Written by Adnan Essa
Posted on 15/05/2013

Can mobile payments improve cash flow?

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At the Mobile World Congress (MWC 2013) next week mobile payments will continue to be a major theme, can businesses use this technology to improve cash flow?

Previously Gartner predicted, that global mobile transaction volume and value would average 42 per cent annual growth between 2011 and 2016. The organisation expects a market worth of $617 billion, with 448 million users, by 2016.

There is undoubtedly a market for mobile transactions and the benefits may particularly appeal to SMEs. Card reading terminals require set up fees, monthly charges and often feature long contracts.

In contrast mobile payments will take commission from each payment, giving businesses more freedom from monthly operating costs. Payment is also faster, usually taking two to three days, potentially improving cash flow.

Paul McDonnell, managing director of MD integration, has adopted the new payment approach. Speaking with the Guardian, he said, "We're saving so much time now not having to constantly post invoices and then issue remainder and then call up people to see if they've gotten the reminder."

Whilst mobile payments have benefits late payments can still occur and being aware of how exposed a business is can reduce the risk. Using credit reports to assess and set credit limits means a business is more likely to be able to pay, reducing late payments and bad debt.

In addition Graydon collects the payment history of businesses, enabling potential suppliers to see how often a business has paid late in the past. Being able to weigh up the likelihood of a late payment against the gains in a contract is vital for business.

Of course, as with all payment methods there are risks and concerns have been raised that mobile payments will increase the chances of fraud. The National Fraud Association's Annual Fraud Indicator found that participants estimated that, on average, 1.4 per cent of their turnover each year is lost to fraud last year. If mobile payments are widely adopted this figure could rise further.

When trading conditions are already tough losing any amount of turnover due to fraud can place considerable strain on a business. Graydon's credit reports include XSeptions, signs of unusual corporate activity that could be fraudulent, giving clients an additional layer of protection.

Remaining alert whilst adopting new technologies and methods can safeguard businesses against unwanted negative side effects.