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A financial tool that’s helping small businesses not only survive the pandemic, but grow

Forced to reinvent their business models by COVID-19, entrepreneurs are finding increased efficiency—and cash flow—in digital payments

A financial tool that’s helping small businesses not only survive the pandemic, but grow
Digital payments have become important tools for small businesses, especially during the pandemic.
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Life changed for Itika Oldwine in the course of a few weeks as COVID-19 swept into the United States. Oldwine’s Los Angeles-based company, Oldvine Florals, had built a reputation as a go-to florist for high-profile weddings, red-carpet events, and corporate product launches. Those bookings dried up virtually overnight. “Events were about 84% of our revenue,” Oldwine says. “It was honestly a shock to the system.”

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Like many companies, Oldvine Florals was forced to quickly alter its approach in the wake of COVID-19. Oldwine pivoted toward individual customers, offering customized floral arrangements for, say, Mother’s Day gifts rather than movie premieres. Oldwine drew on her marketing background to land media appearances and create email blasts to draw new clients. Her plan worked. Within weeks, customers were lining up for gift deliveries and even floral arrangement subscriptions. “We’re crazy busy right now,” she says. “We’re really cooking with grease.”

The turnaround has meant Oldwine has had to tap into a network of skilled freelance floral designers and delivery experts to keep her orders running on time. And, since much of Oldvine Florals’ business is online, digital payments from customers help buoy the company’s cash flow. “It’s definitely been helpful for people to pay directly with cards,” Oldwine says. “Those payments show up right away, and that lets me pay my freelancers and drivers consistently, which is really important these days.”

Digital payments have become increasingly important tools for any small business, and even more so since the onset of the pandemic. Many companies had to completely rethink their strategies for delivering their products or services and managing payments. “If you’re a local bakery, most days you think about whether you have the right flour and the right sugar,” says Kevin Phalen, global head, Visa Business Solutions. “Once COVID-19 hit, they also had to pivot into this new way of engaging with their customers in a digital environment, because safety became so important.”

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THE CONSUMER APPROACH

COVID-19 caused a seismic disruption for small businesses. Take a local restaurant that didn’t have much of a digital presence before the pandemic hit: it suddenly needed a robust website that let customers choose what to order, allowed them to pay online, and helped coordinate the pickup in a safe and secure way. “All of a sudden they had to figure out how to do curbside pickup and delivery and how to take contactless payments, because people didn’t want to use cash,” Phalen says.

Small businesses had a lot of work to do—and very little time to do it—to make sure they kept customers and revenue coming in the door. They saw the opportunity for their efforts to be paid in immediate dividends: the switch to mostly online payments could help streamline cash flow and even reduce the risk that bad checks or other fraudulent payments can present. “It’s made it a little bit easier for them to operate,” Phalen says. “Now they’re getting money passed to them in a manner that gives them much more control.”

As consumer transactions went digital, many small businesses also took the opportunity to shift their approach to sending and receiving money to and from vendors and other business-to-business partners. After all, COVID-19 shuttered many workplaces, making it more difficult to write, collect, and deposit checks. That led to an uptick in companies moving toward digital payments for both accounts payable and receivable.

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In fact, Phalen says he’s seen a migration of small businesses toward digital payment solutions enabled by Visa Direct, Visa’s real-time* push payments platform. Businesses can use Visa Direct through their financial institutions to deliver fast digital payments to suppliers and workers.  Visa Direct also helps businesses receive funds quickly—whether from customers or business partners—helping them to manage cash flow to cover their own operational costs. “It’s something that’s really helping small businesses manage their AP and AR needs,” he says. “They can pay their workers faster and have more control over managing their payments to their vendors.”

FOREIGN AFFAIRS

Digital payments also are making it easier for businesses of all sizes to pay international vendors, which previously involved currency exchange and cross-border payment issues, along with delays associated with sending and receiving payments. Now, innovative solutions can expedite these international transactions to keep a company’s supply chain running smoothly. Visa B2B Connect, for example, aims to make these transactions happen quickly, by facilitating high-value payments directly between participating originating and receiving banks, within one to two days. “We wanted to address how we could make those payments occur faster so that we can accelerate the movement of the goods and services in a secure manner,” Phalen says. “That’s what we’ve built and delivered to our clients around the globe.”

In a challenging environment for small businesses, innovations from Visa can help business owners like Itika Oldwine adapt and adjust to a new reality, allowing her to worry less about how to manage cash flow. Now, Oldwine is focused on growing her business, taking advantage of the grant she received from Visa on the IFundWomen platform, which offered both funding help and business coaching. “I wanted to learn how to explore other ways of getting seed money from potential investors,” she says. “I’m using the coaching experience to help raise more money and expand my business.”

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*Actual fund availability varies by receiving financial institution, receiving account type, region, and whether transaction is domestic or cross-border.

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