Ever wished you could get customers to pay faster? Well, you can. Just give them convenient payment options and you’ll get your money two to three weeks earlier than usual. Some will even pay instantly.
Being easy to pay is a customer service
You work hard to make things easy for your customers. You hustle to get their business. You give them the best price you can. You answer their calls at all hours. So why not make it easy for them to hand over the money?
Enabling customers to pay your invoice immediately via a credit card or an automated clearing house (such as PayPal) is part of customer care. You’re making their lives easier. You can do this by using online payment systems – also known as payment services – which cost nothing to set up.
How much faster will you get paid?
One in five businesses that use Xero to send invoices offer an online payment service. They get paid up to 50 percent faster which, in the US, works out to about 20 days sooner.
Will all customers pay faster?
These stats are an average. Some customers won’t pay any faster. Maybe they have cash flow problems of their own. But other customers could pay you straight away.
That’s the thing about using online payment services. You’ll get paid faster overall, which is great. And you may transform a consistently late payer into an always on-time payer. Imagine what that could do for your cash flow. It’s all about offering convenience.
How to set up online payment services
Several companies provide online payment services that allow you to accept instant payment. If you have compatible invoicing software, you can set these up in about a minute (there’s a wizard to guide you).
What the experience is like for your customer
Once you’ve set up an online payment system, a new button appears on your invoice that customers can click to pay via credit card or an automated clearing house. Whichever option they choose, they’re prompted for the relevant details, just like when buying something online. And that’s it – you’re paid.
Customers won’t have to log into their bank to organize a transfer. They get to process everything on the spot, and move on. Job done. Plus they might get an interest-free period of credit from their credit card provider, which could help their cash flow.
How it's different for you
Because online payment services improve the speed of payment, you’ll probably spend less time waiting, stressing, making difficult phone calls and doing cash flow contortions.
There’s a transaction fee on the payments that you receive this way. You’ll need to match that expense to the payment for accounting purposes. Smart accounting software will do that for you, automatically.
What does it cost to use these payment services?
It generally costs you nothing to offer convenient payment services, but you do pay a fee whenever a customer uses the option. That fee generally works out to between two and four percent of the invoice value. You’ll need to decide if that equation works for you. Some services allow you to pass the transaction fee onto your customer.
You don’t have to offer convenient payment options on every invoice. To help keep costs down, businesses don't regularly offer payment services on invoices of more than $5,000.
Giving it a go
If you use software to send invoices, it’s easy to offer convenient payment options. It’s a bonus for your customers, and it will get you paid faster.
That could be really handy if, like many small businesses, you experience cash flow issues due to late payment. Other things that could also help improve your situation are covered in our invoicing guides – or speak to your advisor for ideas.