How to Use Bulk Payments to Scale Up Your SME

International Payments

min read

TL; DR

Bulk payment is the process of bundling multiple payments into one transaction.
The top three ways to make bulk payments are through payment service providers (PSPs), bank transfers, and card payments.
Bulk payments can help businesses save time and cost, improve cash flow management, strengthen security, and simplify reconciliation processes.

Understanding bulk payments

As businesses grow, one thing that entails is dealing with a larger number of transactions. These may include employee salaries, supplier payments, bonuses, working with contractors, or any tool/equipment upgrades to accommodate larger sales volumes.

Because of this, managing these payments (without errors) also becomes an increasingly daunting task, yet companies must do it to keep the business running.

But it does not have to be.

Bulk payments can help fast-growing SMEs save both time and cost, improve cash flow management, reinforce security, and streamline reconciliation processes.

By definition, bulk payments refer to the process of making multiple payments at once. In simpler words, rather than sending each payment individually, it allows the payer to bundle all individual payments into one transaction either manually or through automated processes.

How bulk payments work

Bulk payments can go by different nomenclatures depending on where you are in the world. In the Eurozone, this form of payment is referred to as SEPA Credit Transfers; in the UK, it’s known as Faster Payments or BACS; and in the US, they are often synonymous with ACH (Automated Clearing House) Transfers.

Here are the three ways to make bulk payments:

1. Bank transfers

Bank transfers are one of the most common methods of making bulk transfers as most individuals and businesses have bank accounts. Not just that, it’s also cheap, safe, and arguably the most reliable option among all due to the stability of banks.

However, bank transfers come with limitations that may not be favourable to certain businesses. To illustrate, customer support is an issue as it’s typically limited to the opening hours of the bank. In this case, for businesses that require access to 24x7 payment services, this will be a major obstacle. Not just that, banks generally have complicated upload formats, which is a cause for concern if the uploading of data is done incorrectly.

2. Card payments

This is mainly used for refunds as most businesses collect payments from their customers through cards. Because of this, it’s much easier to send this payment back to the same originating account as the information is already available. Typically, this transaction can be completed almost instantaneously.

On the other hand, if the customer expects the refund in a different account, this will incur a minimum of 4 to 7 business days for the bank’s verification processes. This may lead to a poor customer experience and can cost customer loyalty in the long run. Also, these transactions come with a corresponding bank fee, which can add up over time.

3. Payment service providers (PSPs)

Payment service providers like Wallex allows businesses to make bulk transfers to both domestic and international counterparts. This is among the most efficient bulk transfer methods as it can be done in seconds online. On top of this, it also allows transactions in multiple currencies, thus eliminating the FX conversion costs.

But, PSPs often come with an associated fee with their bulk payment features and may not be supported in certain countries. This can be a blocker for multi-national companies that need versatility.

🔑

Advantages of Bulk Payments for Businesses

Most commonly, bulk payments are used for local and international salary disbursements to employees, processing invoices from contractors and freelancers, paying dividends to shareholders, direct debits to vendors, or making payments to contest winners.

Here’s why:

Time and cost savings

Imagine a company that needs to make 100 payments to vendors every month. If they were to make each payment individually, it would take a significant amount of time to enter each payment and send it. However, with bulk payments, the company can enter all 100 payments at once and send them in a single transaction, saving time and resources.

Bulk payments can save businesses time as they eliminate the need to manually enter each payment and send them individually. This translates into cost savings because fewer resources are required to complete the same number of payments.

Improved cash flow management

Bulk payments improve cash flow management because businesses can schedule payments to be made on a specific date, thereby ensuring that payments are made on time and reducing the risk of late payment fees.

For instance, a company can schedule all of its payments to be made on the 15th of every month. This ensures that all payments are made on time. Additionally, scheduling payments in advance can help businesses better manage their cash flow by allowing them to plan for upcoming expenses.

🔑

Enhanced security and fraud prevention

Batch payments require the use of Secured Sockets Layer (SSL) and similar forms of encryption that cannot be read while the transaction is in progress. Essentially, this encryption ensures the data is scrambled during the transaction. In practice, it ensures that all data transferred remains private and safe from potential hacks or cybersecurity attacks.

Not just that, bulk payments also minimise the impact of human errors as data is only entered once. This reduces the risk of double payments or overdrawing accounts by accident because the automated systems can quickly detect data error.

Simplified reconciliation processes with vendors

Reconciliation refers to the process of matching payments made with invoices received. Bulk payments can simplify this process because businesses can easily review a single transaction rather than multiple individual payments.

For instance, if a company makes 100 payments individually, it will need to reconcile each payment with its corresponding invoice. This can be a time-consuming process. However, with bulk payments, the company can review a single transaction and easily match it with the corresponding invoices, simplifying the reconciliation process.

Takeaways

Above all, bulk payment is a tool to help reduce the administrative task of making individual payments manually. Instead, it proposes an automated solution that allows a business to manage transactions in bulk. In return, this enables better cash flow management throughout the company.

If you’re looking for bulk payment systems, check out Wallex. Our platform allows you to transact in over 46 currencies and up to 200 beneficiaries.