that value proposition.”
Aberdeen’s payments study was co-underwritten by Sage Payment Solutions and Syncada. A joint venture between Visa and U.S. Bank, Syncada provides a business-to-business network for financial institutions.