In light of changes in economic climate, depending on industry, some of our clients have looked for ways to eliminate credit card processing fees. New programs, like the service fee platform, which was one way to address that concern. However, now there is a new one. The decision to move to a service fee model has not worked out well for some of your customers. Has your service fee program increased outstanding accounts receivables in your collections process?
There are options and they are easy to use.
One of the most difficult conversations we hear businesses struggle with (especially during times of economic stress) is dealing with clients who have not paid their bill as agreed to when the work was contracted. Remember. There is a solution. Stay calm, stay focused, and consider the alternative you already have in place.
Offer Credit Card Payments for Unpaid Balances
You can go back to a traditional credit card payment system to close out the open balances. Instead of waiting for 25% to 35% of your revenues due in accounts receivables, offer a convenient payment “today” via credit card. The nominal 2.5% to 3% in processing fees will greatly reduce your carrying costs and bring your receivables as close to zero as possible.
Today, late payment by clients is common. It is a growing concern for trade contractors and professional service industries; if your business is in either of these fields, you are not alone. There are others who feel your pain and may have similar experiences. The solutions outlined here often work well for all service-based business.
What’s important to consider is the true cost of an outstanding debt and the ultimate successful collection of payment.
Typically, we hear from a potential client who has been pulling away from using credit cards and have been implementing other payment processing options that put the burden of the processing fee on the customer. While we understand that merchant services can be looked at as an expense, carrying unpaid invoices after work has been completed can be more costly in the short and long term.
Whether you are a CPA who promptly completed tax returns, a contractor who has served residential customers improving their homes, a consultant in a professional association providing outsourced c-level guidance, or another type of business owner you have the same two options:
- Keep waiting for the check payment promised to get the “cash discount”?
- Or, collect funds via a one-time credit card charge?
Payment Options for Professionals, Trades and Service Business Owners
If the customer didn’t want to pay the service fee associated with a credit card, and has yet to make a payment by check, they don’t have an option any more. Take a one-time payment via credit card – even if you have to waive the processing fee – and get paid today.
There are many digital payment options reducing risk of asking for a credit card number over the phone, but set up the payment link while they are on the line.
For example the digital options include a credit, debit or bank transfer (EFT) which can all be shared via text, a secure payment portal link or sent by e-mail. Be sure to send the payment request while they are on the line to ensure they follow through and make the payment.
Establish A Payment Plan
If they can’t afford the full payment, create a mutually agreed to payment plan. Break the balance into small, easily manageable bi-weekly or monthly payments.
Remember, we are here, live and ready to connect with you and can review your particular business needs. We advise clients on best practices, share expertise and help you evaluate the best payment options. Save time, bring in the revenues and focus on the future, long term goals for growth.