Month: May 2021

Guide on How Businesses can Simplify Different Types of Payouts

Every business needs a well structured financial management plan to successfully implement its goals. Businesses not only need to focus on the cash flow but, crucially making payouts is also an area to excel.

What is a Payout?

The expected financial return from a business, company or investment within an expected amount of time is called Payout. To put it simply, Payout means when a business or company can earn back its capital investment with a minimal amount of profitability.

In the case of annuities and dividends, Payout refers to money distributed to the investors in periodicals. Also in terms of annuity payouts are given regularly (monthly or quarterly). The payout ratio is given to the investors in the shape of distributions. Nowadays, companies process payouts using UPI, IMPS, RTGS and NEFT.

Different types of Payouts

There are four types of payouts:

  • Customer payouts: The refunds, cashback or any other types of monetary rewards paid or gifted to the customers.
  • Partner payouts: Commissions issued by a company to another one from selling, cross-selling their products and services.
  • Employee payouts: Employees are paid by their employers for their work.
  • Vendor payouts: Payments transferred by the company or business after getting material from the supplier or vendor.

Common payout problems

Here are some common payout problems discussed below.

  • There are limited banking hours for payouts using NEFT and RTGS.
  • Due to complicated file formats, making a bulk payout using a bulk contact list is very intricate and prone to errors.
  • Before making a payout it is not possible to verify the validity of the bank account number of the receiver.
  • There are also limitations on payouts if you are using UPI and IMPS.
  • Because of complicated and vague error messages, it is not easy to track and identify errors.
  • In case of failed transactions settlement and recovery of failed transactions and refunds is difficult.

Simplifying different types of payouts

Businesses need to make their online payment process easy for their customers. A complicated payment process can drown the business for good. Here are some simple ways to simplify the payout process:

Direct debit from bank accounts

Every customer usually possesses a debit or credit card and they are also ready to put their card details in the online portal. Third-party payment portals authorize customers to make direct payment from their bank account using debit and credit cards. The plus point is that if a customer can make payments easily, it is highly likely that the customer is going to come back for repurchasing as well as recommending other users at the same time. There’s also a bonus point here, third party services have made it easier for the user to make payment using the one-tap payment option. Using third party services can be a good idea for making the Payout process easier with its obvious benefits.

Automatic payment set up

In the case of product and service providers who charge on monthly subscriptions setting up an automatic payment method, businesses still have things in their favour. Users can set up an auto-pay option and forget about it after signing up once into their account. However, they need to keep in mind that the debit amount is already available in the bank account.

Instant Transfer methods

Businesses can also consider instant transfer methods using wire transfers and bitcoins. This way both the sender and receiver will not have to wait for 24 hours to send and receive the payment. The instant transfer payment method is easier and convenient for the company and the users.

If you are part of a newly established business or company that needs technical help with the cash flow and payout management system, you can click here for detailed information.