Missing a payment can mean losing critical business supplies and disappointing customers. Discover how you can avoid that with scheduled payments.
Do you want a healthy cash flow, with excess funds always available for emergencies?
Or you are the organised type that wants to stay ahead of their to-do list and wants to program your payments to process automatically when due.
Regardless, scheduled payments allow you to make the most productive use of your funds. With a firm awareness of your pending expenses and payments, scheduling your payments allows you the flexibility to optimise your available funds and take greater control of your cash flow.
But what are scheduled payments? And how exactly do they optimise cash flow? You will find out in this article.
What are scheduled payments?
A scheduled payment is a cash management tool for planning and timing business payments for specific dates. Scheduled payments automatically process on the day you set.
Scheduled payments are an excellent cash flow optimisation tool for managing payments that are not due immediately.
Scheduling payments allows you to organise your payments calendar so you don’t miss critical payments. They are a great way to optimise your available funds by releasing payments only when they are due.
Suppose you have a regular supplier for which you cannot risk missing payments. One way to ensure they get their money on time every time will be to pay their invoices as early as possible, even when your agreement allows you more time.
A better approach is to use a payment solution like Intasend that lets you schedule your business payments to release payments when they become due. The payments are processed automatically on your selected date.
Like a set-and-forget feature, this allows you to authorise payments well ahead of the dates they are set to process—this way, you never miss your critical payments.
Between the time you schedule the payment and when it is processed, you can use the available funds for other purposes. You can even schedule your payments to align with your crucial payment receipts, helping you maintain a healthy cash flow.
How do scheduled payments work?
Scheduled payments automatically pay out on a future date. Depending on your payment arrangement with suppliers and creditors, you can pay your scheduled payments in instalments or once in full.
The way scheduled payments work is simple. You select the supplier or vendor you want to pay, set the amount, and select the day you want the payment to process.
While scheduling payments is straightforward, the steps depend on your payment solution. But even with any differences that may be there in how fintechs and banks process them, the main benefits of scheduled payments are the same.
Here are some of the benefits of using scheduled payments in your business:
- Guarantees timely processing of payments.
- Provides flexibility and peace of mind,
- Minimises payment delays,
- Enhances cash flow management.
- It helps split large payments into manageable instalments.
Most payment service providers charge a fee for the privilege of scheduling payments. This may be a flat fee, a percentage of the payment amount, or a combination of both. You should review the charges and decide if the cost matches the benefits.
What are the different types of scheduled payments?
There are different types of scheduled payments. The type you choose will depend on your payment circumstances, average cash flow position, and your arrangements with suppliers. You may use a different type of scheduled payment for each supplier.
1. Lump sum payments.
Lump sum payments are scheduled to pay out in one full amount. These settle the whole bill at a future date but in full. This type of scheduled payment is suitable for one-time purchases and with suppliers you don’t have a longstanding relationship.
2. Deferred payments.
A deferred payment is one where you push a payment due later. These are typically a product of an agreement with a supplier to settle a bill when you expect to have funds available. The downside is that you may have to pay interest on the overdue amount.
3. Instalment payments.
This is when you split a payment into smaller amounts, each set to process at a specific date. Depending on your arrangement with your supplier, the instalments can be in equal portions or uneven amounts. They can also be timed at regular intervals or on specific dates.
4. Milestone payments.
Milestone payments are designed to process when a specific milestone in a project has been reached. Since contractors can miss the agreed targets, the schedules for these payments can change. These scheduled payments are standard in the construction and software development industries.
What is the difference between autopay and scheduled payments?
The difference between autopay and scheduled payments is in who initiates and controls the payment arrangement. With autopay, the payee is in control; they determine the frequency of payments.
Used by businesses that follow a subscription billing model, autopay is similar to recurring payments. You process them using subscription management or automatic billing software.
On the other hand, the payer has control over scheduled payments. They determine the schedule but often in consultation with the supplier.
Their subtle similarities are why scheduled payments are frequently confused with recurring payments. Some people use the terms interchangeably. However, they are two different approaches to managing payments.
Recurring payments are payment arrangements where a customer agrees to be billed and automatically charged at a pre-agreed frequency for goods or services to be supplied.
Common in subscription ecommerce and also called automatic payments, recurring payments guarantee predictable cash flow since customers pay in advance.
At Intasend, we offer both recurring payments and payment scheduling solutions. We are an all-in-one business collections, online payments, and disbursements solution.
What is the difference between a payment schedule and a scheduled payment?
A payment schedule is a timeline for when each of your upcoming payments will be processed. This may be when the payments are due or when you forecast to have sufficient funds in your accounts. It is a calendar of your upcoming payments that gives you an overview of the payments you have to make in a given month.
On the other hand, scheduling a payment sets a future date when a payment will automatically process. It covers one specific bill or invoice and its instalments, if there are any.
Can scheduled payments be cancelled?
As the payer, you have complete control over your scheduled payments. You can cancel them anytime, whether you have agreed to do so with the payee or because the available funds cannot cover the payment.
It is crucial to emphasise that scheduled payments do not require the authorisation of the payee. It is an administrative tool that the payer can use to stay on top of their payments.
Scheduling payments automates payments according to a timeline you set in case you get busy and forget to make the payments when they become due. However, the processes for cancelling a scheduled payment may differ between different payment service providers.
Scheduled payments bring flexibility and peace of mind
Trying to juggle payments for different suppliers and creditors is a lot to handle even for the most conscientious people. It helps to have tools that can streamline the process.
Scheduled payments offer the flexibility to plan your payments well in advance so nothing doesn’t get lost in the paperwork. They allow you to pre-authorise your payments, helping you optimise your cash flow and minimise payment delays.
Never miss a payment again and keep all your suppliers happy by scheduling your payments with Intasend. Sign up for a business account and take the pain out of managing your payments, disbursements, and collections.
