Small Businesses Turn Digital Payments Into Cash Flow Engine

Being in business means putting a lot of effort into staying in business. And staying in business is a challenge many small and medium-sized businesses (SMBs) face, exacerbated by delayed and manual payments.

Payment delays can undermine SMB cash flow and have a downstream impact on SMBs’ ability to reinvest in their own operations and compete with larger peers.

That’s why, when it comes to reimagining SMB payments and turning them into a growth engine, Lorenzo Soriano de Teresa, senior vice president, merchant services at American Express (Amex) has just one word of advice.

“Automate, automate, automate,” he told PYMNTS during a recent conversation centered on findings from the latest “B2B and Digital Payments Tracker® Series,” which was produced by PYMNTS Intelligence in collaboration with American Express. “The right automation solution, or the right partner, can help businesses move past their current payments concerns to see tangible benefits.”

Still, SMBs, with their limited resources relative to their bigger competitors, often face significant hurdles when integrating automated payment processes into their existing systems.

The thought of overhauling a business’s traditional payment methods can be daunting. However, as Soriano de Teresa emphasized, this transition doesn’t have to be overwhelming.

Upgrading to automated payments is easier than many SMBs might expect, he said, noting that modern and vetted finance solutions are designed to integrate seamlessly with existing software, mitigating many of the complexities associated with such shifts.

“Implementing accounts payable (AP) and accounts receivable (AR) solutions, as we call them, is critical for SMBs struggling with late payments … and the payoff is well worth it,” he said.

Read more: SMBs and the Protracted Challenge of Delayed Payments

Cash Flow Management Can Spur Growth

In the world of business, digital transformation is no longer a luxury but a necessity, especially for SMBs looking to improve back-office efficiencies.

Integrating automated payment solutions can help SMBs address critical pain points such as late payments and cash flow visibility, while helping maintain strong relationships with vendors and customers. Simplifying business-to-business (B2B) solutions through automation also can lead to more streamlined operations and better financial health, said Soriano de Teresa.

“Paper checks and manual payments are prone to human error. Delayed payments can lead to less access to cash flow and potential issues with cash flow management,” he said, noting that businesses of all sizes have similar challenges around manual tracking, reconciling invoices, cutting paper checks and other dated AP and AR workflows.

By automating these processes, businesses gain enhanced visibility into their financial status, helping to ensuring timely payments and reducing the risk of human error associated with manual payment methods. This increased visibility allows SMBs to manage their cash flow more effectively, ensuring that they can meet their financial obligations and invest in growth opportunities.

On top of all that, automation also helps in maintaining positive relationships with suppliers by ensuring that payments are made on time, further fostering trust and reliability.

The benefits of automation are tangible, Soriano de Teresa said. Businesses that adopted automated solutions during the pandemic have reported improvements in cash flow management or receiving faster payments, according to Amex research. This return on investment (ROI) underscores the value of embracing digital payment solutions.

Key Takeaways for SMBs

SMBs do not have to go it alone in navigating this transition to automation. There are numerous partners and solutions available to help them implement these changes seamlessly.

Soriano de Teresa said Amex has invested in partnerships and developed proprietary solutions to scale automation for SMB customers. By collaborating with FinTech companies, Amex provides SMBs with tools to streamline their payment processes. These partnerships enable businesses to adopt embedded payment models, helping make transactions more efficient and convenient than manual payment methods.

Looking ahead, the payment space is set to evolve further, with new innovation focused on making things as seamless and integrated as possible. For SMBs, this means now is the time to explore automated payment solutions. Once SMBs are set up in an automated payments system, they will be better positioned to take advantage of future advancements in this space as technology continues to make B2B payments even more efficient.

To that end, Amex is embracing a three-pronged strategy, Soriano de Teresa said, building new innovations, partnering with FinTechs and making strategic acquisitions, to ensure it remains at the forefront of the digital payment revolution. And this investment in digital solutions will continue to fuel the next wave of advancements in B2B payments. 

The message from industry leaders like Soriano de Teresa is clear: The time to automate is now, and the rewards are worth the effort.