Starting a business in the year when ASEAN (Association of Southeast Asian Nations) integration was hot on every businessman’s tongue can be daunting, and so is ensuring a long-running enterprise gets to survive the expected demand under a larger, if not freer, market.
Whether you’re a starting entrepreneur or a veteran business owner, it’s about time to check that suggestion made by an official from global financial group MasterCard about leveraging digital payments or electronic payments not just to improve your bottom line but also to prep you up for international customers that will come when the ASEAN integration is fully here.
When your business coverage steps beyond your comfort zone, MasterCard Worldwide vice president and head of sales Gerald Sun is right when he said payment and collection processes will have a huge impact on sustaining your business.
“If you will not digitize your payment and collection process, your business will be hurt.” -Gerald Sun
The challenge for many small and medium enterprises (SMEs) now is how to deal with process complexities, including paper-based processes, batch and partial payments and different invoice format and slowly shift to digital payments that, according to Sun, will definitely provide efficiency and competitiveness.
Costly paper-based process
Here’s the scenario Sun painted to us during last month’s Good Business Practices for SMEs in ASEAN organized by US-ASEAN Business Alliance for Competitive SMEs:
Many SMEs’ proof of payment and collection is paper-based, meaning their invoices and receipts are in paper. This also means that this kind of process is costly with having to send the paper in person or by mail and going in person or sending a representative to collect.
There are also other factors to consider: the person who has to send invoices, the person who has to give out the payment to you, and even the weather.
Between sending the invoice and sending a representative to collect, you have lost valuable company time that would have been wisely spent on other parts of the business.
It was not surprising when Sun said that the payment and collection process is the largest driver of cost for SMEs.
“If you will not digitize this specific process, your business will be hurt,” he said.
This is an option SMEs have to take seriously as the ASEAN Economic Community is intent on having a single market and production base with free movement of goods, services and investments across the 10 ASEAN member countries by the end of 2015. And the intent has started with the elimination of tariffs on 99.6 percent of products traded within the region.
More than this, the ASEAN market has an estimated 650 million consumers, which means that the ASEAN integration will push you to do more B2B and B2C transactions in the coming years.
In summary, here are four benefits of digitizing payments and collections, which Sun also presented:
- It increases efficiency and lower your cost through a simple, straight and thorough payment execution.
- It reduces working capital needs through efficiency, transparency and control.
- It helps you grow your business easily through lower funding requirements.
- It enhances seller experience through prompt payment and reduced follow-ups.
What can you add to the list? Or did you have a negative experience with digital payments or electronic payments?
(All images from www.pixabay.com)
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