Developing a Payments Strategy

This article will seek to explore what is involved in developing a payments strategy for any commercial enterprise or pretty much any size. Although the strategy may alter somewhat at the detailed level, I will argue that the approach to be taken is a common one and essentially involves 5 steps. These are:
1. Determining why it is critical to have a payments strategy
2. Focusing on how to issue bills and invoices in a fast and efficiency way
3. Giving customers as user-friendly billing and payment experience as possible.
4. Making as much payment choice available as possible to customers
5. Building a seamless payments process
Within each of these steps there is a mini-process that it is valuable to follow with the idea that at the end of the five steps, a fully tailored and well planned payment strategy can be evolved and then implemented.
In some cases, a senior executive in a given organization or a senior manager in finance perhaps will only need to make minor adjustments to current practice, or merely add a few extra practices or approaches to optimise the system already used. However, in other cases the development of a full payments strategy will indicate a much more substantial overhaul and implementation of changes will need to be carefully planned. In either of these two extremes, we'll examine the major considerations and offer some specific advice in terms of options. There is also lots of third-party advice available in the market, much or which is freely offered. As a result, making changes for the better (at least to some degree) is within the scope of any company in this area.
In the first in the series of five therefore we will look at why it is critical to not only have a payments strategy but to keep it up-to-date and to monitor its success over time.
Step 1 - Appreciating why it critical to have a payments strategy?
First of all let's just define what the payments strategy needs to encompass and then determine why this is so important.
All businesses know that continuing revenue or positive cash-flow is their "life-blood" but few of these have a strategy or even a loose plan to ensure that this keeps flowing appropriately (by which we mean steadily and at a greater rate than costs are incurred). Revenue (as opposed to money from borrowings or equity) only comes in when a business bills for its products and services to its customers and when it receives payment in its bank account. As a result, the process that is used for up-front billing all the way through to the steps to finally collect payment need to operate efficiently and effectively-and this is not something that you want to simply let evolve (or leave to chance).
Whatever its size, a business should spend just as much time on its Payments strategy as it does on its Marketing strategy or Operations strategy. This is simply because all three of these strategies have to work together in order to be successful. Marketing and Sales create demand and get customers to buy in the first place (and will usually spend up-front money in doing so). Operations will fulfill the demand by delivering goods and services (once again spending money to do so). Finally then Accounting and Finance are charged with collecting money from customers, but need to do so in the best possible way (with as much choice as possible) and fast enough to ensure that money is well managed at all times (however seasonal or "lumpy" sales might be).