Outsourced Payment Processing vs Hiring Internally Naturally, making sure that all payments go through and are properly received will be a very important component of running any type of business. Without an adequate payment processing system, your business may have overdue bills as well as accounts receivable that never come to fruition. Your payment processing system should be one of the cornerstones of your business. This will help make sure that all cash inflows and outflows are managed smoothly over time. Once your business has made an effort to develop this critical infrastructure, you will then be able to focus on the other aspects of running a business. The general importance of payment processing is obvious. However, knowing how to create an efficient and effective payment processing system will be a significantly greater challenge. Your business will need to carefully balance costs, operating objectives, and other essential variables. Hastily choosing the system you use may have a negative impact on your bottom line. Because very few new business owners specialize in payment processing, outsourced companies like Smart Payables have become notably more popular. By making the choice to outsource, these essential processes can be directed to someone with a better sense of understanding and level of experience. Deciding whether to outsource payment processes can have a major effect on your business. In this article, we will discuss both the pros and the cons of making this important decision. By taking a step back and trying to view this decision objectively, you should be able to identify whether outsourced payment processing will be in your business’ best interest. What are the pros of outsourcing your payment processing? Both accounts receivable and accounts payable can easily outsourced to an experienced firm. In the digital era, developing an efficient (and fast acting) system is more possible than ever before. Here are some of the pros of outsourcing your payment processing duties: · Increased Expertise: no system is perfect and problems will inevitable emerge. By working with a reliable partner who specializes in payment processing, these problems can be quickly addressed and corrected. Your payment processing partner may also be able to suggest ways for your business to operate—and subsequently process payments—much more efficiently.
· Decreased Costs: by foregoing the option to outsource payment processing, you will have to spend a considerable amount of time developing these systems in-house. Every moment you spend doing tedious tasks (payment processing, statement printing, etc.) is a moment that is not being spent enhancing the core of your business. From an opportunity cost perspective, outsourcing payment processing will actually decrease costs. · Increased Efficiency: the best outsourced payment processing partners will have plenty of experience testing different systems and creating customized solutions for businesses. As a result, you will have access to superior accounting technology, more automated processes, and additional valuable resources. Developing these systems from scratch on your own will be a much more difficult (and arguably unnecessary) task. · Fewer Payment Processing Errors: due to the increased level of precession offered by outsourced payment processors, you will have fewer accounting errors occur over time. When an error does occur, your outsourced partner will be able to quickly correct it. · Ongoing Advice: with the right payment processing partner, you will have a reliable resource that can help give advice to your business. This advice will often extend well beyond payment processing systems and will likely help your business operate more effectively. With all of these potential “pros” readily available and on the table, there is no surprise that many new and growing businesses make the decision to outsource payment processing every year. But What About the Cons? While the pros of outsourcing your payment processing systems may be overwhelming, it will still be important to consider all of the possible “cons” before making any final decisions. · Loss of Control: a s is the case with any essential system, the most obvious drawback from outsourcing is that your business will lose some control over these processes. However, as any experienced business owner will tell you, it is important to recognize the things you can control and delegate those you can’t to someone with the necessary experience. · Ongoing Dependence: any time your business makes the decision to outsource, you are depending on another company (or individual) to help keep things running smoothly. While this will rarely be too large of an issue, it can create problems in the event that your outsourcing partner suddenly goes under. · Standardized Payments: most outsourced payment processing companies will have a standard protocol that they use for all new clients. If this protocol is significantly
different from what your business uses in the status quo, you may be in for a bit of a shock. · Possibly Unnecessary: if you are running a small sole proprietorship with a limited number of clients (5 is a good general benchmark), then payment processing may be something that your business can adequately handle on its own. However, once your business increases in size, it may be time to reconsider your options. Generally speaking, the “cons” that are attached to outsourcing payment processing will be similar to the cons attached to outsourcing any component of your business. Keeping both the positives and negatives in mind, your business should be able to make the right decision. How can I find an effective processing partner? If your business does end up deciding to outsource your payment processing systems, you will then you need to determine the right partner. Because there are now many quality firms available for you to choose from, you should consider the following things when comparing your options. · Does the firm have experience working with businesses similar to your own? · What is their general approach to payment processing? · How much will outsourcing cost? · Do they offer any essential services in addition to payment processing? · Does the firm seem trustworthy? Are they willing and available to answer any of the questions that you might have? Doing things such as visiting each firm’s website, reading former client reviews, and conducting an over-the-phone interview can all help you narrow down your options. As stated, this will be a very important decision for your business that needs to be taken seriously. Conclusion Every decision that your business can possibly make will have several pros and cons attached to it. If your business is considering outsourcing your payment processing needs, it will be important to evaluate both the benefits and drawbacks before making any lasting commitments. By taking the time to consider all available options, your business can take a step forward in a productive direction.