You’ve seen it so many times before – a customer owes you payment, and when you call to inquire, they tell you that they mailed a check yesterday and it is in transit. After a few days go by, you still haven’t received it.
One of the worst things about traditional payment methods is that you never actually know when the payment will arrive. Due dates are stated on the invoice, but clients will send a check on the last possible day or ignore the date altogether. Your clients rely on getting their payments on time, and these delays can cause major issues with cash flow. Thankfully, there are now ways that you can automate payment collection for your clients and get more visibility into their cash flow status.
1. Start Accepting Credit Card Payments
Sometimes the process of making the payment is so cumbersome or inconvenient for the payer that it actually prevents them from settling their debts. Make the collection process much manageable by accepting credit cards. Today, different payment providers allow businesses of any size to collect credit card payments, so whether you are running a side-gig or a multi-national corporation, you can offer credit card payments to your clients. Do your research on your provider, however, as small differences in fees can really add up.
2. Move to Electronic Billing and Collecting
Until recently, the only viable option to pay vendors and collect from clients was using checks and wires. However, there have been significant technological advancements in the last few years, and it is much more convenient and secure to send payments to collect invoices through electronic payment providers. These online payment providers give you more visibility into when the payment was made and when you will receive it, and some automatically reconcile payments in your accounting software. As a bonus, electronic payment platforms are generally less expensive than checks and wires.
3. Set Up Automatic Recurring Payments
Using electronic payment systems, you can set up recurring payments to be withdrawn or charged automatically. Your clients need to permit you to withdraw a payment from their account, and so you will need to set up a Pre-Authorized Debit Agreement, or PAD. A PAD is essentially a contract that enables you to collect your payment from your client for a given amount on a given day without getting their permission each time. Set it, and forget it.
4. Automate Paper Check Processing
Ok, so this one is slightly misleading – there is no way to automate a paper-based process completely. However, there are some tools you can use to make the check process more streamlined. Once you receive the check, many banks allow you to scan or snap a picture to deposit it. You can also look into a custom solution that allows you to scan, collect, and reconcile checks. Some of these systems are quite costly, but the efficiencies you gain may be worth it if you process a lot of checks.
So, there you have it, four ways that you can avoid the ol’ “check is in the mail” trick, and ensure that your payments arrive in your bank account simply and easily.
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