When should start-ups focus on payments?
It should steer the entire business strategy, rather than be an after-thought.
Setting up a business is reasonably quick and easy in the UK – you could do it in a day if the urge struck you. But start-ups need to consider several key steps to going into business, which means getting their priorities right.
Too many start-ups spend more time choosing their company name and designing a logo, than considering their payments process. Yet payments should steer the entire business strategy and not be an afterthought.
Think about it – every business must take money. It may not make a profit immediately, but there must be money coming in or it’s not a business. Even more important than your company name, is how your suppliers are paid and how customers pay you, to ensure you maintain good relationships, forge a good reputation and keep a healthy cash-flow. Get that right at the beginning and you can future-proof your business for expansion into international markets.
Your business may not be an international player from day one, but it may need to work with suppliers or customers overseas. Having systems in place to allow you to pay and be paid swiftly, and in different currencies, could offer you an advantage over the competition. It could also save you money on banking costs as well as setting you up for expansion further down the road.
Traditional international bank transfers are expensive, with some banks charging up to £30 per transaction. Additionally, the majority of banks are slow when it comes to making payments; in some instances this can take 3 working days with higher fees being charged to expedite payments. Other hidden fees such as set up and maintenance fees cause further strain on start-ups looking to trade internationally. For start-ups building relationships in emerging markets, they may find that the currencies in which they need to pay their suppliers are limited, which can result in disruptions in the supply chain while alternative payment methods are being explored.
Fortunately, other options are available which will transfer money instantly and for a much lower fee. Banking Circle typically charges around 1%, or less, whereas Bank fees are often around 5%.
So, consider all the options for payments, particularly if you plan to trade internationally at some point. For more information on implementing an international payment solution for your venture, speak to us today.