Pros and Cons of payment collection methods in Singapore

The CardUp Team Aug 24, 2021 4:27:14 PM
Businessman working at desk

Setting up a business in Singapore may be easy but the real challenge comes when trying to sustain one. Although SMEs are on the way to recovery, challenges still persist across different business functions — manpower, growth and finance-related issues. 

The ongoing pandemic has further exposed the finance-related issues. Delayed payments are one of the major pain points faced by local businesses, with about 60% of them experiencing late payments from their customers due to cashflow constraints.

 

Problems with delayed payment collections

The complications that come with delayed payment collections remain largely the same for most industries. Your company might be an educational institute, wholesaler and distributor of food products, a digital media agency, or a landlord managing multiple properties, but...
When your clients or customers make late payments, you might not have sufficient cash flow to make your own payments to your suppliers, resulting in a ripple effect of delayed payments
Worst still, with delayed collections you might have insufficient cashflow to pay off the equipment rental costs, pre-paid stock, or to remunerate your employees for their work done
As a result, your company will suffer from insufficient capital to take on upcoming projects or other growth opportunities

To save you from getting bogged down by administrative research, we’ve done the groundwork for you, and here’s our complete guide to the best ways to collect your business payments!

 

5 ways to make business payments

 

Here are 5 ways to make business payments

  1. Cash
  2. Cheque
  3. Bank transfer
  4. Credit cards
  5. Online payment gateways

 

1. Cash

 

What is it?

We’re sure this needs no introduction – despite advances in contactless and digital payment means, cash will always remain a familiar way of transaction.

However, consumers are also beginning to fully and completely embrace cashless payments, with the pandemic further fueling its growth. A 46% increase in card payments has been seen since the pandemic disrupted traditional consumer habits, while 63% consumers have been opting for contactless payments. While these trends have yet to be as apparent in the B2B space, it is expected that cash use by businesses will decline over the years, with many of the other payment types, as we will outline in this post, slowly gaining traction.

 

Pros Cons
Most prevalent medium
  • Cash is the most popular payment mode in the world, and is widely adopted by businesses as payment collection methods
Hard to trace
  • Payments collected in cash usually do not leave a digital trail, which may make it harder to trace transactions
Insecure
  • Large amounts of cash collection can lead to increased risk, through theft, fraud or misplacement
Costly to handle
  • The ‘cost’ of handling cash payments come in many forms, including measures to keep it secure and traceable

 

 

2. Cheque

 

What is it?

A cheque is a document that orders a bank to pay a certain amount of money to the recipient - the recipient will have to physically deposit the cheque to the banks, which are cleared only on weekdays.

Most business bank accounts typically come with an issued cheque book. Before making any transactions with a cheque, these businesses must ensure that they have sufficient funds in their accounts. Therefore, while collecting any amount by cheque there is always a risk which a business owner has to take into account. Cheques are also only typically valid for six months from the date on the cheque.

 

Pros Cons
Easy set-up
  • Collecting  a cheque payment requires only a business bank account, with no additional set-up costs 
Insecure 
  • Usage of cheques are open to fraud through forgery
  • Possibility of cheques lost in mail, resulting in late collections
  Costly to handle
  • Takes up additional man-hours
  • Manual reconciliation comes with risk of errors

 

 

3. Bank Transfer

 

What is it?

Companies can also collect payments via bank transfer between accounts held in over 20 banks in Singapore. What used to take up to three working days in the past has become instantaneous today even between different banks, with the advent of the Fast and Secure Transfers (FAST) services and the introduction of PayNow Corporate.

 

Pros Cons
Immediate
  • Payments can be received immediately, even between different banks
Capped by limit
  • Interbank transfers might have a transaction limit, subject to your daily or monthly withdrawal limits, limiting the amounts receivable
24/7 Availability
  • Bank transfers are available 24/7, allowing for convenient transfers anywhere, anytime
Trackability
  • Payment collections are all consolidated within one place for easier tracking and reconciliation

 

 

4. Credit card

 

What is it?

A credit card is a payment card issued to cardholders to enable them to pay a merchant for goods and services based on the cardholder's accrued debt. 

CardUp is a payment platform letting businesses accept digital payment methods without any need for tech setup or integrations. This lets businesses collect credit card and (New!) PayNow payments from customers quickly with a no-code solution.

Businesses can get started with collecting payments as soon as one business day, in addition to managing all past and upcoming receivables through a dashboard and enjoy easy reconciliation.

 

Pros Cons
Ease of setup
  • Create an account in under 2 minutes and start collecting creating payments in as soon as one business day
Small cost
  • CardUp charges a fee per transaction, which can be passed on to your customers
  • Limited time offer: 0% fee for both you and your customers for both credit card and PayNow payments!
Visibility
  • All past and future transactions easily accessible from your dashboard
  • Reduce manual payment processing, reduce risk and save time for your business
Convenience
  • Generate unique payment links to be shared to customers directly on invoices, or via SMS, email, WhatsApp and more
Multiple acceptance options
  • Collect and monitor both credit card and PayNow payments in one platform for additional convenience and streamlined processes

 

 

Limited time offer: Collect payments completely free with 0% fee for you and your customers

 

5. Online payment gateways

 

What is it?

Payment gateways automate debit or credit card transactions between your customers and your company. These pages typically capture card information on hosted or integrated checkout pages.

Payment gateways are often third-party services that take care of the entire payment journey from processing, verifying to accepting debit or credit cards. Some popular providers in Singapore include Stripe, PayPal, and Cybersource.

 

Pros Cons
24/7 Availability
  • Available 24/7, allowing payment collections any time, any day
Requires set up or integration
  • Not every supplier will have online payment gateways set up
  • Requires in-depth integration into existing websites or apps
Costly
  • These payment gateways typically come with high set-up costs and per transaction fees

 

 

Summary

  Pros Cons
Cash
  • Most prevalent
  • Insecure
  • Costly to handle
  • Hard to trace
Cheque
  • Easy set-up
  • Insecure
  • Costly to handle
Bank Transfer
  • Immediate
  • 24/7 Availability
  • Trackability
  • Capped by limit
Credit Cards (via CardUp)


  • Ease of setup
  • Visibility
  • Convenience
  • Multiple options
  • Small cost involved
Online payment gateways
  • 24/7 Availability
  • Requires set-up
  • Costly

 

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