SMB owners wear many hats, managing everything from staff to sales. Adding to the already tough job of managing a small or medium business is the complex task of understanding how payment processing works, including managing the fees, equipment, accounts payable and more.
Here’s where a Payment Management System (PMS) can swoop in as your financial hero to understand your business better.
TL;DR
- Payment Management Systems manage payment processing so you can accept payments, send invoices, track transactions, and view financial data.
- Look for a PMS that can serve as an all-in-one platform for payment processing, integrates with other technologies, offers appropriate POS equipment, and prioritizes security compliance.
- Government agencies have a payment management system to manage grant award payments, making the search for payment management system information more complicated.
What is a Payment Management System?
Think of a PMS as your financial command center. It consolidates all your payment processing needs into one user-friendly platform. A PMS accepts payments, sends invoices, tracks transactions, and analyzes your financial data—all in one place.
You may also hear the term Cash Management System (CMS) in your research. A cash management system focuses on the big-picture health of your cash flow, while a payment management system handles the processing of individual transactions. Imagine cash flow as a river—cash management oversees the whole flow, while payment management ensures water gets in and out smoothly.
Your PMS is a central hub to manage payment requests and store banking information (like your routing and bank account number for ACH payments). A comprehensive PMS is especially useful for SMBs, where efficiency is key and understanding financial performance in your business shouldn’t be overcomplicated.
Key Features of a Supercharged PMS
So, what exactly should a payment management system provide to your business? Key features of a well-built PMS include:
- Efficient transaction processing: Speed and accuracy are key, and a good PMS should process payments quickly and with a user-friendly interface, keeping your cash flow smooth and customers happy.
- Robust security measures: Any PMS worth its salt needs to have standard security features like encryption, fraud detection and compliance with industry standards, including the PCI DSS.
- Helpful integration capabilities: You don’t want a PMS siloed from other technology. Integration with your accounting software, CRM, or inventory system saves you time and effort when analyzing financial performance.
- User interface and experience: Your PMS should be intuitive and easy to navigate, allowing you to focus on running your business, not wrestling with technology.
- Reporting and analytics: A good PMS provides you with reporting and analytics tools, giving you valuable insights into your cash flow, customer trends, and spending patterns.
The Diverse World of Payment Management Systems
If you’re seeking to understand what payment management systems are, a quick internet search will yield some information worth explaining before we get too far into the various PMS options for SMBs.
The U.S. Department of Health and Human Services (HHS) also has a Payment Management System, which is a centralized grant payment system managed by the federal government. The Program Support Center for Payment Management Services (pms.psc.gov) serves as “a fiscal intermediary between federal awarding agencies and award recipients.” Also available through the HHS is the Federal Financial Report (FFR), which provides information about grant award spending, grantee information, and various disclosures.
Essentially, these federal agencies have a specific PMS to track grant award payments and payee information, ensuring federal cash disbursements are securely managed, and grant recipients can receive their awards in an auditable way.
Now, let’s break down various other terminology related to payment management systems you’ll encounter in your small or medium business:
- Merchant account providers act as a middleman between your business and the bank, allowing you to accept credit and debit cards.
- Payment gateways securely process online payments, acting as a bridge between your website and the payment processor.
- Payment processors handle the nitty-gritty of authorization, settlement, and transfer of funds between your business and your customer’s bank.
- Point-of-sale (POS) systems are the all-in-one systems you see at retail stores, handling in-person transactions and often integrating with inventory management software.
- Mobile payment systems let your customers use different payment methods like their digital wallets, contactless card payments and more, offering a convenient and secure way to accept payments on the go.
What Are the Benefits of a PMS?
A payment management system that handles incoming revenue and purchase expenditures effectively, is one of the many tools at your disposal to optimize your business operations. Not only should your PMS help simplify payments and reduce manual time spent, but it should also help you make more money. In fact, 72% of SMBs believe automating accounts payable tasks would improve their cash flow. Here are a few benefits at the top of our list:
- Boost efficiency: Automate tasks like sending invoices and reconciling accounts, freeing up your time to focus on growing your business.
- Enhance security: Gain peace of mind with secure transactions, trusted fraud protection, and industry-standard compliance features—all essential components of a good PMS.
- Streamline checkout: Move beyond clunky POS systems and give your customers a better experience. Modern POS tools are user-friendly, simple, and speedy.
- Empower decisions: You’ll gain valuable insights from financial data, helping you make informed business decisions with a well-built PMS.
Choosing the Right Payment Management System
With so many options, choosing the perfect PMS can feel overwhelming. Here’s what to consider:
- Assessing your business needs: Look at factors like the volume of transactions in your business and the most common payment methods used by your customers to determine the best PMS capabilities for your business.
- Cost and fees: Subscription fees, transaction costs, and miscellaneous charges vary depending on your payment processor. Use actual or projected data to price out the true cost of your payment provider before signing a contract to ensure you’re not overpaying.
- Integration with other business tools: Does your PMS integrate seamlessly with existing software? Data silos are never good for business, especially when we’re talking about your finances, and integrations make your life easier.
- Secure payment comes standard: Make sure your PMS meets Payment Card Industry compliance standards—this is a non-negotiable.
- Customer service on your terms: When things don’t run smoothly, having customer support 24/7/365, means you can spend time on what matters most.
Conquering Implementation Challenges
Implementing new technology like a PMS is not without its challenges. To avoid long calls with the help desk, make sure your PMS integrates well with other systems and opt for a partner that can support you with implementation.
You’ll also want to make sure to assign appropriate user access to your staff and work with any new user so they know how to use the technology, including both hardware and software training to help avoid errors and ensure a better user experience.
Ready to Tame Your Financial Chaos?
At Stax, we understand the juggling act all small and medium businesses contend with. That’s why all of our solutions are designed to simplify your life—from our subscription-based pricing to top-of-the-line POS equipment.
With Stax, you get all the features mentioned above, plus exceptional customer service as your payment management system.
Ready to get started? Get in touch!
FAQs about Payment Management Systems
Q: What is a payment management system?
A Payment Management System (PMS) is a software solution designed to handle all aspects of payments within an organization or between businesses and their customers. This type of system typically automates processes such as payment processing, invoicing, billing, and tracking of payments.
Q: What is the PMS system for federal grants?
The PMS system for federal grants refers to the Payment Management System operated by the U.S. Department of Health and Human Services (HHS). This system is designed to manage the disbursement of funds for federal grants and cooperative agreements. It provides a centralized platform for grant recipients to draw down funds, and for federal agencies to monitor and manage the distribution of these funds.
Q: What are the benefits of having a payment management system?
One of the key benefits of a PMS is efficiency. It automates payment processes and reduces manual effort and speeds up transactions. Beyond that, having a robust PMS could improve your cash flow. Real-time tracking of payments and receivables helps businesses manage your funds flow more effectively. PMS can also ensure compliance with financial regulations and standards by providing accurate records and reports.
Q: How do you select the right payment management system?
Start by assessing your needs and specific payment processing needs, including types of payments, volume, and any industry-specific requirements. From there, look for systems that offer the features you need, such as multiple payment methods, integration capabilities, reporting tools, and compliance support. Be sure to compare pricing, including setup fees, monthly fees, and transaction fees, to find a solution that offers good value.
