How to save money with Open Banking

Have you ever eagerly waited for a payment to be available in your account? Every day of delay costs money!

Credit cards and E-Wallet payments can be fast but not instant. It can take on average up to three business days or a credit card payment or E-Wallet to post and to be reflected in your available credit, like Latoya Irby from The Balance remind us. However, in some cases transactions can take 30 days or even more. That can turn out to be harmful for a company.

Shortening the working capital cycle, for example by collecting payments from customers sooner, will help to free up cash. Since the longer that working capital is tied up in unpaid customer invoices, the less money it will available for keeping the company operation. Let’s remember that working capital are the necessary funds to sustain a company operation until the revenue for sales is effectively available.

That’s why the time span between the sale and the availability of that revenue is key, specially for companies with more barriers to access to short term funding with competitive rates, like SME´s. Fast transactions are synonymous of lower capital costs. However, credit card and E-Wallet payments are far from being fast. After each purchase in an online store, the owner waits for the money and, in the meantime has to fund the working capital

That’s why time is money! One possible solution is to short the working capital cycle by collecting payments from customers sooner. That’s possible with Open Banking, since transfers with Open Banking are immediate, organizations can increase their profitability and even minimize their financial commitments and costs.

Working capital supposes more flexibility in a business and it allows to satisfy customers’ orders, expand and invest in new products or services. Open banking will undoubtedly safeguard this cushion, which can also save you in times of economic difficulty for your business.