Many small businesses, especially those in retail businesses or that run restaurants, are studying ways that electronic and mobile payments might boost their revenue or their improve cash flow. But a large number of these companies still rely on very manual processes to pay their own bills.
"The conventional wisdom is that the use of checks is going down, but for small businesses, this isn't the case," said BC Krishna, president and CEO of MineralTree, a service provider that hopes to help change this.
If you've never heard of MineralTree, that's not really a surprise, because the platform actually sits behind some of the services and applications that some regional banks are beginning to private lable and use to help small-business owners pay their bills more efficiently.
The technology integrates with a company's existing accounting systems to help manage electronic payments more holistically instead of managing them individually for every vendor or writing a check. The pricing depends on the policy of the individual banks, Krishna said. Three of the banks that are using the service include Silicon Valley Bank (with PayAbility), City National Bank (Book2Bank) and Square 1 Bank, all of work actively with entrepreneurs.
MineralTree figures that many small companies make as many as 15 to 20 payments per month. "The check habit is still alive, well and growing for this community," Krishna said.
One company that has made the switch to electronic payments is United Medical Credit, a company in Newport Beach, Calif., that provides financing services for elective surgical procedures. United Medical uses City National's version of the MineralTree service. It uses the service to transfer funds to surgeons and doctors on behalf of its clients, paying a flat fee of $125 per month for up to 125 payments.
"We are eliminating errors, cutting time out of the process, and ensuring almost immediate delivery of the funds," said Matthew Libman, president of United Medical. Prior to making the switch, funds transfers were much more complicated with the third-party service he was using. What's more, if there is a problem or issue with a payment, his team finds out pretty much right away. "We have direct control over this," Libman said.
Right now, MineralTree's service is limited to the three regional banks that I've mentioned. But it might be worth asking your own bank whether it's developing similar services for small businesses.