How To Collect Payment From Customer: 6 Ways To Collect More Effectively
Maintaining a positive cash flow is essential for being a thriving small business owner. A crucial piece of the puzzle is putting the relevant system in place to collect payments from your customers.
We often observe that managing a business requires a delicate balance. There is never a shortage of things to do, from providing customer service to ensuring that business operations such as how to collect payment from customers goes smoothly. Knowing how to collect payment from customers quickly is an ability that must be perfected, especially because it directly affects your bottom line. Cash flow problems are cited as one of the most serious problems by 82% of failing organizations.
Therefore, it is frustrating when certain operations, such as getting payment from customers, are delayed by unforeseen events. To avoid becoming a statistic, we’ve collected a list of ways on how to collect payment from customers professionally and efficiently, without having to deal with the awkwardness of asking for payment.
The Challenges of How to Collect Payment from Customers
Your Clients Keep Putting Off Payment
Clients frequently take too long to pay or simply forget to pay, which is one of the biggest problems for small businesses. This could be the result of unclear terms and conditions being communicated or an improper invoicing strategy.
In either case, one of your primary objectives should be to decrease the time it takes for customers to pay.
Keeping Track of Payments And When They Are Due
Most entrepreneurs still use pen and paper to manage their cash flow. In many cases, keeping track of past-due payments becomes difficult when using multiple tools, such as spreadsheets.
To more efficiently handle your business’s payment collection processes, try using a platform that not only lets you view and track all payments in real time (historically and going forward), but also generates invoices.
It’s Uncomfortable and Unprofessional
Uncomfortable as it may be to talk money or request payments from clients. The best way to maintain your business, though, is to set aside sentimental considerations and learn to ask with professionalism.
After all, you’ve fulfilled your half of the arrangement; it’s now up to your customers to do the same. You can learn about several proactive steps you can take to prevent the need to pursue clients for payment in the sections that follow.
How to Collect Payments From Customers
Step 1: Set Expectations
Your payment conditions define the expectation for your clients as to when and how they should pay.
Describe your terms of payment by responding to the following:
– Are payments due immediately upon receipt of the invoice or within 14 days?
– Will customers be charged late fees for unpaid invoices, and if so, how much?
– Which forms of payment does your home service provider allow (cash, paper checks, debit cards, ACH payments, Visa, Mastercard, AMEX)?
The more transparent you are when establishing payment terms for your company, the simpler it will be to get payments from customers. You ensure that your clients are informed, make sure to mention these conditions on every invoice.
Step 2: Set Up a Payment Notification System
Making it easy for clients to pay is one of the most crucial suggestions for getting them to pay you. Try text-to-pay, for instance, and endeavor to accommodate consumer preferences.
Professional service providers or businesses that provide other kinds of services typically use invoices to demand payment. It is possible to mail invoices. In contrast, printing, stuffing, and mailing paper invoices can take a lot of time and money.
Online invoicing technology, such as that provided by Xoopah, enables business owners to streamline collection by providing the consumer a payment link by Email, SMS, or both. Stripe and Authorized.net are both embedded within the payment link.
One of the easiest and most convenient ways for your consumers to pay is through text-to-pay. It is compatible with all forms of payment, including credit cards, Google Pay, and Apple Pay.
In comparison to email, text payments have a 97% open rate. Once received, it takes the typical client 90 seconds to respond. With fewer people carrying cash, more business owners are being forced to invest in payment processing equipment that allows them to take mobile payments from anywhere.
Simply SMS a link to your professional invoice with text-to-pay to your clients. then use their phone to make a purchase. They won’t have to worry about online fraud since they will simply click the link you send.
Traditionally, accepting money over the phone was a convenient alternative for customers. While most customers currently choose non-calling methods, such as text-to-pay, some will still prefer this technique. This is especially true for customers in their golden years.
Step 3: Accept Their Preferred Payment Method
Accepting the payment option that your customers like to utilize is an extremely crucial way for getting paid quicker. The methods you can use will depend on how you handle payments, but if expansion is required, think about it.
Credit cards, Apple Pay, and Google Pay have all been discussed previously. However, consider any further approaches they might want to take. They can even be questioned in a survey. ACH payments and eCheck payments are two other preferred options.
Bank to bank transfers are used to facilitate payments processed through the Automated Clearing House (ACH) network. You will therefore require the bank account information of your consumers when collecting payments from them. The typical ACH transfer completion time is one to three business days.
Step 4: Send Polite Follow-up Emails
A client may delay payment for a variety of reasons other than deliberately avoiding them. Sometimes the individual in charge of handling your invoice is off sick or on vacation, or the recipient’s email address might have a typo and your message could have been misdirected to their junk mail folder.
You need to first give them the benefit of the doubt if you want to keep a good relationship with them. When more than a week has passed and payment still hasn’t been made, it’s OK to send a courteous reminder email.
You can re-attach the invoice to this email if it helps. Keep a level head, but make it plain that you want payment for your services. A timely response might be prompted by reminding the party of the contract’s provisions.
However, there are situations when just sending an email isn’t sufficient. You may need to make a phone or video call if you don’t hear back. After all, it’s hard to ignore these overt attempts at dialogue.
Step 5: Schedule a Payment in Advance
Platforms for payment automation enable business owners to swiftly plan payments in advance, making late payments obsolete. By pre-scheduling payments, you can automatically bill your clients on a yearly, monthly, daily, or even hourly basis.
You can streamline your payment procedure and save countless hours per month by booking a payment in advance. This method is widely used by companies that charge subscription fees, such as gym memberships.
Businesses can securely pre – process and save their customers’ payment information just once, and then use that data for future auto-pay transactions, which is the fundamental benefit of employing a payment automation platform. Further, with card expiration alerts, business owners are alerted in advance of a transaction attempt if a customer’s payment method is likely to expire.
Taking a sizable investment up front has the following advantages:
by taking payments online up front, where you may secure at least some payment and save the customer’s details to take the balance after the service is rendered.
Take a deposit for the time being:
it’s not necessary for this to become standard procedure for your service company. However, if you have a new client, you can reduce risk by having them pay a portion of the invoice up front. You can stop doing this if you get to know them better.
Step 6: Consider Customer Value
In spite of your best efforts, some clients will deliberately ignore you in order to avoid paying. If you’re still working with this customer, it’s time to evaluate whether or not you should.
While a legal case could potentially help you get the money you’re entitled, the costs of the case could end up being more than the money you’d get back. Debt collection is a nuisance, but it’s counterproductive to spend time on it when you could be serving another client.
In addition, there are situations where avoiding a delinquent client is a net gain. It allows you to locate new customers who are more likely to pay on time or to pay a higher price.
In order to maintain a healthy cash flow and increase profitability, it is crucial that your customers pay on time. Many things could cause them to be late or miss a payment. The majority of these issues are solvable through the provision of transparent payment conditions, the provision of flexible payment choices, and the sending of reminders.
With a text-to-pay option, for instance, businesses may take advantage of the high open rate of messages and the fact that customers can make payments within minutes.
Companies can find themselves in a bind if they can’t figure out how to collect payment from customers. Maintaining solid connections with your clientele is crucial, but it won’t amount to much if you aren’t getting paid for your services.
Find an acceptable medium to successfully recover overdue invoices from customers without negatively impacting relationships.
Start with Xoopah today and make peace with tracking payments.