The case for a business payment ecosystem in 2020
February 7, 2020
The term “payment ecosystem” usually refers to the actors (merchants, banks, etc.) who handle a payment from point to point. However, a payment ecosystem can also mean any processes and people involved in handling payments at a given company.
In that sense of the term, every single business has its own micro-ecosystem for their payments. And, although a lot smaller than vast global payment ecosystems, the way these little ecosystems function matters a lot. And not just to your own company.
Payment ecosystems explained
Although every business is different, their payment ecosystems tend to follow similar structures. Someone handles incoming and outgoing invoices, someone else updates the books, manages payments, and monitors cash flow.
Depending on the size of your business, there could be one or several people involved in your payment ecosystem (accounts payable and receivable specialists, accountants, bookkeepers, and more).
Whatever the case, a smooth, high-functioning payment ecosystem is crucial for the overall success of your company. Misplaced invoices and lost payments can quickly lead to insufficient cash flow that affects both your business as well as your business partners’.
It’s easy to see why: a misplaced invoice and the resulting late payment affects your business partner’s cash flow, and in turn, those companies your business partner won’t be able to pay. It’s a very bad domino effect, felt across many businesses and industries. When your cash flow is obstructed, you might as well poison the watering hole for your business partners.
But, a payments ecosystem isn’t all about your team. Some businesses, especially the small ones, may not have a robust accounts payable or receivable team to delegate these responsibilities to. Because of this, payments ecosystems have evolved beyond staff to include the tools and systems business owners use to do their own finances.
Accounting software like Xero, Quickbooks, and Netsuite have allowed business owners to handle their own finances, while still streamlining the process. Tools like ReceiptBank have made collecting and reporting receipts and bills easier than ever. Timesheets, reporting, reconciling, everything business owners need to organize their finances is at their fingertips. With these tools, they can create their own, personal ecosystem.
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Efficiency is key when it comes to payment ecosystems. And to achieve it, there are two main approaches to payment workflows: centralized and decentralized.
Centralized vs decentralized workflow variations
As with many other aspects of life, centralized and decentralized workflows have both advantages and disadvantages. Which approach would suit you best depends on the nature of your business, how many people you employ, and the amount of payments you handle on a monthly basis.
Centralized payment ecosystems
Centralized, or integrated payment ecosystems refer to a workflow where all the different tasks of the ecosystem are tied together. In previous centuries, this mostly meant a large ledger where all payment-related tasks were noted. Today, payment ecosystems can be tied together using a software platform.
Beware, though. The fact that you’re using software, like a bookkeeping or an accounting platform, doesn’t automatically mean that your payment ecosystem is centralized. In fact, many platforms are focused on a single task within the ecosystem (e.g. accounting, sending payments, monitoring cash flow, etc.) and completely ignore the rest.
A fully centralized ecosystem requires a core platform that either handles all the tasks itself, or is able to integrate its functions with all the other software active in the space.
Decentralized payment ecosystems
As opposed to the above, a decentralized payment ecosystem lacks a central platform that integrates and manages the workflow around payments. In fact, in decentralized ecosystems, tasks are fractured and handled independently of each other.
While certainly less convenient, decentralization doesn’t necessarily mean disorganization. If you don’t want to rely on one platform too much, and if your business doesn’t handle a lot of payments, you can certainly run separate platforms for the various needs of your payment ecosystem.
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However, taking a closer look at the pros and cons of the two different kinds of payment ecosystems can help you make up your mind about which model to choose.
Pros and cons
In centralized payment ecosystems, various tasks are integrated under one software umbrella. Most processes are automated and built upon each other. For example, when an invoice is generated in the accounting software, the central platform automatically updates all the other systems that need to have this information.
This is definitely advantageous for saving time, money, and eliminating information loss. However, convenience has its price: you have to choose software that works well together. Not to mention the fact that in the event of a malfunction or successful cyber attack, the whole system could be compromised.
As for decentralized payment ecosystems, a malfunction or malicious intent would only compromise one platform. Other software could keep functioning as before.
That said, decentralized workflows certainly have their disadvantages. Manually updating each platform after every single invoice or payment is quite inefficient and time-consuming. Information can easily get lost or forgotten, especially if more than one person or department is working in the ecosystem.
All in all, centralized payment ecosystems are usually better suited for companies’ needs due to their efficiency, cost-effectiveness, and automated workflows.
Fully integrated payments with Veem
If your business needs a centralized payment ecosystem, you want to choose software platforms that work well together.
For that, you have two main choices. Firstly, you can try to pick platforms from the same developer. However, this approach can bring several problems. What if your chosen developer doesn’t have a program for a specific task? Or what if it’s not suited to your needs? You could end up with pricey software that aren’t tailored for your business’ needs.
The second – and better – method is to choose platforms that can be integrated with one another. While it’s certainly more time-consuming than simply checking the brand name, it’s well worth the effort. This way, you’ll get a software workflow that’s good for your business and can be integrated into a centralized payment ecosystem.
Luckily, there are many platforms that are able to work together for a seamless workflow. Take Veem, for example.
Veem, the global B2B payment network, has multiple integrations that make it a perfect candidate as a central platform in your ecosystem. Veem integrates seamlessly with the most popular accounting software, like QuickBooks, NetSuite, and Xero.
What’s more, Veem partners with Zapier, the popular integration tool that connects apps for an automated workflow. No coding involved. Thanks to the Veem Zap, you can connect your business payments to 2,000+ other apps through Zapier, saving time and money. And if you’re using Magento for your ecommerce needs, you can rest assured that even that part of your workflow will be fully integrated, thanks to Veem and Magento’s partnership.
Besides seamless integration with literally thousands of software and apps, Veem offers fast, simple, and cost effective global payments to businesses small and large. You can manage all your invoices, payments, and cash flow needs on your Veem dashboard, or via your accounting software. Regardless of the way you work, Veem can make your routine easier, faster, and more streamlined.
Centralize your workflow with Veem and save time and money with fully integrated, easy payments.
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