By Ty Kiisel
OnDeck Capital Inc.
Paying bills electronically is fast becoming the norm for many people. According to a report published in the Credit Union Times, digital bill payments grew from 37 percent of all bills paid to 49 percent in 2013. Earlier in 2015, market research company Research and Markets predicted online payments would exceed $3.2 trillion in the next five years.
This trend isn't just impacting mortgage payments, car payments or online purchases either. Many small business lenders are using automatic electronic payments to make it easier for borrowers to stay on top of their regular periodic payments ‒ regardless of whether those payments are made daily, weekly or monthly. A win-win for lenders, borrowers In addition to being seen as a potential convenience for borrowers, it helps small business lenders approve loans to business owners that might not otherwise get approval at the local bank.
Of course, an automatic payment will require careful consideration of whether your business, or one of your merchant customers, can support such payments from a cash-flow perspective. It will also require some organization to ensure funds are in the account when the debit hits to avoid bank overdraft fees or late fees from the lender.
Here are a few suggestions that will help you and your merchant customers manage an automatic payment schedule:
Automatic payments not only help you, or your merchants, make timely loan payments and give you greater access to borrowed capital, those timely payments may even help you build a stronger business credit profile. A little bit of organization and forethought is what it takes to make sure you're prepared for those automatic periodic payments.
Ty Kiisel is a contributing author focusing on small business financing at OnDeck Capital Inc., a technology company solving the biggest challenge small businesses face: access to capital. With over 25 years of experience in the trenches of small business, Ty shares personal experiences and valuable tips to help small business owners become more financially responsible. Contact him at firstname.lastname@example.org. You can also reach OnDeck at www.ondeck.com, on Facebook at www.facebook.com/ondeckcapital and through the Twitter moniker @OnDeckCapital.
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