Fractional Bill Payments Expected to Benefit SMB Market Nationwide—Accelerating Cash Flow, Reducing Risk, Retiring Debt
"Daily Remittance" Gains Recognition from Users
Dec 09, 2010, 01:54 ET
CHICAGO, Dec. 9, 2010 /PRNewswire/ -- There are more statistics used in measuring business than there are in professional baseball—hard to believe. Products are evaluated and tested in multiple ways like batters, pitchers, and fielders.
In business and in baseball, the home run of statistics is the ability to generate and collect cash. So when customers pay bills late as a result of cash flow, landlords, suppliers, leasing companies, franchisers, and even state and local tax collections yell "foul."
If cash flow problems are the Achilles Heel of business; cash flow acceleration is the cure.
And the cure has arrived. One company based in Des Planes, IL, has a technology-based solution for suppliers who want to get paid on time while reducing risk and for small business owners who want a way to manage their cash flow in a difficult economy. Integrity Payment Systems (IPS), a major B2B business payment provider, believes that "fractional or micro payments" in the form of "daily remittances" are the answer.
Called PayFast®, the new payment tool is a technology masterpiece. Here's how it works.
When a merchant submits his daily credit card receipts (called batches) at the end of a business day, a pre-determined percentage of those receipts are captured and, in addition to standard credit card batch processing services, directed to the merchant's creditors in the form of an electronic transfer (daily remittance). When the merchant's obligations are satisfied, the remittances are stopped. Merchants can pay one or more bills from each batch and account reconciliation is provided daily for both merchants and creditor.
For example, a PayFast enabled merchant can direct a small percentage—sometimes as little as one percent—of his daily "batch" to pay bills like rent, utilities, suppliers, or franchise royalty fees. The benefit to the creditor is that they are paid on time; the benefit to merchant is better cash flow management and not worrying about one or more large payments each month.
For shopping mall owners who wait for checks from thousands of kiosks, remittance of rent from percentage of daily sales is a safety net. For merchants with marginal credit history, paying bills on time can bolster credit scores.
One property manager at Sentinel Property Management, Minneapolis, uses PayFast to collect rents from retail tenants. "We no longer have to wait for checks…merchants like the idea of not facing a rent bill at the end of each month…paying rent becomes part of the business process, not a single monthly event."
Frank Capozza, Marketing Director for PayFast, says he expects to have several thousands customers using PayFast within the next 12 months and tens of thousands within three years. According to Capozza, "PayFast broadens a supplier's business base while reducing the credit risks normally associated with signing new accounts…PayFast accelerates payments and assures that creditors get paid as long as the merchant is in business."
Wind Tide, a retailer in North Carolina, uses PayFast to pay for stock for seasonal sales. The owner of Wind Tide says she "likes PayFast because the more she has on hand, the more she can sell, and the stock is paid for directly from the sale of that stock."
PayFast and IPS believe that this new payment product will accelerate the flow of commerce for millions of small businesses who struggle to get financing to purchase inventory. Capozza says the benefits of using PayFast far out weighs the cost, "PayFast is priced well below Pay Pal and with PayFast the merchant is paying his bills with money be receives from his customers' credit card purchases, not his own personal credit card."
With small business being the backbone of the American economy, anything that helps fuel the expansion will increase the number of new jobs. Capozza says, "PayFast provides small business owners with a new tool that will help them grow their business. We're even seeing business owners ask us to remit a percentage of their daily receipts to tax free retirement accounts. That's good for everybody."
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