Trust erosion from slow payment systems

Most people think financial infrastructure has caught up to the rest of technology. It hasn't. Here’s the current flow of funds on a marketplace: A buyer's card is charged instantly to purchase a seller’s product, and the seller waits 3-5 days to get their money. This makes no sense given the state of financial technology and the advent of stablecoins. Building payment systems has taught me that the feedback loop of consumers spending money and sellers getting paid instantly is the biggest trust signal in digital commerce. Marketplaces make a mistake thinking slow payouts help retention. The exact opposite is true. If you make it super, super easy to withdraw, the feeling of security and the ability to withdraw faster will actually get you more sellers. Sellers vote with their wallets, so you can bet they'll choose platforms that respect their time and their money. The question isn't "should we offer instant payouts?" It's "how long until we’re the last man standing?" The businesses that win in the next 5 years will be those who built operational trust. Instant payout = credibility = greater trust.

The Hidden Cost of Stretched Accounts Payable In an effort to manage cash flow, many companies extend their accounts payable (AP) cycles—delaying vendor payments to hold onto cash longer. It sounds like a smart move, right? But here’s the reality: stretched AP can do more harm than good. Here’s how: - Strained Vendor Relationships – Suppliers are business partners, not banks. Consistently late payments can lead to less favorable terms, higher costs, or even supply chain disruptions. - Missed Early Payment Discounts – Many vendors offer discounts for prompt payments. Stretching AP means leaving money on the table. - Weakened Negotiation Power – When vendors expect delays, they build risk premiums into pricing, making it harder to negotiate better deals. - Damaged Reputation & Credit Risk – A pattern of late payments can harm your credit rating, limit financing options, and signal instability to stakeholders. - Operational Bottlenecks – When suppliers deprioritize your orders due to slow payments, it creates delays, stock shortages, and inefficiencies. Yes, managing working capital is critical. But there’s a fine line between strategic cash flow management and creating long-term financial risk. A well-balanced AP strategy builds trust, strengthens supply chains, and ultimately saves money. Some businesses have stated they have stretched their AP since they are being slow-paid from their customers. But how does that look to your current or future accounts receivable lender that sees the stretched AP aging summary?

The impact of late payments on vendor relationships is significant and multifaceted. Late payments can strain the supplier-buyer relationship, erode trust, and have various operational and financial implications for both parties. Impact of Late Payments: 1. Financial Strain on Suppliers: Suppliers rely on timely payments to meet their own financial obligations, including paying employees, covering operational costs, and servicing debts. Late payments can disrupt their cash flow and lead to financial instability. 2. Interest and Penalties: Late payments often trigger interest charges and penalties, increasing the overall cost for the buyer. This can strain the financial resources of both parties and create a negative financial impact. 3. Operational Disruptions: Suppliers may face challenges in fulfilling new orders or delivering goods/services on time if cash flow is compromised due to late payments. This can lead to disruptions in the supply chain and impact the buyer's operations. 4. Erosion of Trust: Late payments erode trust between the buyer and the supplier. It signals a lack of reliability and commitment, potentially damaging the long-term relationship. 5. Impact on Credit Terms: Consistent late payments can lead suppliers to reassess credit terms or impose stricter payment conditions, affecting the buyer's ability to negotiate favorable terms in the future. Mitigation Strategies: Clear Communication: Establish transparent communication channels with suppliers. Notify them in advance if payment delays are anticipated, explaining the reasons behind the delay and outlining a realistic timeline. Negotiate Favorable Terms: Proactively negotiate payment terms that align with the organization's cash flow. Consider staggered or extended payment terms, especially for critical suppliers. Implement Efficient Processes: Streamline accounts payable processes to minimize delays. Leverage technology for automated invoice processing, approval workflows, and payment scheduling to enhance efficiency. Cash Flow Management: Implement robust cash flow management practices to ensure that funds are allocated appropriately for timely payments. Regularly monitor and forecast cash flow to identify potential challenges in advance. Prompt Dispute Resolution: Address and resolve disputes promptly. A well-managed dispute resolution process prevents unnecessary delays in payments and maintains a positive vendor relationship. In conclusion, the impact of late payments on vendor relationships is far-reaching, affecting financial stability, trust, and operational efficiency. Mitigating this risk requires a combination of effective communication, negotiation, efficient processes, cash flow management, dispute resolution, and collaborative strategies to foster a positive and sustainable relationship with suppliers. #accounting #accountspayable #invoiceprocessing #paymentprocessing #p2p #ap

I’ve been building companies for over 8 years. Every year, WITHOUT FAIL it costs more to acquire customers - making retention more important than ever. Yet companies are losing subscribers to a silent killer, failed payments. In 2025, this problem won't just be expensive, it'll be fatal. When a credit card declines at a physical store, customers can quickly provide another payment method. But in the subscription world, payment failures often result in permanent customer loss, even when customers had no intention of canceling. The numbers tell a striking story: while two-thirds of customers will attempt another transaction after an initial failure, one-third will never return to a business that rejected their payment. Even more concerning, 25% will share their negative experiences on social media [Source: Digital Commerce 360]. Why such a dramatic response? The psychology behind this behavior stems from 3 factors: 1) Trust Erosion: Customers blame the merchant, not their bank, creating an immediate breach of trust 2) Disrupted Routines: Sudden service interruptions feel jarring, especially for daily-use subscriptions 3) Effort Aversion: Customers often find switching providers easier than resolving payment issues The business impact reaches far beyond lost transactions. Companies face brand damage from negative social posts, lost lifetime value from churned customers, increased acquisition costs to replace them, and weakened word-of-mouth marketing. Forward-thinking companies are adopting sophisticated approaches to prevent payment-related customer loss: 1) Proactive Issue Detection: Using advanced analytics to identify potential payment problems before they affect customers 2) Intelligent Retry Logic: Moving beyond simple batch retries to optimize payment recovery based on specific failure types 3) Seamless Recovery: Resolving payment issues behind the scenes without creating friction for customers 4) Clear Communication: When customer action is required, ensuring messaging is clear, helpful, and non-accusatory These are all things Redux Payments does. As subscription services continue to grow, the companies that thrive will be those that recognize payment failures as more than just a technical issue – they're a critical customer experience challenge that demands sophisticated, customer-centric solutions. By understanding and addressing the psychology behind payment-related customer churn, businesses can better protect their revenue, reputation, and customer relationships in an increasingly subscription-driven economy.

Slow, paper-heavy reimbursements don't just frustrate customers-they push them toward faster competitors. Members shouldn't have to pay out of pocket and then wait weeks for care costs to be refunded. Some argue that reimbursements are “fine” as long as they’re processed quickly. But in reality, even brief delays can erode customer trust — reflected in the fact that the average NPS for insurance companies sits below 20. Speed matters, but lasting loyalty comes from accuracy, transparency, and fairness. With Pliant, insurers issue pre-approved virtual cards directly to members' mobile wallets-no app download, no upfront payment. Chronic care, emergency travel, or vet bills are covered instantly, transforming claims from a pain point into a service advantage. #insurance #payments #fintech #insurtech