Accelerate your receivables and keep your cash flow at a steady pace.
Cash flow is the lifeblood of your business, and cash velocity - your cash-to-cash cycle time - increases your competitiveness. The less cash you have tied up in operations, the more you have to invest in your business.
Every company's cash management needs are unique. Your banking professional can help analyze your business's requirements and help you find strategies that can maintain unobstructed cash flow. One of the first things to assess is how readily equipped you are to receive payments.
For instance, you may be losing sales if you don't accept credit or debit card payments. A First DataTM study1 found that 62 percent of consumers prefer to pay with or use signature debit, PIN debit or credit cards, while only 32 percent prefer to use cash. This payment method has spread to business procurement policies as well. When you don't accommodate the needs of businesses that prefer credit card purchasing, you may lose customers - and revenue. Accepting credit and debit cards may also increase customer satisfaction, because the transaction is immediate and simple, compared to purchase orders, invoices and managing accounts payable.
You reduce receivables and improve cash flow by accepting payment immediately. You may be used to waiting 30 to 90 days for payments, but that could be trimmed to as little as one day by receiving credit and debit card payments and depositing them into a business checking account2. In November of last year, Supply Chain Insights3 compared companies' Days of Receivables (DOR) and cash flow performance and found that the best-performing companies had the lowest DOR and the highest cash flow. Accepting credit cards is an effective way to reduce DOR. When you begin implementing credit and debit card processes, you will see a decrease in your cash-to-cash cycle time.
Card payments may also increase opportunities to do business with high-risk customers - you want the work, but not if you won't get paid. Accepting purchases made with a credit or debit card is a win/win solution: A third party, one that specializes in managing customers' credit, assumes the risk.
If you already accept credit or debit cards, you may not be optimizing all the advantages. With the typical card processor, it may take two to five days to receive incoming funds. Next-day funding options may be available to reduce your cash-to-cash cycle time even more. Your banking professional can help you analyze your current processing statement and compare alternative options, so you can find the best card-processing solutions possible.
With PNC Merchant Services®, you will be able to select from a portfolio of customized solutions to manage all of the ways your customers want to do business with you. Call 855-PNC-CFO5 to learn more ways to accelerate receivables and optimize your business's cash flow.
1 First Data Corporation. Market Brief: Consumer Payment Preferences for In-Store Purchases. 2008.
2 Next-day funding on card transactions processed by PNC Merchant Services when deposited into your PNC Bank business checking account.
3 Abby Mayer, Research Associate, Supply Chain Metrics That Matter: The Cash-to-Cash Cycle, Supply Chain Insights LLC, 11/26/2012.
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