How T+1 Settlement affects cash flow - Plural by Pine Labs

Why T+1 Settlement is a Game-Changer for Your Business’ Cash Flow

T+1 Settlements: A Game-Changer for Faster Payments and Optimized Cash Flow

Managing cash flow effectively is the lifeline of any business, yet it remains a challenge for many.

Studies show that 82% of small businesses fail due to poor cash flow management. In 2023, over 10% of these businesses resorted to credit cards for emergency funding, and 75% had already maxed out over 30% of their credit limits.

This financial strain hinders the ability to process new orders and risks pushing promising businesses into debt.

The solution? Faster cash settlements. By adopting a T+1 settlement cycle through a reliable payment gateway, businesses can explore a transformative approach to cash flow management. This access to funds enables higher liquidity, operational reinvestment, and reduced dependency on credit—paving the way for sustainable growth.

How T+1 settlements work in online payments 

Integrating a payment gateway into the online shopping ecosystem is the best approach to ensuring efficient, seamless, and secure payment transactions.

A payment gateway is a tech-enabled solution that automates the payment life cycle through the following steps: 

  • The customer initiates a payment on the merchant’s website or app.
  • The payment gateway routes the request to the acquiring bank.
  • The acquiring bank verifies the transaction with the issuing bank.
  • Once authorized, funds are captured by the acquiring bank.

Settlement happens when the funds are successfully transferred to the acquiring bank. However, when the settlement takes too long—from a few days to a week—this delay negatively impacts cash flows. Businesses feel the impact even more when customers cancel orders and need refunds.   

This is where a faster settlement cycle, and in particular, the T+1 settlement cycle, solves the issue: 

  • Settlement of funds from the acquiring bank to the merchant concludes within one business day.
  • This is an expedited improvement over slower settlement cycles such as T+2 or T+3, which take two and three days, respectively. 

Expedited settlements enable reduced settlement risk, which tends to increase with longer settlement timeframes, especially as businesses scale. 

Benefits of T+1 settlement for business cash flow 

Here’s a snapshot of key advantages for merchants: 

Improved liquidity

As settlements shift to just one business day, this approach helps reduce cash flow gaps that may arise from delayed settlements. Businesses can enjoy improved liquidity. In turn, they have access to funds for purposes such as reinvestment in inventory and operations to marketing and training activities. 

Achieve working capital optimization

Businesses with too much debt are more vulnerable to financial instability. Improved cash flows help businesses proactively avoid reliance on external credit lines. Predictable cash inflows also facilitate smoother day-to-day operations and robust financial operations.  

Enhanced transparency and trust

Businesses can set clear payment timelines with all stakeholders. These range from customer refunds and vendor payments to employee payouts. Businesses can also reap the benefits of better financial forecasting and decision-making, reduce customer acquisition costs, drive revenues, and increase profitability. 

Competitive advantage

Businesses can optimize operational efficiency, capture new markets, and scale faster. They can build superior relationships with suppliers, customers, investors, and all other stakeholders.  

T+1 settlement with Plural by Pine Labs: A comprehensive solution

Streamlined payments have emerged as an important aspect of a superior user journey. The integration of a comprehensive and efficient payment gateway such as Plural by Pine Labs can help lenders address challenge areas such as slow settlement cycles. 

How Plural supports T+1 settlements

Today, consumers pay via diverse modes. Plural Gateway’s integration simplifies the entire payment and settlement process via an integrated dashboard. Businesses can have all settlements processed within one business day, thus ensuring smoother cash flows. 

Features that make Plural stand out

Plural by Pine Labs delivers the following advantages: 

  • Real-time reporting: Businesses can access detailed insights into transaction statuses and settlements at all times. Real-time insights translate into higher transparency and accountability. Businesses also have access to actionable data that powers data-driven decision-making for businesses, especially as they scale. For instance, businesses can dissect payment trends, customer experience, payment preferences, and shopping behavior.  
  • Multi-mode payment support: Businesses can accept payments through various channels such as credit/debit cards, UPI, wallets, payment links, net banking, flexible options such as EMIs and Buy Now, Pay Later, and more. All payments are settled via T+1 cycles.
  • Ease of integration: The Gateway enables seamless integration with e-commerce platforms or mobile apps. Businesses can have it up and running quickly and efficiently with access to round-the-clock customer support. 

Benefits for businesses

  • Businesses can expect minimized operational delays with faster fund availability. Issues can be resolved swiftly due to real-time data access. 
  • They have access to a single, unified platform that powers centralized management of transactions and settlements. Businesses have visibility of all transactions at any given time in one location, which simplifies the workflow and enables better collaboration and transparency for business teams. 

Why T+1 settlements are the future for online businesses 

A brief look at the future of settlements in the e-commerce arena: 

1. Adapting to growing e-commerce demands

By 2029, the eCommerce market is expected to grow to 3.6 billion users, with a user penetration of 49.1%. As more consumers prioritize online shopping, faster settlements support the growing need for liquidity in competitive, fast-growing markets. T+1 settlements are expected to become the norm. 

2. Boosting customer confidence

Faster, seamless, secure settlements and quick refunds tend to instill more customer trust and confidence. Businesses that invest early in a superior payment gateway that facilitates T+1 settlements will have a competitive edge. 

3. Operational efficiency and growth

Improved payment clearance speed helps reduce financial bottlenecks and enables businesses to scale confidently. It also helps businesses balance liquidity and risk and achieve operational efficiency. 

Transform your cash flow with T+1 settlements

By embracing T+1 settlements, e-commerce businesses can significantly improve their cash flows. They can enjoy improved liquidity, streamlined working capital management, higher transparency, and a competitive business advantage. With access to timely funds, they can proactively enhance vendor and customer relationships and drive revenues and profitability.  

Plural by Pine Labs offers Plural Gateway, a comprehensive payment solution that seamlessly powers T+1 settlements. Merchants can expect real-time reporting, multi-mode payment support, ease of integration, and 24/7 support.

Plural Gateway also powers the full spectrum of payment options, such as credit cards, debit cards, net banking, UPI, digital wallets, and payment links, as well as flexible payment options, such as EMIs and Buy Now Pay Later. 

Connect with us to learn how Plural Gateway can transform your payment processes and fuel your business growth today!

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