How Payment Outsourcing Works

    If you’re like a plurality of Americans, you get paid every two weeks. According to the Bureau of Labor Statistics, 36.5 percent of private businesses opt for that pay schedule. There are a few reasons for that: most people are used to biweekly payments and don’t really question the system, even though technology allows for us to get paid faster.

    But processing payments can be a real pain for the companies who have to deal with it. Since they don’t want to deal with it more often than absolutely necessary, they just keep paying employees every two weeks, or even every month.

    If you’re running a business, you probably think of payments as one of those things that you just have to grin and bear it. But that’s not the case in 2019. Here’s a few things you should know about outsourcing payments to a third party.

    It saves you time

    You may be wondering if payment outsourcing is worth it. Won’t it just add extra steps to the process and make things even more confusing? But it shouldn’t — in the grand scheme of things, it should save you both time and money. You should be able to get payments out faster than you did previously.

    Here’s why: when you make the payments in-house, it slows down your whole operation. Your employees have to take time out of their day to deal with paying employees and contractors. They have to fill out paperwork and wait for it to go through. It’s not an efficient process in most cases.

    But payment outsourcing is efficient, because there are companies whose main focus is processing payments. For your company, it might be a pesky distraction, but for payment outsourcing companies, this is their lifeblood. It’s a routine, but not one they take for granted.

    It’s safer than you think

    If you’re nervous about the idea of handing over sensitive payment information to an outside company, that’s understandable. We’ve all heard the horror stories about identity theft, but that’s why finding a reputable payment outsourcing company is so important. If you do that, then your payments should be more secure than if you processed them using employees who already work for your company.

    Companies who process payments for third parties know a lot more about the latest security protocols. They have knowledge that would take most of us months or even years to acquire, and even then, we could still mess up when trying to implement it.

    To put it another way: if you were going to hire a security guard for your front door, then experience matters. You probably wouldn’t hire a random friend of yours with no experience in protecting a house. Instead, you would hire a trained security guard with the proper licensing and certification.

    The record keeping is superior

    Bookkeeping is the bane of many business owners’ existences, but it still has to get done. It’s not a thing you can just skip out on doing. That doesn’t mean you have to like it, though. That’s another advantage of handing off payment processing to an outside company: they’ll keep records for you.

    Let’s say you have to settle up with a contractor. To be more specific, you have to pay an HVAC repair contractor who fixed the building’s air conditioning unit on one of the hottest days of the year. In a normal situation, you might ask your office manager to send the repair team an invoice. Then, after they send it back, you’ll need a couple of weeks to allow the invoice to go through the system. The contractor might not get paid for a month or more in that case.

    A payment outsourcer can speed up that process considerably. Your contractor could get a check in a matter of days rather than weeks. That’s going to make them happy to do business with you, and it might just mean a little faster service, if, for instance, there’s a problem with the office’s furnace come wintertime.