Businesses that incorporate a digital payments platform into their operations can greatly improve cash flow, says Thomas Priore, CEO of Priority. That’s because the right platform allows businesses to receive customer payments and pay suppliers more efficiently.

It’s known as cash acceleration, and it’s particularly critical for small to medium-size businesses (SMBs). Unlike big businesses, SMBs are more likely to face a cash crunch as they balance the timing of income and expenses.

Cash acceleration, Priore said, is an important component of an emerging, tech-driven financial system in which businesses are relying less on traditional banks.

“Unified commerce — where tech platforms that build connection with the stakeholders, their back-end as well as  front-end processes — aided by inbuilt payments, can make real-time cash flow management a reality,” Priore said in an interview with PYMNTS media CEO Karen Webster.

What Is Priority And Who Is Thomas Priore?

Thomas Priore co-founded Priority in 2005 with a mission to ‘make payments easy.’ What began as an electronic payment processing company with a consumer-focused approach has evolved into a fintech powerhouse that delivers integrated payments and banking services. Priority serves B2B, B2C and vertical-specific industries, including real estate, healthcare, e-commerce and consumer finance.

Priority has built a scalable payments/banking platform to collect, store, lend and send money. Its systems include the end-to-end B2B payments platform CPX and the MX Merchant suite of services for merchant acquiring that automates tasks such as billing, sales tracking and customer engagement. Priority also offers Plastiq, which allows businesses to leverage credit cards in a number of ways, including increasing working capital and earning rewards.

Career Track Record Of Thomas Priore

Thomas Priore became the company’s CEO in 2018, and under his leadership, Priority has grown from a tech startup to be the 5^th largest non-bank merchant acquirer in the United States, and a leading provider of commercial payment solutions to major global institutions.

Previously, Priore led other finance-centered endeavors. He founded ICP Capital, a boutique investment banking enterprise with more than $20 billion in assets under management. He also created the structured finance trading and origination arm of Guggenheim Securities, where he managed the fixed income sales and trading division. He’s a Harvard University graduate with an MBA from Columbia University.

Priore is a leading expert in finance and the potential of fintech, focusing specifically on potential solutions for businesses that technology can provide.

“Most consumers experience modern commerce through cellphones and mobile apps, but that’s only half the equation,” he said in an interview. “The other half is mapping out how to sppedup  businesses by collaborating  solutions together that solve their problem areas. We focus on creating better payments and banking experiences through technology because cash flow and working capital are necessary to run a business well.”

What Is Cash Acceleration?

Cash acceleration refers to the concept of businesses using strategies and techniques that speed up the process of converting sales. That too into actual money in the bank. Doing so improves a company’s liquidity and financial health, especially when coupled with cost-reduction efforts that also free up cash.

It’s essential for businesses — especially smaller enterprises — to manage cash flow effectively to meet short-term obligations. It can be such as paying suppliers, employees and operational expenses. Cash acceleration is all about optimizing cash flow.

To improve cash acceleration, companies focus on a variety of strategies, most of them involving shortening the cash conversion cycle. This cycle refers to the time it takes for a business to sell its inventory, collect payment from customers, and then pay off its suppliers. By streamlining any of these steps, businesses improve cash flow.

Digital payments processing systems bolster many of the techniques used to shorten the cash conversion cycle. They include prompt invoicing, streamlining the payment process by offering customers multiple payment options. Inventory management and real-time cash flow monitoring.

Cash acceleration tends to cause a positive ripple effect up and down a supply chain. When businesses can quickly convert sales to money, Priore noted, they have more cash on hand to buy more materials from suppliers.

For example, he said, in the construction industry, contractors can more quickly pay subcontractors. “You keep those folks working and on-site because they are getting paid quickly,” Priore said. That, in turn, “reduces the business carrying costs on the back end — they’re not paying for money that’s sitting around that they had to borrow to keep things going.”

Benefits Of Cash Acceleration In The Current Economic Climate

Thomas Priore said many small and medium-sized businesses face a host of issues that could impact spending. It includes inflation, interest rate pressure, and rising consumer debt. He opines use of digital payment processing systems is important because they help increase the chance of success for SMBs. This is a cornerstone of the nation’s economy.

“The first thing I will say about small businesses, just generally — they’re scrappy,” Priore opines in the PYMNTS interview. “There’s a reason why small business in the U.S. is over 50 percent of U.S. gross domestic product. They’re the strength of our economy when you consider it from that standpoint.”

He said the current economic climate has led to more significant burdens on SMBs. “I agree with the notion that there are known uncertainties out there. Inflation, interest rate pressure, the growing debt burden on consumer.  It will affect small businesses,” Priore said. “Those will change by vertical; some will benefit, some will be hindered.”

Final Take Away 

He noted that banks, historically, haven’t been able to provide solutions to cash flow issues for small businesses.  Many SMBs aren’t happy with their bank relationship because of this. (Add something about our new relationship with Pipe? Or will that muddy the waters?)

The question for business owners becomes.  How do I find other assets within my business so I don’t need to borrow money? Or plug into other sources of embedded finance and just use my cash better? Digital payments processing systems can help provide that solution.

“At the end of the day it gets pretty simple,” Priore opines. “There is a value asset already running through your ecosystem. That asset is payment acceleration.”

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