If you're a small business owner, having a payment strategy when it comes to receiving payments from customers is important. Here's how technology can help.
Small business owners know all too well about the headaches associated with payments. Prompting customers to pay in a timely manner is critical for small enterprises—and it's one of their biggest pain points.
Sometimes it’s the fault of the business owner for a delayed invoice. In other instances, it's the customer who isn’t in a hurry to pay. Either way, lack of payment is a detriment to operations and cash-flow.
The good news: it doesn’t have to be this way. Technology solutions can help you get paid faster and automate much of the process. Even better, there are options for every budget.
Consider these ways to improve your business's payment system.
1. Automate the Billing Process
Running a business is time-consuming, requiring you to wear multiple hats. Something has to give, and often that can be invoicing. The longer it lags without billing, the harder it becomes to get paid.
That’s where automation comes in. There are several invoicing tasks that can be automated, freeing up your time to grow operations and at the same time get paid quicker.
- Automated Invoicing. Through automated invoicing, bills are sent out each month on time without any human intervention. Follow-up reminders are automatic, and payments are processed as they come in. Automating invoicing means no longer relying on staff to manually input data. That leads to fewer mistakes that can impact the bottom line. It also eliminates situations where you forget to bill a customer, negatively impacting cash flow.
- Create Invoice Templates. Your brand doesn’t have to end with your product or service. It can be extended to your invoices, thanks to automation. A bevy of Internet invoicing software and apps are available to small businesses, enabling you to create professional, customized invoices in seconds.
- Add Late Fees. Chasing down clients who are late to pay bills takes time and energy. Frustration can lead to inaction, which usually results in the business owner writing off unpaid bills as a loss. They know tacking on late fees is warranted, but figuring out how much can be too cumbersome. But with automated billing services, the guesswork is eliminated. When billing is automated, late fees can be calculated and added-on based on the unique situation of the customer. That ensures you get paid what you are truly due.
- Process Payments. Automating invoicing doesn’t have to end with sending a bill and follow up on late payments. Services exist to process the payments for you, making it easier and often quicker to get paid.
Most invoicing programs reside in the cloud or on a mobile app, and many are free. They make their money off processing fees when you accept payments through the platforms. Others charge a monthly subscription or have a fee schedule based on the number of users.
When choosing an automated solution, consider the features you need, the frequency in which you are billing and the size of the operation. Some of these services cater to businesses with twenty or more employees while others are going after the small home office.
2. Accept All Payment Types
Gone are the days when you only got paid in cash or check. Today, customers are paying via credit cards, digital payments, and peer-to-peer (P2P) apps.
To speed up account receivables, it's essential to accept all different payment types. According to Inc., business owners are 30% more likely to get paid if they accept online payments.
Third-party providers can help businesses handle all payment transactions, whether it’s processing online sales or collecting monthly invoices. It guarantees that whichever way a client wants to pay, you can accept payment.
Using a third-party payment processor also eliminates some of the startup costs, but it may not always be the cheapest option. You won’t need to open a merchant account, a type of bank account that enables business owners to accept payments, but you could pay extra fees. Those fees can add up quickly if you process a lot of credit card payments each month and have expensive products or services. When deciding whether or not to use a payment processing company, weigh convenience over cost.
3. Make it Easy to Pay Old Bills
Software can’t solve every problem, but it can help urge customers to pay. That’s particularly true for those hard-to-track-down clients who haven't reacted to automated reminders. Thanks to email, texts and online payments, you can increase your odds of getting paid.
Your customers might have every intention of paying but simply forget to or don’t have the time to get to it. That is where a perfectly timed email or text comes in. Sending a gentle reminder with an easy-to-follow link to pay can prompt them to act.
If that fails, consider incentivizing customers to make good on their debt. Offering a discounted rate if the bill is paid in a set amount of time could do the trick. You won’t get the entire payment, but at least you’ll have something.
If all else fails, it might be time to simply pick up the phone. Sometimes the human touch works better than the best technology.
Embrace Automation to Thrive
Small business owners have a lot to be happy about. The economy is still humming along, unemployment is low and people and businesses are spending money. But even in a healthy economy, not getting paid in a timely manner can impact their ability to run their enterprise.
But the right technology can change that. Instead of worrying about sending invoices and chasing down slow-paying customers, you get to focus on what really matters—making your business successful.