Whether you are starting a small business or a veteran entrepreneur, one thing you have in common are payables. Even as a solopreneur or freelancer, you are likely spending some money to run your business, so you need to keep track of your expenses both before and after they are paid. An efficient online accounts payable system can simplify your bill payments and avoid the paperwork that comes with more traditional and manual processes. With the effects of the global pandemic and more businesses working remotely in general, managing your accounts payable online also gives you the freedom to access your payments and expenses anywhere. The benefits of managing your payments online are far-reaching. Here are 9 reasons why and one free and easy way to do it:
1. Control your cash flow For many small businesses, managing cash flow is a delicate balance between not paying too early, depleting cash flow, and late payments. An online solution like Melio allows you to schedule payments in advance, so they go out precisely when you want them to, letting you hold on to cash longer while still ensuring that your payments arrive on time. Flexible payment options let you choose how to pay, free ACH transfers, or a credit card when you want to defer payments and extend float.
2. Manage all your payments from one place Managing your accounts payable online keeps all your activity organized in one central place so you always have a clear overview of all your finances. You can also pay your bills from any device, monitor your paid and upcoming payments, reconcile your statements, and keep track of cash flow from any location.
3. Save time Manually calculating invoices is a time-consuming error-prone task, taking up valuable resources in terms of time and labor. Using an online accounts payable solution, can help you automate your processes and free up time for other things. One example is recurring payments like rent/lease, utilities, IT costs, etc. By paying your business bills online, you can schedule these payments to go out every month automatically.
4. Track bill payments as easily as tracking your emails When you pay your business bills online, you can track your outgoing payments and know with certainty that the funds have arrived instead of manually sending checks in the mail that can get lost or stolen. This allows you to boost efficiency and foster a more secure ecosystem of payments.
5. Security Managing your business payments online minimizes the risk of your payment being lost, forged, or stolen. Online accounts payable systems have layers of security protocols and encryptions that help secure the transfer of funds to your recipient safely.
6. Cost-effectiveness We already mentioned how online payments help you avoid late payment fees and the risk of checks getting lost/stolen in the mail (and the work that comes with that). But did you know that Bank of America researched and calculated that a small business could spend between $4 to $20 per check when you factor the time to look up your recipient’s payment details, write and mail the check, stamps, envelopes, and finally reconcile payment?
7. Hands-free payments The Covid-19 pandemic has impacted every facet of small businesses, including business payments. Many have found that implementing an online accounts payable solution helps keep the wheels of business turning. They can still pay their overhead, vendors, and service providers, and continue to sell products and services to their customers.
8. Control who can authorize purchases and payments Many small businesses don’t necessarily have an established purchase order system in place. You can, however, control who has the authority to approve orders and payments. With an online accounts payable system for small businesses, you can set up payment approval workflows that allow you to designate who has permission to approve payments and for what amounts.
9. Manage your end of the year and tax season reporting Organizing your business payments with an online accounts payable solution can help you better manage all your paperwork and reporting when tax season rolls around.
Also, at the end of every year, small businesses are required to file 1099 forms if they have paid an independent contractor $600 or more.You need to classify each service provider and submit them to your accountant or bookkeeper. If you manage your small business payments with Melio, you can easily classify and export a .CSV file for quick access.
One easy (and free) way to set up your online accounts payables
Melio is a free and simple online accounts payable solution designed for small businesses. Melio makes it easy to organize, schedule, track, and reconcile all your business payments from one intuitive dashboard (think Venmo for small business).
With Melio, you can pay your invoices online with a bank transfer (ACH) for free or use your credit card for a 2.9% tax-deductible fee allowing you to defer payments when you need to, increase cash flow and even earn card rewards. Even if your recipient does not accept payments online, Melio will send them a paper check or deposit their money in their bank account for free.
As a small business owner, you probably have a lot on your plate. Setting up your accounts payable online is an excellent way to ensure that you always have an overview of the money that goes out of your business, and how you can optimize spending. Melio is a free and simple way to help you get started. Visit www.melio.com to learn more.