Guarantee reliable payouts with a flexible float facility

A US-based survey looking at insurance industry payouts reported that, given the choice, 80% of the respondents would prefer instant disbursements on their claims, while only 33% actually receive their claims instantly. Similarly, in the gaming industry, 79% of online gamers preferred instant payouts when given the option, demonstrating significant demand for a payouts solution that meets their expectations. 

Similar trends have been reflected in South Africa, where the rise of on-demand goods and services, as well as increasingly seamless and instant payments options, are also driving consumer demand for instant, friction-free payouts. 

To meet the growing need among enterprise businesses for instant withdrawals, many teams use a Payouts API to streamline high-volume payments and process in bulk on a daily basis. Typically, treasury operations manage these payouts by forecasting to ensure that business float accounts are sufficiently funded. 

However, even if the payment provider offers sufficient warning when float is running low, unforeseen events can lead to higher-than-expected payout volumes or values. If accounts aren’t funded in time, businesses may fail to meet their payment obligations and customer expectations. How can a payouts facility help manage this risk?

What is a payouts facility?

A payouts facility provides businesses with instant access to extra funds in the event their scheduled payouts exceed the available funds in their account on a particular day. This eliminates the need to constantly top up accounts when funds run low and ensures businesses can always meet their immediate payment obligations without delays or disruptions.

How is this different from a credit facility or loan?

A payouts facility differs from credit facilities and loans in several key ways. Unlike credit lines or loans, which provide longer-term financing for investments and projects, a payouts facility offers temporary access to funds specifically to cover immediate payouts needs, such as salaries or claims. It serves as a cash flow management tool rather than a financing instrument.

Interest rates on float accounts are typically lower, as they are only applied to the funds used. Repayment is more flexible, with no fixed time period, unlike loans, which have structured repayment schedules. Additionally, qualification for a payouts facility depends on the business’s transaction history, making it more accessible than credit facilities that often require a strong credit history.

Use cases that require resourceful floats

A float account is used on an as-needed basis, typically when the cash outflow is greater than planned. Different industries have various trigger events that require the agility of a float facility to meet their obligations. Here are a few examples:

Industries that manage time-sensitive payouts such as claims and salary payments need to guarantee that their transactions will never be delayed, to limit the impact on their clients. A payouts facility ensures a payment is never missed due to insufficient funds, which helps to maintain customer trust. 

For businesses that leverage e-wallets to allow their suppliers to cash out - such as Uber Wallet for drivers - it's essential to ensure that payouts are processed immediately and at any time. With access to float as needed, businesses can avoid disruptions and ensure seamless payouts whenever their suppliers need them. 

Manage your payouts with Stitch

Enterprise businesses can initiate reliable payouts 24/7, 365 days a week, and better manage float with Stitch Payouts. All transactions can be monitored automatically through the client dashboard, with standardised reporting. With payment automation, refunds and withdrawals can be initiated over API, with an option for instant or same-day disbursement. Stitch Payouts offers:

• Smart routing to ensure high success rates
• Real-time bank account verification to mitigate fraudulent payments
• 24/7, 365 payouts, including weekends and public holidays

A note on directives from the National Credit Regulator

While most credit agreements are regulated by the National Credit Regulator, in order to ensure that the general public is kept safe from reckless credit, some exemptions are available to organisations like Stitch. In order to qualify for the payouts facility, a merchant’s juristic entity needs to verify that it has over R1 million in either asset value or turnover before the facility is made available. In addition to this, as best practice, the terms of the payouts facility need to be agreed upon through a contracting phase with Stitch.