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Direct Debit vs. Payment Gateways

According to the 2019 Nielsen Payment Landscape report, two in three Malaysians have gone cashless with 57% of the population utilising online banking, and only 27% have opted to use credit cards to pay for their expenses.

There is no denying that when it comes to accepting and processing payments, payment gateways such as PayPal and Stripe have been the de facto solution for business owners. However, with the rise of the subscription economy and the shift towards payment digitisation, many more viable options for processing recurring payments such as Direct Debit have surfaced in the market.

So, whether you are a new business looking to set up a new payment system, or if you are a regular business planning to switch up your payment providers, any changes you make to the payment methods makes that much of a difference from having to make a successful sale, to losing that particular customer to another merchant due to payment preference issues.

In this article, we will shed some light on Direct Debit vs. Payment Gateways along with their differences, benefits as well as disadvantages to help you narrow down your choice to best suit your business needs.

 

But first…

What Is It And How Does It Work?

Let’s start off with payment gateways. A payment gateway is a conduit between the customer and the merchant that processes credit card payments for businesses. A virtual service that collects credit card information securely, stores it, and routes it to a payment processor every time a transaction needs to be made. As a Third Party Acquirer (TPA), the proceeds of your transactions will be received on your behalf before the funds are directed to your bank account in batches over a certain period of time.

On the other hand, and contrary to popular belief, Direct Debit is not a payment gateway, but is categorised as a payment solution that allows businesses to pull payments directly from their customers’ bank account. It is the easiest way for businesses to receive regular or recurring payments from a customer. By filling out a one-time online eMandate form, the customer gives permission for the business to collect payments directly from their account when it is due. Unlike traditional TPAs, settlement happens solely between the buyer’s bank and the seller’s bank, and the funds will go directly into the merchant’s bank account.

So, while there are plenty of payment solutions in the market, there is no one solution that fits all. What is less clear for people for the most part are the ins-and-outs related to each of these concepts, and how choosing and configuring them can impact your business.

Distinguishing The Key Differences
Which one is better?

With all that is being said, the answer to this question boils down to the 3 important differentiations below that could make or break your business.


Flexibility – Utilising a subscription model is more than just charging the same fees to the same customers over a certain period of time. You should also take into consideration of having a payment provider that supports a variety of package plans, to offer not only a variety of billing cycles but with flexible time periods and multiple pricing levels as well to improve customer retention.


Settlement/Payout policy – While some payouts are performed on the same day, others may be performed in batches and could take multiple days before it is successfully transacted into your account. Find a solution that will ensure that you receive the payments on time so that you are able to predict your cash flow.


Reporting – Whether you want to see a single transaction or analyze trends for an entire portfolio, reporting gives you real-time visibility into your transactions. You would want a solution that provides not only daily transaction reports, but also specialised ones such as settlement report, payment modes report, unsettled/failed transactions report, etc.

In any case, both Direct Debit and Payment Gateway solutions offer services beyond payment processing. However, if your plan is to collect recurring payments, then the advantages are obvious. While payment gateways provide options for recurring subscriptions, credit card payments often expire and lead to high level of churn. So, if you are a subscription-based business utilising credit card payments, you might want to rethink your strategy on this.

 

How Does Curlec Stand Out?

As the only payment solutions provider that utilises online Direct Debit in Malaysia, Curlec creates a seamless payment experience that enables you to get paid on time, every time via Direct Debit and Instant Pay (FPX).

Curlec’s simplicity makes a powerful platform for businesses of all shapes and sizes as the system is designed to save you time and manual administrative work, allowing you to focus on growing your business. Hence, putting you, the merchants in control of your own cash flow.

 

Want to talk to us about swapping your current payment solution provider to Curlec? Contact us below and we will get in touch soon!

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How Tos Tips

Whatsapp Your Recurring Payments! Our New Update Tells All

Your customers are busy people. If your business involves recurring payments, you’re probably familiar with this scenario:

An interested prospect responds to your advertisement or gets in touch with your company. From there on, the drill is pretty much the usual – contact them through the phone, follow up further through Whatsapp and ultimately (hopefully!) close the deal.

But then the prospect hits you with one of these:

 

“Oh, I’m currently overseas for work! I’ll only be back in a month.”

“My schedule has been so packed recently. I’ll let you know when I’ve got the time to pop by and sign up.”


Sounds familiar? If you’ve ever been on the frontline of sales, most likely so. In situations like these, no amount of persuasiveness or irresistible promotional strategy can help secure that sale, simply because the prospect can’t sign up even if they wanted to.

 

What We’re Doing To Combat This

To directly address this issue, Curlec’s latest software addition gives merchants the ability to send eMandates directly over the phone through Whatsapp!

Customer representatives or sales personnel can now message the eMandate form over to the customer, and the customer can sign up without even having to make a trip to the company’s physical store. The process takes less than 5 minutes for the customer, and is done on a purely remote basis.

What’s an eMandate?

For companies with recurring billing payment models, the challenge of late payments and delayed cash flow is all too commonplace. These issues pull companies towards the direction of Direct Debit for its ability to automatically collect payments on a recurring basis. But don’t worry if you’re still new to the world of Direct Debit, brush up on your basic knowledge here!

The eMandate is essentially the digital “registration form”. Customers fill it up to grant permission for the merchant to deduct payments from their bank account via Direct Debit. With Curlec, the eMandate could previously be sent through email – and now through Whatsapp as well!

But why not just use email, then?

The channel you use to sign customers up is more important than you think. It affects your close rate, user experience, and even the relationships between you and your customers.

The response rate for email vs Whatsapp is self-explanatory. Which do you respond to faster, email or Whatsapp? There’s your answer.

When it comes to lead response rates, emails may fare better for B2B approaches. But try sending the average Joe an email follow-up response and you can expect to never hear from him again.

Even if all the necessary convincing has been done, and the only step left is for the prospect to sign up via the eMandate, Whatsapp is a clear method of ensuring the prospect feels more pressured to complete the process, and to complete it ASAP.

 
There’s more than one reason why you should be using Whatsapp to close sales.

Consumer Convenience

The checkout stage is where a prospect turns into a customer. When you pay for your groceries at the checkout, you want it done in a jiffy. The same goes for Direct Debit. In this scenario however, the checkout point is the registration of the eMandate.

By being able to send the eMandate over to the prospect wherever they may be, the prospect enjoys a frictionless “checkout” process where all they have to do is open up their Whatsapp to access the form. Considering that Malaysians were the world’s largest Whatsapp users, that’s a pretty comforting fact.

With our new update, there’s no piles of paper involved, no trips to the bank. Not even the need to open up an inbox.


Competitive Customer Service

According to the director of CEB Matt Dixon, more than 50% of customer loyalty is based on the overall sales experience.

Whatsapp enables for more personal, customized customer interaction. Automated website redirecting and emails can hardly compare to the effect of chatting with a prospect via a messaging app they’re already using every single day.

Sales personnel can naturally answer customer enquiries more pleasantly too. Any bumps the prospect may face or queries they may have while filling up the eMandate can be immediately addressed – all they have to do is text.

This helps the prospect (and soon to be customer!) feel as if the sales rep is always there to help them, effectively instilling more trust and customer loyalty in the company.

 

Smoother Cash Flow

Perhaps most importantly? Sending the eMandate through Whatsapp pretty much guarantees a faster submission.

By sending it through email, there isn’t much sense of urgency for the prospect. It may linger in their inbox, perhaps until it completely slips their mind. And by the time your sales rep follows up with them, they’ve probably already changed their mind and decided they’re better off not doing business with you.

The follow up process becomes more efficient as well. Sending a quick “just checking in” reminder can be done more often and is seen as less intrusive and unwelcome as compared to following up via email or over the phone.

Direct Debit at its core is all about putting the company in control of their cash flow. Paired with the benefits of using Whatsapp, its ability to improve cash flow is only enhanced.

 

Have a go at our new feature for yourself!

You want things done instantly, and so do your customers! Our latest software feature enables you to do all that. After all, Whatsapp is an instant messaging app.

Connect with us using this form here to find out how Direct Debit can help your business become a more profitable one.

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Tips

8 Important Questions To Ask When Choosing A Payment Solution

According to the 2018 Global Payments Insight Survey, businesses are now advised to further invest in their payment capacities due to intensifying competition and mounting customer expectations.

For business owners such as yourselves, the decision of whom to entrust with the sensitive payment processing information of your company is a tough one. And many still opt for the easiest route by relying on their respective banks for solutions, despite not having the most appropriate or cost effective option to handle your payment needs.

To ensure that you get the best deal in the market, we have highlighted 8 important questions to get you started on picking the best payment solutions provider for your business.

 

1. Does the payment provider support your type of business?

Each industry will have different standards in payment terms, frequency and value. If the payment provider has experience serving merchants in the same industry as your business, they will be in a better position to offer you a perfectly tailored solution.

 

2. What are the key payment methods you should be processing?

Alternative payment methods represent approximately 50% of online business transactions, plus, cash-on-delivery and credit/debit cards are not the only payment methods made available in today’s society.

More and more customers are now opting to use new payment methods such as Direct Debit due to its convenient one-time authorisation for recurring payments.

 
3. Will the payment system be easy to implement?

Let’s be honest, implementing a fully fledged payment system can be expensive and timely undertaking, so you would want to know if the system is easy to implement.

Make sure the system is easy for you to use as well as making the customer sign up process as smooth as possible.

 
4. What is the cost?

Whether you will be charged a flat fee, % of transaction value, tiered pricing or a monthly fee, your choice will depend on your budget and how you expect your business to perform.

Additionally, you should always consider time saved on administrative tasks and the increased productivity of your employees as the key benefits of a payment solution.

 
5. Does the payment provider integrate with your accounting software?

If you have established your own system, you probably would not want to change your existing software and would like to ask the provider to integrate the new system with your existing platform.

While some providers are easier to integrate than others, most providers will provide you with their APIs to integrate their system onto your website, app or social media page.

6. Does the payment solution provide ways to keep track of successful and unsuccessful collections?

Being able to monitor successful collections in real time will help your business tremendously in focussing its collection efforts. And in the event of unsuccessful collections, certain payment methods such as Direct Debit can be programmed to reattempt collection without human intervention.

 
7. How secure is the payment process?

Dabbling with business payments mean you will need to choose the right provider that could safeguard your customers payments and offer secure data processing. The payment method should also provide fraud prevention tools to protect both the merchant and customer.

Indirect settlements whereby the customer’s payment is routed through a third party acquirer before being settled into your account can also jeopardise the reliability of getting paid on time.

 
8. Are you tied into a lengthy contract?

Since your business will continue to evolve with time, you should always factor in your long-term needs, but also have flexible options to ensure that you and your payment solutions provider can keep pace with the changing technologies.

 

Curlec: A Smarter Way to Collect Recurring Payments.

As the only payment solutions provider that utilises online Direct Debit in Malaysia, Curlec creates a seamless payment experience that enables you to get paid on time, every time via Direct Debit and Instant Pay (FPX) based on 5 key attributes.


Simple, low pricing: We charge 1% per transaction, capped at RM10. Given that we utilise PayNet’s bank-to-bank network, our Direct Debit payments are routed outside expensive credit card networks such as Visa and MasterCard, hence reducing the processing costs for you.


Flexibility: Once your customer has authorised payments with you, you can control how much to “pull” directly from your customer’s bank account as long as it has been previously communicated and the amount is below the maximum amount. With a click of a button, you can easily customise the day, date, frequency and duration of payments accordingly.


Less admin work: Not only would you save cost utilizing Curlec’s payment method, it would also save you time and manual administrative work, allowing you to focus on growing your business. Curlec’s simplicity is a powerful platform for businesses of all shapes and sizes.


Lower rejection rates: There would be lower rates of attrition and higher retention rates as bank account details do not change as often as credit or debit card numbers. Additionally, Curlec is also compatible with both Credit and Debit Cards issued by a Malaysian bank.


Improved cash flow: Using Curlec would immensely help your cash flow as Direct Debit provides same-day and direct settlements into your bank account. This means that you can get paid faster each time.

Read more on how Curlec’s Direct Debit can work for your business needs here.  


Want to talk to us about swapping your current payment solution provider to Curlec? Contact us below and we will get in touch soon!

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Tips

Malaysian Consumers Love Instalment Plans. Can Business Owners Too?

With the retail environment becoming increasingly competitive, businesses are struggling to stand out – or make ends meet for that matter. When faced with the question of “How can we improve sales?”, it’s safe to say that the majority of business owners in Malaysia will look towards their sales & marketing team for answers.

But how many think towards changing their payment method instead? We’ll answer that for you – not many.

Despite instalments having been proven to be a competitive differentiator for businesses and having a direct impact on whether a business makes a sale or not, opting for flexible payment methods don’t come to mind for many. In other words, we as business owners have to know how to look at our services/products from the customer’s point of view.

Instalments to combat every customer.

At Curlec, we’ve seen firsthand what implementing instalment plans using Direct Debit can do for businesses. Sales conversions prove significantly easier when you offer “on-the-fence” prospects the option of splitting up seemingly huge figures into monthly payments. Especially if it’s an automated option and they don’t have to get their hands dirty!

But wait… Are instalments the same as Direct Debit?

In short, no. An instalment plan is a series of invoices over a period of time in which the customer honours an obligation to pay back the merchant for a good or service. The way Direct Debit fits into the equation is by being the payment method in which these obligations are fulfilled. Other methods include cash, cheque or bank transfer but are less convenient for merchants to receive.

A look at how the “BNPL” scene ties in.

“BNPL” stands for “Buy Now, Pay Later”, a term for flexible payment methods where consumers can choose to pay for products or services via in-store credit first. A whole slew of companies are already hopping onto this scene!

“Buy Now, Pay Later” in Malaysia bridges the gap between consumers who are unable to pay for a product/service yet, and merchants who desperately want to make that sale. Malaysian consumers – younger ones who are more prone to impulse-buying in particular, will be able to pay for larger-ticket purchases even without a credit card! This includes the unbanked, who in 2017 made up for 8% of the population.

As we begin to see this rapidly growing movement reach the shores of Malaysia, we can be sure of one thing – The arrival of a time of big spending.

Going deeper into the picture, Malaysian businesses can expect an increase in overall sales not just due to an increase in the purchasing power of Malaysian citizens, but also because being able to buy now and pay later allows them to smoothen their costs and reduce the immediate financial burden.

Remembering too, that the average Malaysian salary this year has been increasing at 3% compared to the previous year. Compounded, this will eventually result in the future burden of consumption from today gradually declining to negligible amounts.

 
“A rich country is one where its people have high purchasing power, not just high salary rate or wage.” – Former Prime Minister, Tun Dr Mahathir Mohamad.

 

The key takeaways from this? Malaysian consumers are going to be spending more and spending big.

As a business, providing the option for consumers to pay via instalments means you can leverage on this wave of big spenders. Because ultimately, we’re still the typical thrifty Malaysian. Being more inclined to make larger-ticket purchases doesn’t necessarily mean we want to pay for it all at once.

 

Direct Debit deals with the difficulties.

The sad truth is that even for businesses who are already offering instalment plans for their customers, results are not always guaranteed. There are two main reasons as to why this could be happening.


1. Most instalment plans only cater to credit card holders

Consumer attitudes towards cashless payment methods are telling – they would much rather use their debit card or bank accounts for instalments here in Malaysia. The problem here? Most instalment plans require a credit card, an item only around 20% of the population have. That’s quite a hefty number of potential customers a business could lose out on!

How Direct Debit helps:

Don’t get confused! Direct Debit = A method of collecting recurring payments automatically from a bank account, not credit/debit card.

But…why collect payments from bank accounts instead? To oversimplify it – lower transaction fees, lower failure rates and less admin work required. Our article here does a full-on comparison!

So that 80% of the population left with no credit card? Direct Debit for instalments makes sure you’re not leaving them out of the equation. No credit card? No problem.


2. Manually tracking each customer wastes time and resources

For most SMEs, enabling traditional instalment plans isn’t the most feasible. It’s fine when your customer base is still small, but once you hit the thousands or even just the hundreds, keeping track of them is next to impossible. Whose payments are overdue, whose payments failed… whether or not you’ll even be able to contact them is a whole other matter.

How Direct Debit helps:

Direct Debit for instalments automates the process and reporting of collection for merchants. This is done during the initial sign-up, when the merchant and customer will agree on the amount, date and frequency of the payment. (Yes, it’s completely customizable!)

After that, payments are automatically pulled into the merchant’s account. So instead of having to chase after customers with outstanding dues every single month, merchants can rest at ease knowing that the payments will already be in their bank account the next time they check it.


Curlec Boosting Businesses

So if by now, you still haven’t jumped on the instalment bandwagon – Get in touch with us here! We’ll help you find out how your business can incorporate, or improve upon your current instalment plans with Direct Debit!

Keen on reading more about consumer financing in Malaysia? Check this out!

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Direct Debit vs Standing Orders – Defining The Differences

At first glance, Direct Debit and Standing Orders may seem like one and the same. When Auto Debit comes into the picture however, it becomes even more confusing for the unfamiliar.

In this article, we shed light on Direct Debit vs standing orders along with all its differences, benefits and disadvantages. If you’re still stumped by Dirwect Debit and Auto Debit however, our recent article here delves into the comparison between the two, from estimated reach to failure rates.

But first…

What is Direct Debit?

Direct Debit is an automatic payment method that allows a business to pull payments directly from their customers’ bank account. Yes, that’s right – of any amount, of any frequency, on any date. Needless to say, it requires the prior authorization of the customer beforehand.

Such convenience and flexibility is made possible via a one-time online form (eMandate) which the customer fills out. This gives permission for the business to debit directly from their customer’s bank account.

While not the most commercial payment method in Malaysia for the past few decades at least, initiatives by Bank Negara and SME’s such as Curlec in driving Malaysia towards the direction of greater economic efficiency via electronic payments has since seen Direct Debit becoming an encouraging trend in the financial sector.

What is a standing order?

Sometimes termed as a standing instruction, standing orders are an order a customer gives to their bank to make fixed regular payments to another account or third party.

The customer is required to be present in person at their bank to set up the standing order. The manual process is traditionally a lengthy one involving queues, forms and signatures galore. Though this still exists today, online banking has enabled customers to set up standing orders from the convenience of their own home or mobile device.

However, what this means for you as a customer is that the responsibility of setting up the payment is entirely in your hands. While business owners on the other hand, will not have the ability to manage the payment particulars such as amount, date and frequency of collection.

It’s all in the name, really.

Direct Debit = An authorization from a customer to a business to debit directly from their bank account. (Either on a fixed or regular basis)

Standing Order = An order from a customer to their bank to make payments of a standing amount and frequency to a business.

Distinguishing the key differences.

Comparison between standings orders and direct debit in a table format

Should I Use Direct Debit or Standing Orders?

The flexibility of Direct Debit and the familiarity of standing orders boils down to a few major questions you should ask yourself when considering the direct debit and standing order difference.

 

1. What kind of payments are my customers making?

For fixed payments such as property rental and education fees, standing orders can be an easy, hands-off way to settle monthly bills.

Payments which may vary in amount and collection date such as utilities and membership fees however, can benefit from the flexibility of direct debit, which allows the business owner to customise the payment particulars after obtaining authorisation from the customer.


2. How much admin can I afford to do?

Direct Debit requires little admin as all processes are automated. Business owners only need to get hands on during the one-time eMandate set up.

Since standing orders rely heavily on the customer to kickstart the procedure, chasing after forgetful customers can become the norm. A nightmare scenario maybe? Investing all that time and effort selling to the customer, only for them to change their mind on their way to the bank.

Even worse, standing orders may not always be accompanied by the correct reference number so businesses may end up erroneously chasing for payments that have already been made!

3. How big is my customer base?

Direct Debit is suitable for any size of a customer base as its one-time online set up ensures anyone can set up a Direct Debit anywhere.

Standing orders are typically suited for smaller scale businesses or organisations due to its tedious set up requiring the customer to make a visit in person to the bank. As an added hassle for standing orders, the business will have to frequently check its bank account to view the status of a collection. And did we mention all the paperwork?

 

Direct Debit in Malaysia?

Curlec is the pioneer Direct Debit company in Malaysia. If flexibility and convenience is what you’re looking for, get in touch with us here to find out how Direct Debit can be one of the key transformative tools for your business!

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Direct Debit vs Auto Debit – What’s The Difference?

In Malaysia, the term Direct Debit and Auto Debit are commonly used interchangeably and misunderstood as the same thing.

While both are methods of automatically collecting recurring payments, there are significant differences between the two that if confused for one another, can mean a world of difference for the business collecting payments.

To learn how to differentiate the two and find out which is best for you and your business, read our comparison below on the difference between Direct Debit vs Auto Debit and you’ll never make the same mistake again!

Note: Direct Debit, Auto Debit and standing instructions are all different payment collection methods. In this article, we only cover the first two. As for standing instructions, that’s for another day!

The Major Difference

Credit Card Illustration

Direct Debit is an automatic payment method that allows a business to pull payments directly from their customers’ bank account. It’s the easiest way for a customer to make regular or recurring payments to a business. Auto Debit (sometimes referred to as Continuous Payment Authority or CPA in the UK), on the other hand, also collects payments on a recurring basis. But instead of from their bank account, it collects payments from a debit or credit card.

In short:

Direct Debit = Regular or recurring payments collected automatically from a bank account.

Auto Debit = Regular or recurring payments collected automatically from a credit or debit card.


Comparing the two

So, that’s all there is to it?”

Well…not really. Due to the method of collection, there are several side effects that you, as a merchant or business owner are definitely going to want to take into consideration seeing as it might affect cash flow and conversion rates.

The advantages and disadvantages of direct debit vs auto debit. Although most are actually advantages when considering a market like Malaysia
Fret not, there’s a reason why the two are so confusing!

But we don’t blame you for mistaking one for the other. This common misconception is brought about due to the way both automatic payment methods are generally marketed in Malaysia. What with Auto Debit commonly being branded as Direct Debit and vice versa.

Take Maxis’ Direct Debit for example. It’s described as a payment instruction from you to Maxis which authorises Maxis to collect your bill charges from your credit/debit card account. The bill is deducted automatically at your regular bill cycle.

Did you catch that? “Collect your bill charges from your credit/debit card account” This means that Maxis’ Direct Debit is actually an Auto Debit service as it collects payments from credit/debit cards instead of directly from the bank account!

Remember, Auto Debit = Collected from credit/debit card. Whereas Direct Debit = Collected from bank account.

Which is better?

Both Direct Debit and Auto Debit are more efficient methods of collecting payments as compared to other payment methods.

Despite this, Direct Debit has the capability to cater to a wider audience and be more low-cost. This is due to the low percentage of credit card users in Malaysia, which severely limits the reach of businesses who offer Auto Debit.

Additionally, the high fees of processing transactions through the global Visa and Mastercard networks, especially when compared to that of Direct Debit, ensure that this is a costly method to run for businesses.

Find out if it’s time for your business to offer a new payment method by reading this article on whether or not your business needs a change in payment methods!

How does Curlec stand out?

With all that said, what makes Curlec different from the rest?

Curlec is the pioneer Direct Debit company in Malaysia. While companies offering Direct Debit services in Malaysia aren’t very many to say the least, they tend to be heavily paper-based and manual, many with long processing times and high rejection rates.

Curlec manages to stand out and make the process even more efficient for both merchant and customer alike by digitising the sign up process and offering the option of auto collection and account reconciliation, ensuring payments are collected in a seamless, affordable and worry-free way.

Uniquely in Malaysia, Curlec’s Direct Debit also accepts locally issued credit cards.

Wonder if your business can benefit from implementing Direct Debit? HINT: It helps to save admin work, reduce costs and improve cash flow!

Find out by asking us here!

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Tips

This New Year, Will You Optimise Your Business Cash Flow?

As business owners, entering a new year means more than gym memberships and quitting bad habits. Personal goals aside, there are also New Year’s resolutions for the business. To provide better customer service, improve engagement on your social media channels and optimise cash flow once and for all, to name a few.

Many of these goals tie in to the overall cash flow of your business, which ultimately affects your daily operations and can become just as disconcerting as general revenue problems.

The consequences of poor cash flow are detrimental and can pave the way for a path to hindered growth, low profit margins and at worst, business failure. Not exactly how you’d want to ring in the New Year!

Yet, a business can still be profitable despite its negative cash flow, which explains why poor cash flow management is still ubiquitous in the majority of businesses, from homegrown startups to multinational corporations.

Sometimes, it’s just habits that stick. Especially in a nation like Malaysia, where payment terms are seen as more of an option than a priority, and getting paid on time is a rare case for joy.

But this new year, make it a point to optimise business cash flow by leaving behind these bad practices in the previous year and implement these techniques to optimise cash flow.

old school telephone to invoke vivid imagery on chasing late payments in the old days

Being afraid to approach clients for late payments

Instead: Offer discounts for early payments and penalties for late payments, implement automated solutions.

Undoubtedly, one of the biggest factors which affects the ability to optimize cash flow within a business is the bad practice of late payments.

It’s not uncommon for invoices to go unpaid for months, with buyers completely ignoring the payment terms stated in black-and-white and sellers not following up consistently, resulting in an increase in tension within the relationship.

Alternatively, for those on the buyer’s end, late payments can result in a loss of trust, endless frustration and the altogether loss of a client. So, what are some cash flow management strategies that can help break through this vicious cycle?

One solution is offering incentives for buyers who are early or on-time with payments, and implementing high interest rates for late payments exceeding the due date.

Despite this, many buyers will still not abide by the payment terms. An even better solution? Avoiding the topic of confrontation altogether by automating the invoicing and payment processes.

Direct Debit, for example, can help to collect payments from the buyer on date every month, mitigating the need to waste time, resources and manpower to follow up Every. Single. Time.

Forking out unnecessary funds and wasting resources

Instead: Save time and money by using Direct Debit to collect monthly payments.

Ask yourself this, how much time and money are you really spending every month on late payers?

You might not want to know the answer. Most recently, a US-based study from Sage reports that late payments are costing SME’s up to $3 trillion annually. That’s 12 zeros.

The report states that over 30% of SME’s viewed the client relationship as the number one barrier hindering them from chasing payments as aggressively as they’d like to.

“As a consequence of late payments, 16% in the US say they will struggle to pay bonuses around the festive period, and nearly 25% expect an impact on staff pay.”

Employee work hours, overtime, admin fees and the other extra costs can be almost invisible at times. That is, until it starts to pile up.

What can you do about it? One of the most efficient ways to optimize cash flow would be to use Direct Debit to make the payment collection process effortless and essentially, let it do all the dirty work for you.

Not managing your inventory well

Instead: Forecast well to reduce costs.

For many businesses, better business cash flow can even stem from optimizing inventory management.

Accurate forecasting for one, can ensure that you’re meeting demand while optimising inventory levels to maintain healthy net working capital.

Another method which has allowed previously irreducible cost centres to see gradual decreases over time is by supplementing robust SOPs (standard operating procedures) with technical competence in data analytics.

In many industries, expertise in supply chain analysis has also evolved to a point where the usage of advanced machine learning algorithms is regularly employed to optimise just-in-time inventory.

Sometimes, the issue may be, to put it simply – human error. Say, a miscount in inventory or erroneously processed orders. Automating such processes by using Curlec to pay for your orders on a regular schedule can help to reduce the risk of human errors. Find out how to do that by contacting us below!  After all, we’re only human right?

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Smarten Your Payments With RHB And Curlec

For Curlec, servicing and improving the education industry is part and parcel of being one of the pioneers in changing the way Malaysia is making payments.

In the education sector, problems with payments arise when it comes to collecting fees from students or their parents on time. Despite the many solutions present today, the age-old issue of having to chase after the other party is still present in nearly every industry.

Because of this, institutions tend to adopt one too many different payment channels which through Curlec, can be easily consolidated into a single method while still remaining flexible enough to adapt to different situations. Not to mention, all the administrative hassles and problems that arise when having to reconcile payments, a task that proves to be effortless by syncing Curlec with accounting systems.

Recently, Curlec had this exact opportunity to discuss ideas on improving operational efficiency in the education industry and to share their knowledge on how Direct Debit can help resolve said issues in a joint workshop with RHB.

Smarten Your Payments With RHB And Curlec

Orbit, a startup co-working space in Bangsar South hosted this workshop, where clients of RHB in the education industry gathered to attend “Smarten Your Collections with RHB and Curlec”, a joint effort by RHB and Curlec to discuss methods on improving payment collections in the education industry.

As a fast-growing and innovative FinTech startup, Curlec aims to make payments seamless for all. For this workshop, the different online payment methods typically used by those in the education sector were covered, along with how payment methods like Direct Debit and FPX in particular could be the missing link when it comes to solving the multitude of problems associated with payment collection for educational institutions.

Curlec makes use of Direct Debit and FPX to tackle issues mentioned above like the collection of school fees. To date, such processes are still done manually, requiring a massive burden to be constantly heaving on the shoulders of a school’s employees. This is where Curlec steps in to relieve that burden. Authorised, automatic withdrawals from the bank account of students or parents can be done on a customizable date, all the while ensuring employees still possess the ability to make any changes when the need arises.

Additionally, administrative hassles like advanced notifications and reminders for outstanding dues are all tasks that can be put into Curlec’s hands. This means employees in charge of admin or accounts can rest at ease and put their focus on other tasks.

Digitising the classroom experience isn’t a foreign concept for most schools, though digitising administrative processes seems to come in second place. Transitioning to more modern mechanisms such as Curlec helps in driving efficiency by reducing the percentage of errors and minimising employee workload, which in turn allows more space for growth. This will help to keep institutions one step ahead of the game.

Find out how we can help in smartening your payments by filling out your contact details below, no matter what industry you’re in.

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5 Ways To Know If Your Business Needs A Payment Method Change

For most business owners, the method in which you collect payments from your customers can mean the difference between a customer gained or a customer lost. And with the vast array of payment methods to choose from, it’s only normal to feel that “As long as payments are coming in, I’ll accept whatever form it comes in.”

But such decisions can have a lot of side-effects and doesn’t work for all businesses. And even if your business relies solely on one payment method, doing so might mean that there’s still space to improve, especially in an age where buying habits and expectations are constantly shifting with the times.

Still, the most common mistake small business owners fall prey to is a failure to change by sticking to “tried and trusted” methods. If you’d like to know whether your business can benefit from a change in the way you collect payments, read on to find out some of the telltale signs that a significant change is due.

 

1. You have to chase after customers every month for payments

Whether it be gym memberships, monthly subscriptions or payments requiring invoices, recurring payments are something present in many businesses. And unless you have a surefire way of ensuring your customers stick to their promise, there will always be a select percentage of customers who seem adamant on making the lives of you and your employees harder.

Such customers will use any means possible to avoid the responsibility of paying up despite the countless emails, calls and messages. Perhaps they repeat the same excuse over and over to delay, or claim that they’re overseas (even though months later, it’s questionably still the same excuse).

The outcome? Extra stress on employees, extra costs incurred for the follow-ups, and very likely – a lost customer. This is one of the reasons why automated Direct Debit can help establish a friendly relationship with you and your customer from the get-go and hinder the possibilities of them pulling any tricks halfway down the road.

 

2. Delayed payments due to late invoices are commonplace

A survey by the SME Media Group and Inti International University shows making late payments has become a very common problem in Malaysia, with 73% of business operators saying it was Malaysia’s business culture.

Surely, this is something most business owners can relate to. Despite having the payment terms in black and white, companies simply refuse to abide by it. If you’re a small business owner, such culture and habits can be detrimental, as explained by the Atradius Payment Practices Barometer Survey.

“Unpaid invoices can have a serious impact on a businesses’ turnover or cash flow. Not only because non-payment by buyers costs a business time and money in respect to pursuing collection of debts, but also because bad debt reserves represent money that is unavailable for use in growing the business. In addition, the longer the receivables remain outstanding, the lower the likelihood of turning them into cash.”

Such complications can be avoided by using a payment method which enables trust on both ends. Curlec allows businesses to set a date which can be discussed with the other party beforehand to ensure that payments can be withdrawn on an agreed date, a feature the usual manual or online bank transfer lacks. Read more on how to get your business paid on time here.

 
3. Keeping track of cash/cheque is a headache

Cash and cheque are two of the most traditional  payment methods used in Malaysia. However, the cons of using these payment methods outweigh the pros. With cash, you might find that keeping track of everything in the cash register can be an absolute headache. Cash not totalling up at the end of the day and mysteriously going missing… Plus, keeping huge sums of cash only puts your business at risk of losing said money to internal or external theft (another constant worry!)

Cheques on the other hand, place and even greater strain on the business when it “bounces” due to insufficient funds. Extra costs involved, administrative annoyances, and time spent following up just isn’t worth it.

 
4. Your fees for online payments are through the roof

Online payment gateways such as PayPal, are convenient and all-inclusive payment methods, that are particularly useful for ecommerce transactions. But there’s one thing most businesses can agree on – the insanely high fees. Set up fees, annual fees, transaction fees, the list goes on. Take PayPal for example. Merchant rates for up to RM12,000 for Malaysian customers is 3.9% + RM2.00 per transaction. Such fees can slowly but surely eat away at your business’ account and though they don’t seem like much, over time they can accumulate and make a significant dent. In comparison, Curlec’s services only charge 1% per transaction, capped at RM10, with no other hidden fees.

 
5. You find yourself doing too much admin

Often overlooked are the tangible side-effects of using payment methods which may not be the most suitable for your business. Namely, time wasted and all the manual work required. Take cash payments for example, employees will be required to manage the cashier, collect cash and tally the total once or even twice a day, only for the possibility of them pickpocketing from the till. Plus, not to mention the costs and time involved in hiring and training new employees! With automatic systems like Curlec for example, there’s hardly a need for an employee at all.

High employee and material costs actually play a huge factor as well, though when considering payment options, not many business owners take this into account. Equipments such as payment terminals to accept debit / credit card payments and cash registers may also not be worth it at times. But with Direct Debit, all you need is a laptop or computer.

If you’d like to know what payment method suits your particular business best, connect with us by filling up the form below this page!

 

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5 Ways Curlec Helps SMEs With Direct Debit

Malaysia is no stranger to Direct Debit, as this payment service has been available since 2010. However, up until now, it has remained an extremely underutilised system due to the high costs and administrative burden associated with running the previous paper-based process. This has resulted in Direct Debit solutions being exclusively reserved for large organisations that have the resources and capabilities to facilitate it.


SMEs have thus been overlooked by traditional financial institutions as they do not have the volumes or internal processes to handle Direct Debit payments. This has resulted in a large void for SMEs due to the lack of suitable alternatives available to them, particularly for recurring payments. This is emphasised by the fact that the average bad debt per company in Malaysia stands at a staggering RM52,100 with an average 94.1 day credit period, as discussed in our previous post.


It is clear that SMEs have been underserved nationwide and payment collection continues to be a big problem. At Curlec, we are changing this and providing a Direct Debit solution to businesses of all sizes. Here are 5 ways that we are helping Malaysian SMEs:


1) Improve Cash Flow

Direct Debit puts you in control as it lets you collect payments whenever they’re due. This means that you can spend less time chasing payments and increase the volume of cash your business has on hand at any given time.


2) Reduce Costs

With Curlec, you can avoid costly credit and debit card transactions. This is because Direct Debit payments are routed outside of card networks such as Visa and Mastercard, making it considerably cheaper for you.


3) Focus On Your Business

Once authorised, you can take payments from customer accounts with no further action needed from them. This lifts a huge administrative burden as payments become automatic, leaving you time to focus on growing your business.


4) Increase Customer Retention

Curlec is a great way to encourage customer retention and attract recurring revenue. This is because Direct Debit creates a simple payment method that can easily be renewed and maintained over long periods of time.


5) Better Accounting

Curlec easily integrates with accounting systems, meaning that collecting payments become automatic when invoices are due. Once you’ve received a payment, Curlec will mark the invoice as being paid allowing for automatic account reconciliation.


We understand that cash flow and managing money is the lifeblood of SMEs. With Curlec taking care of your payments, you take a huge amount of the hassle out of handling these processes. You no longer need to waste precious time chasing customers for late payment and can instead get back to focusing on growing your business with the peace of mind that there will always be money in the bank, all year round.


If you are interested in finding out more about Curlec please reach out to us here by filling in the contact form below this page.