Processing invoices is an integral part of running any business at any stage, yet due to a variety of challenges, it can often be the most dreaded line item on an accounting team’s to-do list. As the business continues to grow, the volume of invoices to process also increases. And as the number of invoices needed to be processed increases, so do the potential problems, such as manual errors, as well as the costs stemming from the use of both credit cards and traditional payment methods. That’s where benefits of Payment Initiation services via Open Banking can help businesses to solve these challenges and operate businesses with reduced costs.
In this article, we will go through a few common challenges of invoice processing and how Payment Initiation services via Open Banking will help solve these challenges.
Challenges while processing invoices
Three challenges businesses may face while issuing outgoing invoices or processing incoming ones include:
Manual errors and inefficient processes
Handling a huge number of invoices requires a lot of manual work, including checking payment details and customer details, such as IBAN numbers. For every invoice, it involves copying & pasting of payment information along with other account & customer details for invoice processing. This can lead to discrepancies in information like invoice number, payment details, contact details, etc. This process leads to simple human errors; it’s even possible for experienced professionals to make such mistakes while matching the information for each document. Manual errors lead to having to double the work processing invoices, including finding errors or missing information, resolving the error and managing the back & forth communication with customers. This not only takes up employees’ valuable time, it ultimately costs time and money for the whole business.
High transaction costs for the business
Even though many businesses are taking advantage of Open Banking-based alternatives, many are still using traditional payment methods or payment via credit cards. These payment methods can charge transaction costs of up to 3%. While managing a high volume of invoices, these high transaction costs for the businesses negatively impacts the profit margins and cash-flow management of the business.
Late payments
Various errors mentioned above can possibly lead to delayed payments. For example, if an invoice with an incorrect amount was processed by an accounting department, businesses might need to pay late fees in the future and it could even have an adverse effect on the vendor relationship. Similarly, if a customer enters their bank account details incorrectly during the process to issue the invoice, it can lead to delayed payments and impact cash flow.
Now, let us see how the benefits of Payment Initiation services can help businesses address these challenges.
Benefits of Payment Initiation services to overcome challenges during invoice processing
With Payment Initiation services, businesses allow their customers to provide consent to third parties to connect their bank accounts and authorise payments directly from the bank account. This drives significantly convenient and cost-effective payment solutions for businesses compared to traditional payment methods. Some of the benefits include:
Eliminate the chance for errors and improve efficiency
While managing invoices and other receivables, there is a possible risk of typos and errors during high manual effort of data input. Using Payment Initiation, payment information is pre-filled to reduce the complexity of manually copying and pasting payment details. This reduces both the chance that someone makes an error or typo, which saves time, money and the resources it would take a business to rectify the mistake.
Minimise transaction costs
Using Open Banking Payment Initiation services to transfer and accept payments will significantly reduce the transaction costs typically associated with using other payment methods, such as credit cards. Payments sent via such services run through SEPA payment rails which allow direct payments from one bank account to another without intermediaries. These cost-effective payments help to minimise the transaction costs for the business and improve profit margins.
Faster account-to-account payments
Businesses can execute account-to-account payments instantly without intermediaries holding payments using Open Banking-based Payment Initiation services. This drives faster payments, compared to credit cards and traditional payment methods. With fast account-to-account payments, businesses can operate with better cash flow management, pay bills on time, and make business decisions more quickly.
Payment Initiation Service by finleap connect
With connectivity to over 3000+ banks, our Payment Initiation Service solution brings more opportunities for businesses with increased profit margins, seamless payment journeys and no chargebacks for businesses. At finleap connect, being at the forefront of Open Banking, we are driving technological changes in the payments landscape. Some of the key features of our Payment Initiation Service solution include:
Pre-filled payment information to eliminate risk of typos and errors
Fixed cost per transaction starting from 0,10€ to minimise transaction costs
Fast payments with highly secure and reliable processing without intermediaries
Do you want to know more?
Do you want to learn more about the benefits of Open Banking for your business? Feel free to reach out!
