6 Payment Methods to Accelerate Business Cash Flow

Managing liquidity is a crucial priority for any business. Up to 90% of business failures are due to poor cash flow management and lack of working capital, even for otherwise profitable companies. However, the good news is that modern digital payment methods and trade financing solutions are available to optimize your company's cash conversion cycle.

Implementing faster payment acceptance, collection, and disbursement systems can significantly enhance liquidity, particularly for corporations operating in emerging Southeast Asian markets like Indonesia. Research indicates that companies leveraging real-time payment and settlement options can accelerate revenue growth up to 20% faster than competitors.

This article explores six key payment mechanisms and cash management techniques to improve business receivable's velocity and cash flow. You will discover how each solution can strengthen your liquidity position so you can meet financial obligations, fund investments for growth, and gain a competitive edge over other businesses.

As an MNC or SME operating in Indonesia, fulfilling orders from large overseas buyers or domestic distributors often requires accepting extended payment terms that can strain cash flow. However, trade financing solutions like letters of credit and forfaiting can optimize working capital and transaction efficiency. These invoice financing methods accelerate receivables conversion so you can meet supplier obligations and fulfill orders faster.

Letters of Credit

Letters of credit provide assurance of payment to your overseas suppliers, improving your ability to secure critical imported inputs. With a letter of credit from a business banking partner, you can ensure your supplier will be paid once documents like invoices and transport records are presented to the bank. This removes the risks of nonpayment for imports that could disrupt your production. By securing reliable payment for essential imports, letters of credit enhance the certainty of supply and smooth operations to fulfill customer orders on schedule, leading to faster invoice settlement and improved cash flow.

Export and Import Forfaiting

Forfaiting involves the purchase of export or import receivables by a forfaiter at a discount. It allows you to convert longer-term receivables into immediate cash by selling your outstanding invoices to a forfaiter. Forfaiting accelerates cash flow while removing credit and transfer risks associated with overseas buyers. Many financial institutions provide forfaiting services for export and import receivables across various flexible discounting terms tailored to MSME needs. Forfaiting provides guaranteed payment, allowing you to meet obligations and pursue new orders with less liquidity risk. You can learn more about forfaiting services offered by reputable institutions by visiting their websites.

Transitioning from paper to digital invoicing can accelerate cash flow, especially for MSMEs with limited accounting resources. Manual invoicing and tracking on paper often lead to lost invoices and payment delays for smaller businesses. However, leveraging digital invoicing solutions from reputable providers can help streamline processes and improve cash flow for MSMEs. Some convenient solutions for MSMEs and MNCs in Indonesia include:

DART

Digital Accounts Receivable Tool (DART) enables automated invoice management on one platform. It allows seamless exchange of billing and payment data with customers and partners, simplifying reconciliation. DART provides unique tracking IDs to manage receivables more efficiently.

Omni Collect

Omni payment processing meets the need for convenient digital invoicing and payment. It offers versatile options to issue invoices via email, WhatsApp and more. Omni Collect also allows payments through credit cards, e-wallets, and cash. Moreover, you can monitor transactions wuth business partners in real-time.

Accounts Receivable Re-discounting

Digitizing invoice delivery addresses only part of the cash flow process. The next step is leveraging receivables financing to accelerate monetization of the invoices you issue. Receivables financing solution can accelerate cash inflow in a few key ways:

• Immediate funding against outstanding invoices (up to 90%)
• Discounted purchase of receivables for immediate access to value
• Customized factoring solutions tailored to your industry

Integrated receivables solutions like ARR complement digital invoicing by providing early invoice discounting and factoring. This unlocks working capital tied up in accounts receivable quickly. The end-to-end approach optimizes speed of delivery and collection, cash flow visibility, and funding. Streamlining invoicing and payments using integrated systems is the future of cash flow management.

Managing cash flow across international operations can be very complex for companies dealing with different currencies, regulations, and banking systems. Common problems that businesses face with overseas partners include delayed receivables conversion, opaque visibility into various accounts, and inability to shift liquidity efficiently.

However, liquidity management solutions exist that can cushion these effects to ensure smooth cross-border cash flow. These solutions give a centralized view of cash positions globally and help shift money efficiently to where it's most needed.

When you consolidate control over worldwide cash flows in one place, companies can ensure adequate working capital to fund growth, despite cross-border complexity. Liquidity management solutions provide visibility, tools, and expertise to unlock trapped capital and direct it toward strategic priorities. For example, they enable fast receivables financing, aggregation of real-time data on global cash positions, and seamless cross-border transfers to redirect liquidity based on business needs.

Managing business payments and collections manually can be highly inefficient for companies. Without effective digital adoption, SMEs may spend many tangible hours every month reconciling cash inflows and outflows without automation. This strains working capital and cash flow through delays in receiving customer payments or making timely supplier payments.

Digital payment platforms address these challenges through seamless connectivity and automation. They provide omnichannel access to streamline and accelerate collections from customers and payments to suppliers.

Key benefits of digital payment platforms include:

• Instantly receiving payments from customers via multiple methods
• Automating recurring collections and invoice reconciliation
• Initiating real-time domestic and cross-border supplier payments
• Accessing financing facilities to fund growth
• Gaining visibility into cash flow forecasts and trends

MSMEs and large companies can benefit from enhanced working capital efficiency by digitally optimizing the payment process. Automation also frees up staff time previously devoted to manual tasks.

For Indonesian firms seeking an effective business payment solution, digital platforms like the HSBCnet provide mobile and online tools for managing payments, receivables, liquidity, and more. Well-designed digital payment platforms offer convenience and connectivity that simplify payments, accelerate receivables and provide data-driven cash flow insights.

For businesses involved in international trade, waiting 30, 60, or 90 days for payment from overseas buyers can severely strain cash flow. This impacts the ability to pay suppliers and fulfill additional orders on time. However, open account financing provides solutions to accelerate receivables and optimize working capital for global trade.

Open account trading refers to commerce between a buyer and seller without restrictive letters of credit. It facilitates purchases based on the financial strength and creditworthiness of the trading partners. Rather than waiting extended periods for overseas buyer payment, suppliers can be paid earlier after goods are shipped.

Outstanding invoices can also be converted into immediate cash at favorable rates through receivables financing. Supply chain tools provide visibility into receivables and optimize working capital.

With well-designed open account trade financing solutions, companies can confidently trade with partners selected by financial standing without reliance on restrictive trade documents that delay payment. This acceleration of cash inflow timing also mitigates payment risks. Exploring open account financing options from reputable providers can help businesses involved in international trade improve cash flow and better manage growth.

Another financial payment strategy that improves short-term cash flow is to delay outflows by extending payment terms on business expenses. As an MNC or SME, you can achieve this by subscribing to a corporate card program through a business bank.

Paying business invoices and B2B transactions with a corporate card can significantly extend the payment due date, in some cases by up to 44 days (ID customers only). This improves short-term cash flow by delaying outflows.

Corporate cards allow grace periods of over a month before payment is due. Opting for cards that provide the longest possible payment terms enables you to hold onto capital for an additional period and accelerate growth.

When evaluating corporate card programs, look for features like:

• Competitive interest rates and fees
• Detailed reporting and management features
• Customizable controls and spending limits

When you maximize the benefits of corporate card payment terms, companies can optimize working capital efficiency and reduce reliance on external financing for short-term needs

Efficient cash flow management is crucial for companies to optimize working capital and funding capacity. Implementing digital payment methods and strategic financing can accelerate receivables conversion, facilitate strategic investment, and enable scalable growth. As global markets become increasingly competitive, corporations must continuously evaluate ways to enhance liquidity. Business banking partners provide both the capabilities and expertise to unlock working capital and elevate operational excellence. By leveraging these cash management solutions, firms can sustainably improve cash flow performance amidst evolving demands. With robust capital and data-driven decision-making, businesses can confidently scale and seize new opportunities worldwide.