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I want to make payments

As much as a business likes to watch the money flow in, it’s also important to ensure your key people – such as your suppliers and staff – are paid in a timely manner. It will give you a clearer picture of your business’ cash flow position and helps to avoid any disruptions.

The best approach depends on the size, frequency and address of your suppliers.

Small amounts

For smaller transactions, a business credit or debit card could be the most convenient and measurable way to pay. You can avoid carrying cash and a debit card draws on funds in your bank account, so your account balance is your limit. Plus, card accounts provide a record of transactions and if you can download these as a spreadsheet it will help with your accounting. Some banks, including Westpac, offer integration directly with online accounting software to allow for quicker reconciliation.

Paying suppliers

Your business should already be set up to accept payments using the normal methods: cash, cheque, electronic transfer and BPAY ®. Cheques are becoming less popular due to their turnaround times.

Electronic funds transfer gives you an automated method to make payments. Payments can be scheduled, so you can hold onto your cash until the final payable date. The electronic record keeping allows you to check payments to a particular supplier or timeframe. 

Making overseas payments

Paying overseas suppliers can be more complex, as you’re exposed to exchange rate movements, and the best method depends on how frequent and large your transactions are.

For smaller, irregular payments, and if the vendor accepts, you may find it simpler to use credit cards

If your business regularly relies on importing, you’ll need to investigate a more cost effective option. For example, you might find that your Bank offers a feature allowing you to transfer money internationally as part of your internet banking or offers foreign exchange accounts. The exchange rate offered on these accounts tends to be more competitive than credit card rates.

You might also find that the larger the transactions, the better the exchange rate.

It’s hard to avoid the trials and tribulations of exchange rates. Two ways to minimise them are:

  1. Set-up a separate foreign exchange account: By receiving and making payments in the same currency, you reduce the exchange rate risk. And you can withdraw money when the rate is favourable.
  2. Fix the price on contracts: This means keeping watch on the exchange rate and its predicted movements. If your transactions have a small margin, then fixing protects your profit. On larger margin sales, you’ll be taking more risk if you don’t fix, both of a reduced margin and also a windfall.

Paying staff

These are your most important stakeholders and you can’t afford to be late with payments.

If you have more than just a few staff members, hand over the details to a payroll manager and let them manage and calculate payments. Remember, you need to accrue personal leave, annual leave, superannuation payments and allow for flexible hours.

There are packages where you simply provide a spreadsheet with all the details, or there are software packages where you input the data. Ensure their package integrates with your accounting software, as you’ll need this information to calculate taxes, such as payroll tax.

Things you should know

Deposit Accounts for Business Customers Terms and Conditions (PDF 514kb) (PDF 955KB)

To be eligible to apply for Business One – Low Plan, your business must be registered in Australia.

General advice: This information is general only and does not constitute any recommendation or advice. It is current at the time of publication, and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these matters. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering the finance options for your business.