What does a business need the most to scale and grow from one stage to the next? Customers? Of course! Employees? Sure. Continuous development of their offerings? The answers can be many. But one of the most important requirements is working capital.
Working capital is required for numerous reasons. And it is important because easy access to money for a business’s day-to-day activities can help improve business convenience greatly. This is the primary reason behind the launch of our new feature – Early Settlements.
The long process of processing settlements is a burning problem in the fintech industry. With banks settling to Razorpay 24-48 hours after the transaction is made, it gets challenging (and risky!) to settle the money before hand. However, asking people to wait for a week for an amount processed in 5 seconds is not just unfair but a poignant question on the technical advancements being made in the fintech ecosystem.
Out came Razorpay Early Settlements!
What is Razorpay Early Settlements?
With Early Settlements, you get access to your funds on the same day instead of your traditional or default settlement cycle. Razorpay Early Settlements helps you reduce your settlement period from T+3 (or T+2) days to within a few hours (from the time of transaction), thus enabling your business to avoid cash-flow challenges and prepare better for working capital requirements.
A ready inflow of cash that will help you amplify your business, and meet day-to-day cash requirements without any hassles.
What are the benefits of Early Settlements for your business?
- Easy and early access to your money
- Reduction in daily cash crunch and increased cash flows
- Better management of inventory and stock
- Payments to creditors and vendors without any delays
Can the settlements be done at any time of the day on any of the days?
Yes, they can. Early settlements can be rolled out on any of the business days. We are also working towards enabling 24×7 instant settlements (even on bank holidays) through IMPS payouts.
Razorpay levies a small fee that is deducted from the merchant’s settlement balance. This fee is primarily charged because Razorpay has to bear the subsequent cost of processing the early settlements by taking a loan from loan providers. This deduction takes place only if you decide to process the settlements instantly or on the same day.
Who is Early Settlements for?
It is technically for every business onboarded on Razorpay. Primarily in the last 6 months, we have seen 30% of e-commerce businesses that have gone live with Razorpay availing the Early Settlement functionalities to power their daily vendor payouts. This is followed by 17% of financial services businesses and 15% of IT services companies. For IT services, a majority of the users are freelance designers or web developers who want quick access to capital for the work they have done.
We carry out risk checks (around refund rates, chargebacks, etc) before offering this feature to any business. To sum up, though we have seen a high traction among the industries mentioned above, businesses from almost every industry has availed Early Settlement and it has seen a high repeat rate.
How to enable Early Settlements?
Just drop a mail to firstname.lastname@example.org or raise a support ticket at https://razorpay.com/support/ and we will get in touch with you at a time comparable to the time required to make a payment with Razorpay.
To explore more about Early Settlements, click here.
Also read: How Automated Payouts are Helping SMEs