PSP Angels

VIKTORIA SOLTESZ

Founder of PSP Angels

Does your company have a payment strategy?

Every company has a detailed strategy which usually covers everything from sales to HR. Handing all finances is usually the job of the accounts department… but who is responsible for the payment strategy?

If you wait for your Chief Accountant or CFO to spare some time from the daily tasks of the reporting on accounts receivable /payable in order to set up such strategy, your company might be in trouble. Accountants are amazing in accounting. But online payments (mainly which involves high risk) became a special industry on its own, and payment planning demands its own attention.

Collecting funds “as they come” and allowing them to flow by themselves is a classic business mistake, which might cause serious delays, lost revenue opportunities and unnecessary costs for your business.

To understand everything about the incoming and outgoing funds we need to answer the following questions: • how much • how often • where from or to • what currency • and whom pays or we pay to

Answering these questions honestly can make a significant difference on your financial stability and profitability. With an effective payment strategy, every incoming our outgoing amount becomes an opportunity to maximise profit, while reducing risk and optimise workflows. Without strategy, your cash flow, liquidity and customer satisfaction might be taking an unnecessary risk or cost.

What is a payment strategy

formed decision about your payment providers: their risk, costs, and full range of services. As online payments are booming, high risk solutions are changing all the time, so you need to evaluate all opportunities on the market who has the risk appetite to accept your business.

Surprisingly, the fees are subject to rapid changes too. It might be the payment provider who is changing their fees, or it could be your company, which has grown significantly in certain areas in the last 3 to 4 months, whereby more volume means lower fees; you might be eligible for a discount which you are not taking advantage of.

To make sure that you are having a cost-effective yet safe solution, you will always need to have an up-to-date information about the payment market. This information and the payment decisions shall be then monitored and revised periodically, following the latest market trends, and benchmarking your competitors’ solutions.

The payments strategy not only considers all the factors which can affect how the money is moved between the different payment providers, i.e.. when and how the payment is received or spent but also how and where the money is kept before being sent further. Knowing how long are we “parking” our funds before we use them (or pay out the shareholders or clients) and what are the exact fees, opportunities and risks on these periods are also critical to achieve maximum operational effectiveness.

For example, if you only want to reduce your costs, you may want a payment strategy that takes advantage of multiple providers and a cashier system which allows cascading from the cheapest to the more expensive solutions. However, is you are losing a significant amount of deposits at the checkout, you might want to have a look at the

acceptance rate or the conversion ratio of your current providers and educate the customer service or retention department of how collect funds from your clients in multiple ways, regardless of the fees.

An effective payment strategy will also likely require you to update some operational processes and expand the number of ways you make or receive payments. A strategy which places high priority on security may lead you to increased costs by demanding more expensive and throughout licences.

To maintain success throughout the constant changes, your payment process needs to be able to adapt to a variety of different factors, such as multiple payment types — often across borders and with numerous partners and institutions. The ideal payment automation solution will be flexible and designed to grow with your business, ensuring your payment options are never restricted.

Multiple ways, new solutions, fresh innovation, and alternative payments are all promising safe ways for you to be ahead of your competition, but whom shall you trust your client’s and own funds?

How to set a payment strategy

1. Follow the money

Check on your current payment methods, by creating a detailed diagram about all money inflows and outflows, allocate risks points and costs to the different providers. Understand what percentage of the payments are successful and what’s the reason for declines. Understand your clients preferred payment methods and make sure you provide all the desired ways to ease their payment experience. Understand all the risks associated with your current payment providers

2. Challenge and evaluate

Question all current solutions and methods quarterly. Keep your eyes on the payment market to get up-to-date information about what your competitors are using. Understand all new opportunities and solutions. Get information about your customer’s payment behaviour changes. Investigate and assess all new providers and see if how you can you fit your company setup within their risk appetite.

3. Work with professionals

Gather all information about your partners. Train your colleagues by creating awareness of the situation. Delegate the payment related responsibilities to the most senior person in your team or hire a part time expert who can guide you with fresh ideas and exhaustive market knowledge and contacts. Your strategy should include personnel management and training so your colleagues also understand how your strategy works and what they can do to support it to the fullest.

Viktoris Soltesz Founder of PSP Angels

4. Use the latest technology

The technology and systems you use can also play a very important role in your payment strategy.

Your payment consultants can direct your attention to new threats and opportunities on the markets you are present, and other legislation changes which can streamline the payment process.

So who’s job is to do all that?

Someone with experience, of course. But payment professionals are hard to find, and even harder to hire for part time. Small and medium sized businesses will not need a payment expert full time, 8 hours a day, but cannot work effectively without an expert’s market knowledge. Setting up clear goals and the right KPIs for your payment operation is priceless and can save a lot for your company if it’s done by the right person. Plus, the high-risk payment market is still running on personal contacts, subjective fees and favours.

If your company doesn’t have a payment strategy or payment expert yet, it’s time for a change. A payment professional can help you design and implement a payment strategy that fits your requirements and works for you. To learn more, visit www.pspangels.com or email info@pspangels.com