Payments & Business Infographic topic9

Payments: The Engine of Commerce

A visual summary of how payments facilitate trade, build trust, and the consequences of delays.

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How Modern Payments Facilitate Trade

Instantaneous electronic payments have revolutionized commerce, shortening the sales cycle and enabling businesses to operate more efficiently.

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  Boosts Working Capital: Factories can receive advance payments to buy raw materials and start production.
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  Accelerates Sales: Consumer goods can be ordered, paid for, and shipped faster than ever before.
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  Enables Projects: Large-scale infrastructure projects can be funded and started immediately, delivering essential services.

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Building Trust Between Buyers & Sellers

When parties in a transaction don't know each other, various payment arrangements can be used to mitigate risk and build trust.

Advance Payment

Buyer pays before goods are shipped, reducing seller risk.

Milestone Payments

Payments are made as specific project stages are completed.

Escrow Account

A neutral third party holds funds until contract terms are met.

Guarantees

A third party (like a bank) promises to pay if a party defaults.

Open Account

Seller ships goods and bills the buyer later, based on trust.

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The Ripple Effect of Late Payments on Business

When a payment is late, it can trigger a chain reaction of negative consequences across a company.

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  Disrupted Cash Flow: Prevents accurate financial forecasting and can lead to urgent, costly borrowing.
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  Delayed Accounts Payable: The company may be unable to pay its own suppliers, damaging its reputation.
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  Strained Relationships: Damages trust with vendors and clients, potentially leading to loss of business.
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  Broken Supply Chain: Can halt the shipment of goods, affecting production and retail sales.

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Impact on Individuals

Late payments don't just affect companies; they have real-world consequences for individuals.

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  Property Sales: A late deposit can cause a property sale to fall through.
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  Education: Late tuition payments can bar a student from attending class.
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  Personal Hardship: Delayed remittances can cause financial difficulty for families relying on them.

Infographic based on "Topic 9: Payments enabling business".