Bills can be the bane of any small business, especially if they’re not paid on time. And, making timely payments to your vendors, lenders, and suppliers is challenging when you’ve got cash flow problems – not to mention wages, rent, and utilities.
Intuit® recently found that 32% of small businesses can’t pay their vendors, lenders, employees, or themselves due to cash flow problems. But, even with a stable cash position, paying bills can be quite a burden. You have to keep track of due dates, set up payment reminders, transfer funds, visit the bank, mail checks, follow up on payments, and balance your books.
Every business has a different bill pay workflow. But, most would agree that the time spent on those tedious administrative tasks would be much better spent on money-making tasks that help the company grow.
Thankfully, you can use online bill pay services like QuickBooks® Bill Pay* to lighten your load and recover valuable time. This article will first examine some common cash flow and payment problems small businesses face. It will then explore how you can manage bills through our integrated payment solution to alleviate those pain points.
Bill payments and cash flow problems for small businesses
COVID-19 hit the economy hard, forcing many businesses to temporarily pause operations and, in unfortunate cases, close their doors for good.
More and more, companies are struggling to stay afloat, but the service sector, in particular, is falling behind at an alarming rate. Businesses in the restaurant, hotel, movie, and performing arts industries are late on nearly half their bills. They “appear close to a financial breaking point,” reports Mark Zandi, Moody’s Analytics chief economist.
Now more than ever, these companies need a way to organize and optimize bill pay to preserve cash and prevent bankruptcy. Unless individual agreements and extensions are made on a case-by-case basis, it’s difficult to defer payments without damaging your credit score. And, with so much on your plate, it can be tough to manage who you owe, how much you own, and when you need to pay it. Taking the time to then balance your accounts payable represents yet another challenge.
The good news is that you don’t have to go at it alone. To help small business owners regain control over their finances, we’ve built a bill payment solution directly into our accounting software. You can save yourself the time and stress of managing all your bills.
What is QuickBooks Bill Pay
Small businesses rely on QuickBooks to record bills, keep their books up to date, and manage the accounting for their business. Now, QuickBooks can help record bills and pay them using Bill Pay by Melio.
What is online bill pay? It’s a new, built-in payment solution for small business owners who use QuickBooks. The eBill tool is free to access for existing users* and allows you to schedule electronic payments.
Given that a single late payment can drop an excellent credit score by 100 points, paying bills on time is critical. Bill Pay allows you to set up a future payment schedule, so that you can stress less about due dates and derogatory credit marks. You can also send one-time payments to vendors, as needed, giving you total flexibility and control.
You can use online bill pay without exiting QuickBooks, which lets you tackle all of your accounts payable and avoid paper bills. You can also access this service via the QuickBooks mobile app and enjoy flexibility with multiple payment options. This way, you’ll know exactly when and how your recipient will receive the money.
When it comes to paying their business bills, the two main concerns for business owners are keeping their cash flow under control and minimizing the time they waste in the process,” said Matan Bar, CEO of Melio. “That’s why we are excited to introduce Bill Pay for QuickBooks users. Bill Pay helps small businesses save time and money by enabling them to schedule their payments online straight from their QuickBooks screen. It can be used for virtually any business bill, including rent, merchandise, utility bills, and taxes, and because they can make sure the vendor gets paid right on time, and not a day sooner, it means they keep their cash longer and improve their cash flow.”
How does Bill Pay work?
Bill Pay lets you send checks and bank deposits quickly and easily. Recipients don’t have to set up anything on their end. All you need to do is enter your bank account information to pay bills online, directly inside your accounting software. You can settle invoices, balance books, and schedule bill payments in real time.
First, you’ll decide how you’d like to complete the online payment.
- QuickBooks Cash: Use your QuickBooks Cash account to pay bills directly.
- Bank account: Connect your financial institution by submitting a user ID and password, or manually completing the micro-deposit process. Payments are completed in one to three business days, free of charge.
- Debit card: To pay bills online using a checking account and debit transaction, simply enter the card details. The payment will process the following business day, also free of charge.
- Credit card: You can also connect a credit card to finance bill payments and control cash flow, even where credit cards are not accepted. Although there is a 2.9% fee for credit payments, which are processed the following business day, the charge may be tax-deductible. This payment method can also allow you to defer bill payments to maximize your cash flow, earn valuable card rewards, and improve your business credit score over time.
Next, determine how you’d like to pay the vendor.
- Bank transfer: Bill Pay supports ACH transfers that arrive in one to three business days, making it the fastest business-to-business (B2B) payment method offered.
- Check: If you prefer to pay by paper check, it will arrive by mail in approximately five to seven business days. You can also expedite your check through FedEx for an additional $20 to avoid late fees.
The recipient has no additional charges with either option, and doesn’t have to do anything extra to receive the payment.
What are the benefits of Bill Pay?
Extra time is a valuable commodity for small business owners. Bill Pay helps free up that time by taking on the logistics of sending payment to vendors. The tool also allows users to schedule automatic payments, so they’re sent right on time, every time. And, you can worry less about missing due dates.
With everything business owners have on their plates, Bill Pay cuts down the time and effort required to pay bills and balance books. No more going to the bank, waiting on hold to pay over the phone, or signing in to separate accounts to access invoices. Bill Pay lets you do it all at once, directly within your QuickBooks account.
Say goodbye to setting up payment reminders, juggling due dates, and incurring late fees. You can also enjoy greater control over when and how your business pays its bills. Choose between bank transfer, debit, and credit card.
Half of small businesses fail within five years. Paying bills on credit – even where credit cards typically aren’t accepted – can be advantageous. It gives you the opportunity to defer payments, preserve cash, and earn rewards on every transaction. And, by demonstrating a positive payment history toward your statement balance, you may be able to improve your business credit score. Improving your score is crucial for qualifying for funding later.
QuickBooks makes it easy for small businesses to pay bills online or on a mobile device. Watch the video tutorial, or follow these steps:
- Go to “Pay bills” in QuickBooks.
- Review the outstanding bills that need to be paid.
- Select the bill you’d like to pay.
- Select “Pay bill online.”
- Decide how you’d like to pay bills: by bank account, debit card, or credit card.
- Choose how the vendor will receive payment: by bank transfer or paper check.
- Enter the vendor’s routing number and account number or mailing address.
- Save the vendor’s information for future bill payments.
- Schedule a date to process the payment.
- Verify the payment date.
- Include a note or invoice number for the vendor.
- Review the payment information and edit if necessary.
- Select “Confirm and schedule payment.”
- Notify the vendor, if you’d like, to let them know the payment is on the way.
- See the status of your bill payment from the “Expenses” page.
- Select the bill, then select “View payment” on the following page.
- View payment details and cancel or edit as needed.
- If you have questions, select “Need help” in the top-right corner to view Bill Pay FAQs, or speak with a customer service rep.
Bill Pay saves you time, paperwork, and transaction fees. It’s free to access for existing QuickBooks users.* And, it gives new members another reason to join the over 7 million business owners who rely on QuickBooks accounting software.
*Bill Pay services powered by Melio with funds held by Evolve Bank & Trust or Silicon Valley Bank (members of the FDIC and the Federal Reserve). Bill Pay is not available for QuickBooks Online Simple Start.
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