Why bank wires need to be retired

Did you know that the bank wire method for transferring funds is based on decades-old technology? This is one of the reasons it’s slow and cost-intensive.

The good news is that there are alternative payment methods that use modern infrastructure to transfer funds with low transaction fees and faster processing times.

Let’s take a look at why bank wires are outdated and how your business can benefit from alternate methods of domestic and cross-border payments.

Bank wire vs wire transfers

 

Companies frequently do businesses with entities located in geographically distant locations, be it remote workers, suppliers, or utility service providers. Sending funds from bank-to-bank is therefore a regular business activity. Most business owners use bank wires to transfer funds.

Many people often confuse bank wires and wire transfers though they’re different in more ways than one.

The main distinguishing factor between the two is that a bank wire involves the transfer of funds from bank-to-bank whereas a wire transfer is used to send money through a number of networks using a bank or third-party. In bank wires, funds are transferred only through banks. On the other hand, many non-banks and private corporations frequently offer wire transfer services.

Both bank wires and wire transfers are based on the same technology that was used to send telegraphs many decades ago. In fact, the first wire transfer was sent back in 1872.

However, there haven’t been any noteworthy advancements in wire transfers since the establishment of the Society for Worldwide Interbank Financial Transactions (SWIFT) network in 1970. This means transferring funds using a bank wire or wire transfer today is no different from what it was 50 years ago!

The traditional ‘fast and convenient’ way of money transfer has now become outdated and costly. The bank you use to send or receive a bank wire normally charges a fee for their services that both the sender and the receiver pay.

Wire transfer fees are based on different factors such as whether the funds are incoming or outgoing or whether they’re domestic or international.

Correspondent banks act as a middleman to facilitate the issuing bank and the receiving bank. This banking system has made bank wires slower and more expensive than ever before.

What is SWIFT and how does it work?

 

SWIFT is the world’s largest electronic messaging system that was originally designed to securely and easily transmit financial messages.

It’s essentially a bank-to-bank messaging network that uses a standard system of codes showing where a fund transfer is coming from, where it is going, and how it will get there.

According to 2018 estimates, SWIFT facilitates the exchange of an average of 31.31 million messages a day. The high volume of daily message transmission makes it almost impossible to trace fund transfers. Tracing lost fund transfers is costly, takes a lot of time, and there’s always a chance that you won’t recover your money.

The SWIFT regulations state that if a financial institution doesn’t have a correspondent account, the funds will be routed from bank to bank until it reaches the required destination. For instance, if your bank doesn’t have a connection with your beneficiary’s bank, it will have to loop another bank that does have a relationship with your bank – the correspondent bank – to complete the fund transfer.

In addition to this, SWIFT and other intermediary financial institutions charge different fees for their services. The payee has to pay a fee when receiving their funds. You also have to pay additional fees for international wire transfers that require currency exchange.

Two better ways to transfer money

 

Here are two alternatives to bank wires and SWIFT networks that are better in terms of security, processing times, and cost-effectiveness.

ACH

 

ACH (Automatic Clearing House) transactions offer a fast, secure, and cost-effective transfer of funds between banks. ACH transactions work in a batch process, unlike bank wires which involve the transfer of money from one bank to another.

When a money transfer reaches a bank, it’s stored on that day and sent on the next day. This way, these money transactions cost less than wire transfers. However, ACH transactions are slower than wire bank transfers and can take around 2 to 3 business days to complete.

Ablii

 

Ablii is a business payment solution that lets you send and receive domestic and overseas payments. You’ll be able to transfer funds online directly between bank accounts. Moreover, both parties (sender and recipient) will receive real-time status updates on payments in transit.

This payment solution enables you to send payments using data saved in your accounting software including contacts and invoices. Ablii also allows you to manage a searchable payment history through an easy-to-use interface.

Conclusion

 

Alternative payment methods like ACH payments and Ablii offer fast and secure ways to transfer funds. They are also more cost-effective than bank wires, making them a better option for businesses.

Ready to implement a fast and secure payment system for your business? Get Ablii today!

15 Finance terms every small business owner should know

Being a business owner, you have to wear many hats. Especially when it comes to finance, the number of accounting terms and acronyms may feel overwhelming. You may not enjoy talking finance, but understanding these concepts are crucial to your success. We are here to help! We’ve compiled a list of the top terms you should know as a small business owner.

Assets: All things your small business owns for daily operations. These assets span two main categories: tangible assets or intangible assets. Tangible assets include items such as, cash, real estate, equipment, computers and furniture. Intangible assets include intellectual property, copyrights and stock.

Accounts Payable (AP): AP is the sum of outstanding amounts your business owes to vendors or suppliers that have not yet been paid for.

Accounts Receivable (AR): AR is the money owed to your business by customers for the purchases of goods and services made on credit. Account receivables are reflected as a current asset on a balance sheet, since the customers are legally obligated to pay the amount.

Balance Sheet: Summarizes your small businesses key financial data at any given time. This big picture view into your fiscal health includes assets, liabilities and owner’s equity.

Capital Expenditures: CapEx are the purchases your small business makes that will be used to improve performance long-term. These include vehicles, computers, building improvements, and machinery.

Cash Flow: Cash your small business generates from every-day business operations after subtracting purchases made on capital expenditures.

Depreciation: Is a representation of the amount of an assets value that has been used up. It applies to tangible or physical assets over its useful life. There are many types of depreciation, including straight-line and various forms of accelerated depreciation. These depreciating assets allow your small business to write off their value over a period of time.

Dividends: Are a portion of your small businesses earnings that are distributed to the shareholders. The board of directors manage and determine the amount paid to the class of shareholders, by issuing the dividends in the form of cash, additional stocks or other property.

Expenses: The cost of operations that your small business incurs to generate revenue.

Forecasting: A process that uses your small business’s historical financial statements to predict future trends. These trends can be analyzed for a specific period of time and can help with sale, profits and asset values predictions.

Liabilities: Are the debts your small business owes. These liabilities include credit card balances, mortgages, monthly bills and bonds.

Operating Expenses: OPEX are day-to-day operating expenses your small business incurs to keep it operational. These include inventory costs, payroll, insurance, rent, R&D and equipment.

Revenue: Is the amount of money that represents the goods and services your business sold before subtracting any expenses.

Retained Earnings: RE is the amount of net income available to your small business after paying out dividends to your shareholders. Your small business can incur positive net earnings (profits) or negative net earnings (loss).

Working Capital: The money your small business has available to spend or invest on items for the business.

Hopefully this quick list saves your time and helps you feel confident discussing your business’ finances. Still crunched for time? Get in touch with us today to save time and increase visibility while managing your cash flow and payments.

COVID & CORE banking hours in Canada

It’s been an extremely challenging time for small businesses. Cash flow issues and reliance on government funding have become the new norm. We’ve received feedback from our customers that have struggled with the digital options available from the banks, such as remote deposit capture and ATMs, as these options only accept checks up to a certain amount. When digital payments aren’t an option, before making a trip to the bank–make sure it’s open. To help, we’ve compiled a list of both COVID and CORE banking hours in Canada for the Big Five banks:

Royal Bank of Canada (RBC)

The Royal Bank of Canada is the largest of the Big Five with respect to revenue ($46.0 billion in 2019) and number of employees (85,000 in 2019). Founded in 1864 in Halifax, Nova Scotia, as a commercial bank financing the fish and timber industry. RBC now has over 10 million clients and 1,209 branches worldwide.

 

You can find your closest branch by visiting RBC’s branch locator where you will find up to date information regarding banking hours.

Toronto-Dominion Bank (TD)

Toronto-Dominion Bank is the second largest of the Big Five with respect to revenue ($41.1 billion in 2019) and has 89,000 employees. TD Bank is the result of a merger of the Bank of Toronto and the Dominion Bank in 1955. TD now serves over 11 million customers at it’s 1,091 retail locations in Canada.

 

You can locate your nearest branch and its opening hours using TD’s branch locator.

Bank of Nova Scotia (Scotiabank)

The Bank of Nova Scotia also known as Scotiabank is the third largest bank in Canada with respect to revenue ($28.8 billion in 2019) and 99,000 employees around the world. Founded in 1832 also in Halifax, Nova Scotia, to improve the transAtlantic trade industry. Today Scotiabank serves 10 million customers at it’s 900 Canadian locations.

 

You can locate your nearest branch and its opening hours using Scotiabank’s branch locator.

Bank of Montreal (BMO)

The Bank of Montreal is the fourth largest Canadian bank with respect to revenue ($22.8 billion in 2019) and over 45,000 employees around the world. Founded in 1817, BMO is the oldest bank in Canada. BMO now serves over 7 million customers and has over 939 Canadian branches.

 

You can locate your nearest branch and its opening hours using BMO’s branch locator.

Canadian Imperial Bank of Commerce (CIBC)

The Canadian Imperial Bank of Commerce is the fifth largest bank in Canada with respect to  revenue ($18.6 billion in 2019) and employees (over 40,000 in 2019). CIBC was formed as a result of the merger in 1961 of the Canadian Bank of Commerce and the imperial Bank of Canada. CIBC now serves over 10 million customers worldwide at their 1,100 branches across Canada.

 

You can find your closest branch by visiting CIBC’s branch locator where you will find up to date information regarding banking hours.

How to create a great customer experience

Customer experience refers to interactions between a customer and a company throughout their business relationship. The secret to keeping customers satisfied is to deliver great experiences at every customer touchpoint. It’s critical to remember that customer experience does not begin and end with a sale, but includes any interaction they have with your business before, or after a sale.

When customers are happy with your brand, they’re more likely to stay with you. This is why businesses that put customers first and build a customer-centric culture outperform their competitors.

In this article, we’ll take a look at some of the ways you can deliver great customer experiences every step of the way.

Make a good first impression

The customer’s first impression with your business isn’t typically formed when they interact with a company employee face-to-face or over the phone. In fact, it’s formed when they visit your website for the first time or view your content on social media.

Everything in your branding elements – from your logo and color schemes, to your messaging and illustrations – tells the customer what to expect from you and shapes their impression of you.

One way to make a great first impression on your customers is by strengthening your brand touchpoints, including your customer service centers, company website, email newsletters, as well as social media pages. Delivering good customer experience ensures customer satisfaction and also helps you get positive word-of-mouth marketing going about your small business.

Improve website usability

Another way successful companies create a great customer experience for their customers is by making sure their website is user-friendly and accessible. Delivering a seamless website experience is essential for a good user experience, and it’s all about using good information architecture. After all, you want your customers to be able to effortlessly browse through your site and quickly find the information they’re looking for.

We recommend that you test your site’s usability with a small team to get a better idea of the end user’s perspective. Tinker with your site to understand its ins and outs and identify the points where customers struggle.

For example, if you’re running a membership site, your goal might be to enable visitors to land on any page of your website and find the information they’re looking for, intuitively. By making it easy for customers to find information and complete tasks, you’ll be able to deliver a great user experience while boosting conversions.

Identify customer pain points

Being mindful of your target customers’ needs can help you accurately identify their pain points and address them. You can use this information to position your product or service as a potential solution. Solving the challenges customers face helps you deliver great customer experience.

Start by creating a customer journey map and identifying their pain points. This will help you find areas of friction that negatively impact their experience. This will help you figure out how your product or service can solve the customer’s problem.

A good practice is to collect customer feedback and analyze data to figure out the most common issues customers face. This way, you’ll be able to focus on solving their problems and positioning yourself as a customer-first business.

Offer coupons and discounts

Employee satisfaction increases employee productivity which in turn means delivering better service and value to your customers. This ultimately leads to an increase in sales and promotes profitability.

Successful businesses keep their customers happy by building a culture of rewarding and recognizing their employees. This enables them to increase customer satisfaction and boost customer loyalty.

You can improve customer experiences by keeping employees and customers at the forefront of your company. Consider offering staff members special discounts on occasion and rewarding loyal customers by sending them exclusive discounts via email.

Set up self-service options

Offering self-service options is a great way to enable customers to find answers to questions through your website (or via a telephone number) during after-hours. This is especially useful for companies that aren’t open around the clock.

You can offer self-service options to your customers by creating an online helpdesk or knowledge base with FAQs on your company website. Another way you can offer assistance to your customers is by setting up live chat options that they can use to talk to a customer service representative and resolve their issue, or leave a support ticket if an operator isn’t available.

Conclusion

By focusing on improving the customer experience, you can achieve your internal goals of driving up sales and increasing customer retention. We looked at some of the ways you can improve your customer experiences and increase customer loyalty and, hopefully, you’re in a good position now to take the next steps.

Do you agree that creating a great customer experience can help you get ahead of the competition? Share your thoughts in the comments section below.

 

 

 

 

 

Payments from Canada to India are live!

Toronto, ON – Ablii, a self-service online payments platform for businesses, is proud to announce that it’s expanding with remittances to India. Now businesses in Canada can send cross-border payments to India as well as the U.S., in addition to domestic payments.

nanopay Corporation launched Ablii in the summer of 2019 to replace traditional payment methods, such as checks and wires. While banks offer some services for large corporations, there are limited affordable payment options for smaller businesses. Ablii aims to fill this void in the market and offer features that businesses are looking for, such as low-cost payments, automated updates to online accounting software, and management controls.

With the recent expansion, businesses in Canada can now make cross-border payments to both the U.S. and India for only $5.00 per transaction, making it one of the most affordable options on the market. Competitive exchange rates, plus no sign up or monthly fees, lets business owners try the service risk-free.

“In Canada, we continue to see many businesses using checks and wires. Despite many of the bank’s functions moving online, the majority of international payments are done in the branch. We want to give business owners back their time and their freedom from in-person payments, and now we can for payments to both India and the U.S.” said Simon Keogh, Chief Product Officer of nanopay Corporation.

According to a study by Payments Canada, “more than 80% of small businesses want more payment options.” It’s time to give the businesses what they want. Business owners can sign up today at ablii.com, and follow news impacting small-to-medium sized businesses on Ablii’s LinkedIn, Facebook, or Twitter.

“The world is changing and globalization is the norm. All businesses, not just large corporations, have to access the global marketplace in order to compete. It’s clear the need for secure, ubiquitous, and low-cost payments are common around the globe. This is why we are so excited to offer business payments to India,” said Laurence Cooke, Founder and CEO of nanopay Corporation. “With Ablii, it’s never been easier for business owners to pay vendors, contractors, or suppliers in India.”

Ablii looks to soon expand into other international markets, as we continue to offer more affordable alternatives for international payments.

Protecting your small business from occupational fraud

March is Fraud Prevention Month, an annual public awareness campaign aimed at helping educate the public, and providing the tools and resources businesses need to defend themselves against fraud.

However, businesses are the target for many kinds of fraud, and small businesses are particularly vulnerable. Which is why we decided to take this opportunity to bring light to some of these issues and discuss what can be done to mitigate these risks.

 

  • Firstly, there are multiple kinds of fraud, but what is occupational fraud and how does it threaten a business?

Occupational fraud is sometimes called workplace fraud or internal fraud, but refers to fraud committed by employees or executives, against the company. There are 3 general categories of occupational fraud.

 

  1. Corruption: This may be the most well known type of occupational fraud. Examples include bribery, kickbacks, and extortion. However, corruption is not the most common form of occupational fraud, nor is it the most costly (on average) to businesses.
  2. Asset misappropriation: By far the most common form of occupational fraud, examples of asset misappropriation include, skimming, fraudulent disbursements, and larceny (false sales/shipping, theft of office equipment, etc.)
  3. Financial statement fraud: This may be the least common source of occupational fraud, but it is certainly the most costly for businesses. Examples include improper disclosures, fictitious revenues and improper asset valuations.

Businesses are often focused on external threats, and combat these by implementing firewalls, alarm systems and encrypted access to systems. However, occupational fraud is more common and causes more financial loss to businesses than frauds committed by third parties, and these internal threats require controls and protective measures as well.

 

  • Businesses of all shapes and sizes are vulnerable to occupational fraud. How are small businesses affected differently?

It’s important to point out that regardless of business size or industry, all businesses have some level of vulnerability to fraud, whether strategically planned, or opportunistic in nature. Having said that, small businesses do seem to be in a higher risk category for a number of reasons.

Small businesses typically have fewer resources to contribute to anti-fraud controls than larger businesses. Not only that, smaller businesses are typically more trusting of their employees and therefore may not feel the need to expend additional resources for these controls.

According to the ACFE 2018 Report to the Nations, small businesses lose almost twice as much per scheme to occupational fraud than large businesses! In addition, fraud caused by a lack of controls is nearly 70% more likely to occur in small businesses than large businesses.

Also, one fact that I found surprising, fraud is nearly twice as likely to be perpetrated by the owner or an executive in a small business (less than 100 employees) than a large business.

 

  • What types of controls can businesses put in place to protect themselves and their consumers from these issues?

There are many controls a business can put in place, and each business needs to think about what works best for them. Having said that, a few examples include:

 

  • A code of conduct: Having a corporate wide code of conduct that explicitly states the ethical behaviour all staff should exhibit has a surprisingly high impact. In a survey of companies done by the ACFE, there was a 56% reduction in median fraud losses when a code of conduct was in place.
  • A fraud risk assessment program: A great tool for businesses to understand their risk universe, the likelihood of a risk event occurring, and the measures or controls that are in place mitigate them. Start with a simple approach that can scale.
  • A digital business payment platform: No, moving to digital payments does not automatically protect from occupational fraud, but many platforms today, like Ablii, have built-in controls to help small businesses specifically fight occupational fraud.
    • Payment approvals require a second set of eyes to review all outgoing payments before they can be completed.
    • Employee permissioning ensures only employees with proper authority can add/edit payees and bank accounts.
    • Transaction logs keep records of all transactions and account activity on an immutable ledger, allowing businesses to easily identify any financial discrepancies.

Protecting your organization from fraud takes a little work, but once procedures and technology are in place, it will begin to feel like a routine part of running the business. Questions or comments? Get in touch with one of our team members!

 

How to build your personal brand as an entrepreneur

Building your personal brand helps you nurture trust in your target audience, showcase yourself as an authority in your field, get featured in online and print media, and build a community.

However, personal branding and business branding aren’t the same things.

A business brand is built around how you want your business to be identified and differentiated from other businesses. A personal brand, on the other hand, is built around how you want others to identify you – your lifestyle, values, personality, and interests.

In this article, we’ll take a look at how you can build your personal brand and grow your customer base.

Build your foundation

 

Building a strong and authentic personal brand requires you to take inventory of what you stand for. The first step in building your personal brand is to lay a foundation that gives you the confidence and authenticity to build upon.

Branding doesn’t mean showcasing yourself as something you’re not. Instead, it’s used to sincerely (and strategically) project your authentic self to clients and customers. In the same way, your personal brand should tell your audience about your skills, achievements, beliefs, and values.

When building a strong foundation for your personal brand, start by taking your existing brand assets into account:

  • The skills you possess as well as the training, certifications, achievements, and awards you’ve received.
  • The various industries, fields, or topics you’re interested in or passionate about.
  • The core values you hold dear and the things you stand for.

 

After you’ve figured out your existing brand assets, you can start bringing together the key elements of your personal brand.

Ask yourself:

  • What’s your brand vision? What do you want to be recognized for?
  • Why is building a personal brand important to you?
  • What message do you want to get across to your target audience?

 

These questions will help you formulate your brand vision and message.

Connect with your target audience

 

Collaborating with other leaders in your industry and mentioning each other in social media posts can help you increase your outreach.

You also need to make sure that you share your content on the right social media platforms. For example, if you create visual graphics or infographic-based content, Twitter and Instagram are great platforms for sharing it with your followers.

Another way to connect with your target audience is by giving your posts a personal touch. Consider providing unique insight through tweets, videos, and captions. This way, people will know your stance and it will help establish you as an authority in your industry.

Creating and sharing free content on your personal social media page can also help you earn the trust of your followers and build your personal brand. Once you’ve jotted down some topics, choose the type of content you want to create and decide which platforms you’ll share it on. Some of the common content types include articles, online courses, podcasts, infographics, and PDF guides.

Keep in mind that creating and sharing content can be time-intensive. Start with one or two main content types (like articles or videos) and promote your content through a few different marketing channels (such as Twitter and YouTube).

Instead of targeting a wide audience right off the bat, focus on becoming a leader in your community. Start by defining your target audience and building a community for them to communicate with each other, have discussions about a topic, help each other, and get in touch with you directly. Consider creating a Facebook Group or a private forum to connect with your target audience.

Increase your visibility and online presence

 

Sharing content on your own platform (such as your website or social media profiles) enables you to attract new customers, but it requires a lot of time and effort. Getting featured on other platforms gives you exposure to other people’s audiences.

People want to know about other people in their industry and learn from their experiences.

Managing your own outreach by personally reaching out to media outlets is a great way to build your personal brand. These may include online magazines, high-authority websites, and podcasts.

Here are some actionable tips you can use to increase your visibility and online presence:

 

  • Get interviewed on webinars and podcasts that are popular in your industry.
  • Create written content for online magazines and blogs that are read by your target audience. These are typically sent out in email newsletters.
  • Speak at live conferences, casual meetups, and summits that your peers and target audience attends.

Conclusion

Building your personal brand as an entrepreneur can help you differentiate yourself from your competition. Start by building a solid foundation and connecting with your target audience. After that, focus on increasing your visibility and online presence.

What platforms do you use to communicate with your target audience? Let us know by commenting below.

 

3 payment trends to watch for in 2020

 

A new decade is upon us, and the payments landscape is changing FAST. Here are our 3 payment trends to look out for in 2020.

 

Shifting focus from P2P to B2B

 

Peer-to-peer (P2P) payment services have become increasingly popular, especially in the U.S., as companies like Zelle and Venmo have become household names. However, while the last few years have seen many new innovative options become available to consumers, very few innovative solutions have come to market for business-to-business (B2B) payments…until now. 

 

B2B payments involve complex, manual processes, where paper checks still account for roughly half of all corporate transactions. Organizations, both large and small, are actively looking for digital, account-to-account payment options, and payment technology companies capable of offering flexible, functional solutions will be able to capture a market many times larger than P2P payments.

 

Real-time in no-time

 

Payments will not just become increasingly digital, they will become faster! The idea of a real-time payment, once a myth, is slowly becoming a reality. Canada and the U.S. have yet to implement said systems, but the U.S is taking significant steps towards a faster payments system, while Canada has begun discussing the path towards modernizing its payment rail. Approximately ¼ of the world’s countries have already, or are currently implementing a faster payment ecosystem, and this will undoubtedly become the new reality.

 

While real-time payments have yet to come to fruition in North America, payment providers who are prepared will stand to reap the benefits of this digital transformation. As one article states, “solution providers stand to gain from an evolution-not-revolution approach to adoption…” and this evolution has officially begun.

 

Cash is no longer king

 

While cash may be accepted (almost) everywhere, it’s now clear that consumers prefer digital payment options. In Canada, small businesses now do fewer than 25% of their transactions in cash, and that number is decreasing fast. Cash still has its place, but consumers have made it clear that the best payment experience is no experience at all. Services like Amazon and Uber have made it as simple and painless as possible to pay, while credit cards have mostly moved to contactless payments. The adoption of digital wallets has been slower in North America than the rest of the world, but adoption rates are steadily increasing. Finally, businesses, especially small businesses that have less access to alternatives, have begun demanding new options. In fact:

 

  • More than 80% of small businesses want more payment options
  • 61% of businesses surveyed would move away from cash, if they had other options
  • 67% would be willing to move away from checks, if they had other options

 

So 3 things have become very clear:

 

1) Both consumers and businesses want digital payment options. Cash still has its place, but this is a digital era and payments must evolve to match other industries.

2) It’s only a matter of time before real-time payments are achieved. Both Canada and the U.S. are not there yet, but some payment providers, including Ablii, are ready.

3) Business-to-business payments are lagging behind, with paper checks forcing businesses to spend far too much time and money on payables/receivables and reconciliation.

Check back in later this year to see if anything has changed!

 

 

 

 

Learn about ACH payments

In this post, we’ll take a look at what ACH payments are and how your business can benefit from using this mode of payment.

 

What are ACH payments?

Automated Clearing House (ACH) payments are an electronic transfer of funds between banks. These payments are transferred through the United States ACH network, which connects thousands of financial institutions nationwide.

ACH transactions are secure, fast, and cost-effective. While there are other types of electronic transfers such as credit and debit card payments, they aren’t ACH transactions. In fact, ACH payments are specific to bank account transactions.

To complete a transaction, the entity requesting a payment needs access to bank account information from the other entity involved. For instance, let’s say you need to deposit money in your employee’s bank account. You’ll need to get their bank account information, which includes the employees’ bank name, type of bank account (savings or checking), recipient account’s number, and the bank’s ABA routing number.

This information is used to transact payments to the correct account. The same information will be required by the billers when making pre-authorized withdrawals from their bank account.

ACH payments are mostly electronic from beginning to end. However, some users convert paper checks to electronic payments and the money is transacted through the ACH system.

 

How do ACH payments work?

When a customer sends you a payment through ACH, the funds will show up in your bank account as a direct deposit. Here’s a brief explanation of how ACH transactions work:

Sending payments: To begin, a customer has to authorize the transfer of an ACH payment. Similar to signing a credit card receipt or a paper check, they are required to sign an ACH authorization form (or give verbal consent). The ACH system enables you to set up one-time payments, recurring payments, or a series of payments made on specific dates.

Receiving payments: After an ACH transaction is authorized by the bank, the agreed-upon payment is transferred from your customer’s bank account into your account. Payments are typically processed within 3 to 5 days, although sometimes it’s received on the same day. Similar to paper checks, if there are insufficient funds in your bank accounts, the ACH payment will simply “bounce”.

 

Benefits of ACH payments

Let’s look at the key benefits of ACH payments for businesses:

 

  • Easier to track than check payments. ACH transactions are easier and faster to handle as compared to conventional payment methods such as check payments. As opposed to checks, ACH payments can be automatically set up, require less time to process (as checks have to be mailed), and cannot be lost.
  • More cost-effective than credit cards. For organizations receiving payments via credit card transaction (which charge around 2% to 4% per transaction, plus setup and operational fees), ACH payments often cost less to process. This is especially useful for businesses that have to collect several recurring payments.
  • Facilitates long-distance payments. Businesses can remotely receive ACH payments, just like credit cards. If a customer doesn’t want to give you their credit card information or don’t have one, ACH can be a great alternative.

 

Are ACH payments a type of EFT?

While ACH transactions are a type of Electronic Fund Transfer (EFT), ACH is specific to the United States, and each country uses their own domestic payments system. If you do not live within the U.S, you should check with your banking provider to learn more about how funds are transferred.

 

Conclusion

ACH payments are an easy, secure, and fast way to transfer funds between banks. They are more cost-effective than credit cards and also undergo a rigorous verification process before and during the transfer.

What payment options do you offer your customers? Let us know by commenting below.

4 accounting tips for small business owners

To run a successful business, you need to keep your books up to date. That being said, entrepreneurs often struggle in this area, and risk falling behind when focusing on growing their small business.

But good news! There are some tried-and-tested tips that can help you stay on top of your company’s financial health and efficiently track your business’ transactions. In this article, we’ll go over some actionable tips to help you take control of your accounting responsibilities.

 

Tip #1: Keep it simple

As a small business owner, you should consider using cash-basis accounting. It’s a simple accounting method that’s used to track income and expenses.

In cash-basis accounting, you record transactions only after they’re completed, and make a record when you get paid or when you make payments. Ideally, transactions should be recorded on the day they occur.

 

Tip #2: Know which data points to record

Recording everything on a daily basis may seem tedious at first, but keeping a detailed record of your money transfers is necessary for reconciliation purposes.

Here are the main data points you need to record for incoming funds:

 

  • Products or services sold
  • Customers (or businesses) to whom you sell your products or services
  • Amount received from customers (or businesses)
  • Date when the payments were received

And here are the data points you need to record for outgoing funds:

 

  • Taxes paid
  • Paychecks and bonuses
  • Business operating expenses (e.g. inventory, marketing, and equipment)
  • Overhead expenses (e.g. rent, utilities, and legal fees).

There are several reasons why you must keep a detailed record of your company transactions. For starters, it can help you claim small business tax deductions depending on your income or the business structure.

Moreover, some received money may not be part of your revenue. For example, the sales tax you collect isn’t revenue. If you put all your money into a single account, it will be difficult to separate sales tax payments from your actual income.

 

Tip #3: Follow up on receivables

Sending an invoice to your customers doesn’t necessarily mean you’ll receive the payment on time. Good practice involves issuing invoices as soon as you deliver a product or service as it significantly increases the chances of timely payment.

Remember to follow up with vendors who owe you money as the payment deadline approaches. You can also offer early payment discounts to motivate your clients to pay on time!

Additionally, accepting online payments and using cloud-based accounting software can help you streamline your accounting tasks. With Ablii, you can simplify your business transactions. The platform helps you automate your accounting, track receivables, and get your money faster.

 

Tip #4: Create financial projections

Financial projections and reporting may take time, but they can help you estimate where your business will be in the next few years. This information puts you in a good position to make sound decisions regarding investments.

Financial forecasting can be complicated for some people as it involves figuring out the different ways expenses can change due to forces beyond your control – such as interest rates and inflation – as well as decisions made by your customers. The same goes for revenue since you need to take various factors into account, such as an increase in prices and how many new customers you acquire each year.

Consider starting with a profit and loss statement, which tells you how profitable your company is over a period of time. By analyzing it regularly, you will be able to get insight into which business areas you’re making money and which ones you’re losing money in.

 

Conclusion

Accounting for small business owners may seem complicated at first, however, it becomes a whole lot easier if you implement some simple tips to better understand your business’ financial health.

Do you regularly record your business transactions? Share your best money management tips in the comments section below.

 

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