If your business model includes recurring customers who pay you on a regular basis you should have an automated payment system in place. Not to be confused with automated invoicing, automated payments mean that each month you charge a payment for your services to your customer’s credit or debit card. In order to do this successfully, you must obtain your customer’s information such as the name on the business card, banking information, address, and then set the amount to be charged, the frequency, and an end date. You should also get the customer’s signature authorizing you to charge their card or bank account.
This system is good for those businesses such as:
Subscription boxes
Marketing or accounting services
Legal services
Monthly memberships
If you do, awesome! This means you understand the value of your time when it comes to the operations of your business, and that you have streamlined a basic, but crucial aspect of your business.
You could be losing precious time and energy by not using an automated payment system for your recurring customers. It is exhausting when you spend time chasing checks, resending invoices, reluctantly assessing late fees or having to cease services until payment. By not having an automated way to charge your customers, you are probably spending a percentage of your week running behind your money.
Here are 3 ways that automating your customer payments can save you headache and heartache in the long run.
Automated Payments Save Your Business Money
Sometimes running your own business can feel like being a professional beggar. When payments are late, this interrupts the flow of your business and costs you money. As we mentioned previously, chasing invoices can be a drag that slows up your ability to pay vendors, contractors, and yourself. When your customers are billed automatically, this saves your business money by ensuring an efficient accounts receivable cycle.
Your Customers Benefit from Automatic Payments
In the age of digital convenience, most individuals readily input their credit/debit card information into apps in the name of ease. While we do warn the general public to be mindful of automated monthly fees, the point is that people are becoming more and more accustomed to not having to think about paying bills. And so while automated processing saves you a great deal of stress, that benefit is mutual. When you offer autopay as part of your service, you are enhancing the experience of your customers.
Digitizing Your Payment Processes Makes Your Business More Efficient
Many companies are going paperless, allowing their employees to work from home, or hiring contractors who work in other cities. That may sound like a lot, but what that means is that in today’s marketplace businesses are finding ways to maximize productivity by using online tools. While your business may not be completely digital, using online tools and software to accept and process payments is absolutely one of the biggest steps toward making your business more efficient.
If you’re using tools like Quickbooks, Square, Paypal or any other digital payment processors to accept customer payments, then you’ve got the right idea. However, the drawback of employing such tools is that they can provide a false sense of expertise for small business owners. Many of those platforms are great, but offer a wide array of benefits that small business owners do not have the time to figure out. Working with an accountant to manage your accounting software can serve as a great value add for your small business or startup.
For help managing your business finances, check out our services page. Desnoyers CPA, is an accounting firm that offers a wide range of services for business owners. Check out our monthly blog and join our mailing list to get more information for small business owners seeking experienced financial advice.