As you may remember, in February 2022, we launched a survey of local businesses to inquire about how business is going for them and asking them to identify what they perceive to be their challenges today and moving forward.
A quick recap of those findings:
The pandemic caused many businesses to introduce an eCommerce presence or expand upon their existing presence. The businesses we surveyed indicated that 10% or less of their sales in 2021 came via eCommerce activities. Those numbers were higher for larger businesses. Nearly half of Middle Market companies (48%) and 42% of Commercial companies saw greater than 50% of sales achieved through eCommerce activities, which is more than double the number of smaller businesses achieving that level. For a third of the companies we talked to, this didn’t indicate an increase from 2020, but 22% of businesses saw sales via eCommerce grow by more than 25% year-over-year.
Companies were prioritizing a need to focus on technology prior to the pandemic, and in its aftermath, though their needs have changed, technology remains a priority. And key among those priorities are Payments and eCommerce. The needs vary depending upon the size of the business, but investment in these areas is essential for businesses as they seek to meet the changing needs of their customers.
So, what does this mean for my business?
It’s been said that eight out of ten businesses fail due to a miscalculation in cash flow. It’s important to know the role that profit and cash flow play. And many businesses recognize their importance – as half of small businesses consider these topics to be their main source of stress according to Insights West.
So how can businesses come to better understand cash management as a whole? Finding the right tools to manage the processes goes a long way to getting the management of a business’s cash flow under control. A great place to start is your local bank. In addition to providing accounts and lending solutions, many financial institutions offer a variety of services that can help you streamline many important tasks for the day-to-day running of your business. These services are also referred to as Treasury Management Services by many financial institutions
The importance of Treasury Management solutions in a digital-first world
Treasury Management services can include payment and collection services that aid businesses in sending and receiving payments. As adoption of digital services continues to increase, and customers become more accustomed to online and contactless business, the demand for easier ways to pay also rises. The COVID-19 pandemic, along with the increasing innovation in the payments industry, have driven a revolution in payments where consumers have come to expect the ability to pay or get paid, at anytime, anywhere. As a result, the demand for digital, contactless, frictionless, and speedier payments will only continue to rise. Similarly, our survey found that local businesses also witnessed many changes in the attitudes and behaviors of their customers during the pandemic. Most businesses we surveyed (54%) reported that customers are increasingly likely to use eCommerce rather than physical locations. Being able to accept a broad range of payment methods allows businesses to meet their customers where they are in terms of their purchasing behavior and preferences, while also streamlining business cash flow.
Point-of-sale (POS) terminals may be available for purchase or rent to allow your business to accept contactless or credit card payments. Being able to accept payments in a broad range of ways allows your business to meet your customers’ expectations, while making it easier for people to pay you. Many of these tools offer online reporting capabilities, making it easier to track the flow of cash and better manage your business’s funds.
Payment solutions are not limited to card processing. Being able to use services such as Automated Clearing House (ACH) or wire transfers allows you to securely send or receive payments electronically, with tools to monitor these transactions easily, from anywhere you have online access to your accounts. For businesses looking to invest in efforts to prevent fraud and cybercrime, additional services, such as Positive Pay, allow businesses to better safeguard their accounts. Positive Pay reduces the risk of check and ACH fraud by verifying the authenticity of each payment. Implementing these add-on tools are a cost-effective method to protect your business’s finances. Your local bank may offer a variety of services to manage and protect your business’s cash flow.
Where do I start?
We always recommend that our business customers do an annual review of their business plans, to evaluate where they could save on interest rates, fees, or other variable and fixed expenses. We’d recommend you contact your Financial Institution to do this. You might find ways to save a considerable amount of money in fees, as well as discovering ways to better protect your accounts from fraudulent activity.
If you’re already working through some solutions, or know you need some help, here are our top five ways to maximize your cash flow or ways to look at things differently from some of our top trusted experts in this space.
- Send out your invoices immediately and make sure they are clear and easy to understand. (1)
- Offer incentives to your customers to pay their balance in full early – this could improve your immediate cash flow. (1)
- Use electronic payments for paying your expenses and allowing customers to pay you. Not only can you wait to pay until the day an invoice is due, but your customers can also pay in multiple ways, increasing their ability to do business with you. (1)
- Consider the following when it comes to payment solutions: Price, Features, Flexibility, Functionality, and Security. Each of these plays a role in how you can function with the solution and where the solution fits into your customer service and experience model. (2)
- Ask what it would take to partner with an established electronic service, like PayPal® – what are the advantages or disadvantages of each company? Can you implement them quickly and easily or is there a large startup cost? (2)
Additionally, our bankers are always here to help. If you’re not sure where to start, how to decide on the right solution for your business, or need trusted advice for any other area of running or expanding your business, reach out to your local branch.
Sources: 1. 10 Ways to Improve Cash Flow (Investopedia, Dan Moskowitz); 2. Quickbooks Blog, September 2020
The First Citizens National Bank is the 4th oldest national bank in the United States still operating under local leadership. It prides itself for its unique style of community banking, blending leading-edge technology and convenience with outstanding personal service, and access to experts who provide advice and tailored solutions to more complex financial questions. Founded in Wyandot County in 1860, the Bank operates thirteen banking and ATM locations in Wyandot, Hardin, Marion, and Delaware Counties, including branches in Powell, Marion, Delaware, and Upper Sandusky. The Bank is a trusted partner to local businesses in north and central Ohio. They understand the critical importance of business success to community and community health and are invested in providing content on topics that are of importance to success of local businesses.