By Bharathi Ramavarjula, Xero SVP.
For small business owners, juggling cash flow and customer relationships (amongst numerous other responsibilities) is a daily reality. But while they’re focused on these critical tasks, a critical area is often left vulnerable: payments. The surprising prevalence of paper checks in the U.S. creates unnecessary exposure to fraud, delays, and administrative burdens.
This outdated process is a hidden liability, turning a routine operation into one of their most critical and vulnerable functions. Real-time payments, coupled with integrated accounting solutions, now offer a way to reduce these risks while streamlining operations for business owners.
Why Small Businesses Are Especially Vulnerable to Payment Fraud
Small businesses face a perfect storm of payment risks that go far beyond traditional check fraud. According to Experian, financial fraud against small businesses has surged by 70% since the onset of the pandemic, resulting in billions of dollars in losses annually.
Delayed payments, chargebacks, compliance violations, and cyberattacks can disrupt operations and create a ripple effect of challenges. For instance, late payments can strain cash flow, making it difficult to pay suppliers or employees on time—an issue that can be compounded if chargeback fraud occurs, where customers dispute legitimate transactions, resulting in lost revenue, higher processing fees, and potential damage to a business’s reputation. Together, these risks illustrate how interconnected and consequential payment challenges can be for small businesses.
Recommended Articles
September 14, 2018
10 Steps to Avoid Business and Employee Fraud
January 5, 2022
4 Tips for Preventing ACH Credit Fraud
Evolving regulatory requirements and growing cybersecurity threats add another layer of complexity. Without a proactive plan to address these risks, businesses expose themselves to unnecessary financial and operational challenges.
The Growing Demand for Real-Time, Secure Payment Solutions
Businesses and consumers increasingly expect faster, more reliable transactions. Real-time payment systems in the U.S. now offer a way to meet this demand, providing immediate transaction verification and visibility into cash flow. This transparency allows business owners to spot issues as they arise and respond proactively, rather than waiting days for payments to clear or for problems to surface.
However, speed and visibility alone are not enough. To turn these benefits into tangible operational advantages, businesses need payment systems that integrate directly with their accounting workflows. Integration ensures that every transaction is automatically recorded, reconciled, and verified, reducing manual work and limiting opportunities for errors or fraud. For example, modern accounting platforms increasingly allow payments made through connected providers to sync automatically with invoices, so reconciliation can happen continuously rather than waiting until the month’s end.
How Integrated Payments Protect Businesses and Improve Efficiency
For small businesses, every dollar and every minute counts. That’s why integrating payment systems directly with accounting software is no longer just a convenience – it’s a strategic advantage. When payments flow seamlessly from authorization to recordkeeping, staff can spend less time chasing late checks or fixing errors and more time driving growth and innovation.
But integration isn’t about efficiency – it’s about protection. Automated verification, immediate transaction confirmation and real-time record updates make it far harder for errors to slip through the cracks. Small businesses that adopt these tools can safeguard revenue, maintain cash flow predictability and operate with confidence in an environment where risks are constantly evolving.
Ultimately, integrated payments are a way to transform routine financial processes into a competitive edge. Businesses that embrace them don’t just move money faster, they gain the clarity, security and operational freedom to focus on what truly matters: growing their business.
Taking Action with Smarter Payment Infrastructure
Modern accounting platforms show how integrated payments can protect revenue and improve operational control. By linking payments directly to accounting workflows, businesses can capture transaction details automatically, verify vendor information, and flag unusual activity before it becomes a problem. Maintaining a complete, real-time record of all transactions allows owners and finance teams to make faster, more informed decisions while keeping operations secure.
Small business owners can take action now by adopting integrated payment solutions to safeguard revenue, streamline operations, and free up time to focus on growth. Modernizing your payment processes today transforms everyday transactions into a competitive advantage.
Strengthening Relationships Through Reliable Payments
While the benefits of real-time payments extend well beyond fraud prevention, helping strengthen relationships with both suppliers and customers, it’s important to understand the nuance of how funds are received. For example, while card payments may show up as an immediate transaction, the funds may not settle into a business’s account for a day or two. Nonetheless, the immediate confirmation of a successful transaction still allows businesses to demonstrate professionalism and build trust, while delays or mismanaged payments can strain partnerships.
For small and mid-sized businesses, the question is not whether real-time, integrated payments offer benefits—they do. The challenge is implementing them quickly and effectively. When businesses embrace real-time payments, they gain speed, accuracy, and security in one solution, protecting revenue, streamlining operations, and enhancing relationships with clients and suppliers.
By combining automated safeguards with human oversight, small businesses can operate with confidence, even in the face of growing fraud risks. Real-time payments, supported by integrated accounting systems, represent a smarter, more resilient approach to the way money moves—one that aligns with both operational needs and the expectations of today’s business environment.
==
Bharathi Ramavarjula is Senior Vice President, Product Management, Developer Ecosystem & Payments at Xero.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
