Why it pays to consider alternatives to BACS
If your business requires supplies, uses parts or carries inventory, then it faces a constant balancing act. On one side, ensuring ready availability of essential items, on the other avoiding ‘dust-gathering’ stock.
Under-provision, and you can end up missing a sales opportunity. Over-estimate, and you risk tying up valuable funds that your business could use elsewhere.
So how do you get it right? The main methods of optimising your supply chain purchasing include:
Using analytics to improve demand forecasting
Accelerating supply chains and applying ‘just-in-time’ logistics
Maintaining stock buffers but only for high turnover items
But no matter how good you get at stock-flow management, cashflow remains crucial to delivering goods and making sales. How you choose to pay suppliers for stock – whether for sell-on, as components, or for ops and maintenance – can affect success.
How BACS could be holding you back
Over the past decade supplier payment by cheque has been phased out. Most businesses now use bank-to-bank transfers such as BACS.
Although cheap, standardised, and compatible with most account systems, BACS payments have several disadvantages that could be holding businesses back.
They can take 3-5 days to clear for suppliers
They can only be processed in working hours
They may need special software or a bureaux service to make bulk payments
They are typically facilitated by accounts teams
The rise in business expense card payments
Smart businesses want to pay suppliers faster (to ensure priority and continuity of supply) while keeping cash in their bank for longer.
Achieving this is easier than you think. Most suppliers and wholesalers readily accept card payments for large and regular purchases.
Business expense cards, such as Allstar Plus, let you pay suppliers instantly while giving your cashflow extra wiggle room to recover. As long as you clear the balance within the agreed repayment time frame, there are no credit fees or payment/transaction charges.
Here are four other ways a business expense card can add to your payment toolkit:
Rebates or loyalty points
Some cards allow businesses to turn transactions into cash back or other incentives such as Amazon vouchers
Supplier discounts
Paying early with a card can enable you to negotiate early payment rates or discounts with your suppliers
Cost effective line of credit
Used alongside other funding such as business current accounts, cards such as Allstar Plus provide interest-free credit which is useful during seasonal/high activity spikes
Lower the admin strain
Most good card payment solutions also come with expense tracking and management software enabling your business easy tracking and analytics of outgoings
If you want to give your supplier payment arrangements more flexibility (and keep suppliers and stakeholders happy), perhaps it’s time to think outside of the ‘BACS-box’.
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