Small Business Payments Toolkit – Top 5 Takeaways

By Mary Hughes

Small Business Payments ToolkitThe Remittance Coalition has released the first volume of the Small Business Payments Toolkit, which is intended to encourage the adoption of electronic business-to-business payments and remittance information exchanges by small businesses.  Many small businesses continue to over-rely on paper checks, which are labor-intensive, expensive and prone to fraud.  The Remittance Coalition is a group of payments industry stakeholders (including Federal Reserve Banks) that works to increase the efficiency of business-to-business (B2B) payments made and reconciled by US businesses.  The toolkit provides a host of useful information that can be leveraged by small businesses, SBDC consultants and trainers, financial institutions, vendors, and anyone interested in learning more about payments.

Here are the top five takeaways from the Small Business Payments Toolkit:

1. Adopting B2B electronic payments and remittance information exchanges may make life easier for small business owners

Although it may not currently be a top priority, small businesses that choose to enhance the efficiency of their payments processes can yield benefits in a number of ways: 

• Increased ease of paying taxes, bills, and payroll
• Increased ease of receiving payments for businesses that bill clients on a recurring basis
• Higher savings from reducing labor and administrative costs needed to process payments and remittance details

2. Learn about the various types of payments fraud and tips to help avoid fraud

Educating all levels of a small business on basic payment security practices can go a long way towards avoiding fraud and data breaches.  Some payment security best practices include:

• Use strong passwords with lengthy combinations of letters, numbers and special characters, and make sure to change them often.
• Dedicate a PC to be used only for online banking activities.
• Use dual control for origination of ACH files and wire transfers. This means assigning roles to two different individuals so it is not possible for one person alone to complete a transaction.

3. Small businesses that accept ACH payments may benefit from a slew of increased business opportunities

Accepting ACH payments opens the door for new opportunities that include:

• Increased business retention
• Reduced fraud — ACH payments are safer than checks
• Ability to work with companies and government entities that exclusively do businesses with those accepting ACH payments

4. When looking to improve the efficiency of your payments processes, choosing the right financial institution is key

Be proactive and contact banks about payment needs; don’t expect them to come to you. Specifically, seek out financial institutions that offer services like:

• Small business-focused online banking with robust bill presentment and payment services
• Services to set up small businesses as ACH receiver and originator
• Fraud monitoring and prevention tools, including alerts

5. Contrary to the name, this toolkit isn’t just for small businesses!

While small businesses are the toolkit’s primary target, small business bankers, advisors and anyone else interested in learning more about B2B payments will also find this toolkit helpful.  Some of the great resources within this 32-page document include:

• An explanation of the different types of payments (Page 3)
• An explanation of how the ACH network electronically moves money and data (Page 8)
• Fraud prevention and mitigation tips (Page 19)
• A “resource” section full of links to external sites where interested parties can learn more about the specific toolkit information that most interests them (Page 30)

Take a peek at the Toolkit — it’s a quick and easy read for everyone!

Mary Hughes
Senior Payments Information Consultant
Payments Information and Outreach Office
Federal Reserve Bank of Minneapolis