In business, cash flow is king, and one solution to keeping the cash flowing is to make it as easy as possible for your customers to pay you. By adopting the new payment methods that are being heavily marketed to, and adopted by, your customers, you can shorten your accounts receivable cycle and ensure that you have the cash on hand to meet your business needs.
As the payments space gets more innovative, a variety of companies are competing for your payments business with technologies and services that offer substantial speed and convenience. These services can facilitate all sorts of transactions by employing devices that attach to mobile phones to take credit cards on the go, terminals that accept ApplePay and other emerging payment types, and readers that process checks on the spot.
“Businesses have more options than ever before when it comes to accepting payments,” says Patty Hines, a senior analyst with consulting firm Celent. “The question is how expensive are those options, and are they in the form that is the most convenient for the customers of that specific business?”
Know your customers
For small businesses the best payment methods depend both on what the company is comfortable with and what its customer base likes to use. That can vary substantially depending on the type of company, Hines notes. “A hip coffee shop downtown might need to take ApplePay, because its millennial customers expect that, while a craft store with customers who use checks might want a check reader that turns a check into an ACH payment,” she says.
For many businesses, accepting credit cards is a core capability: it allows customers to pay on the spot with either debit or credit cards, decreases the amount of currency that a business has to deal with, and also avoids the risk of a check bouncing. Extending this capability onto the store floor via mobile devices can be a great way to enhance the overall buying experience, because an employee can offer advice and then process the transaction instantly once the customer is ready to buy.
Other service businesses might find more success embedding payment options into invoices, so customers can immediately click on links and pay through credit cards or PayPal. “The key is to make the link as simple and easy to use as possible,” says Hines. “If you make customers jump through too many hoops to use your invoicing system, they will likely go back to mailing checks.”
Choosing the right partner
More competition in the payments space means more competition to win your business, which gives you the opportunity to find the best vendor to partner with on this critical aspect of your operations. Cost is important—not only the ongoing costs of using whatever technology and equipment the vendor provides, but also the cost of the equipment itself.
Consider how easily the vendor’s technology will cooperate with your bookkeeping system. Having to manually enter transactions can eat up staff time, so a system that integrates with your current accounting or ERP system is worth investigating. Some systems now extend to your e-commerce platform, making it simpler to send discount offers, create newsletters with click-through buying options, and the like. Once you have a partner, periodically see what advances are out there in the marketplace and get some sense of the costs, so that you can renegotiate your current deal or find a new vendor with better terms.
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