It’s a few days before payroll is due, and you have three outstanding invoices over a week late. One customer has promised that their check is in the mail, another customer asked to postpone their payment a week until their paycheck clears their account, and the third customer hasn’t returned a phone call or email in two weeks. These scenarios are common for a small business owner, but the good news is that there are ways to help mitigate late payment issues. Automatic recurring schedules aren’t just useful for your gym membership or car payments anymore; businesses in various spaces see the benefits of automatic payments. Here are three things you need to know to make the switch to payment plans and get paid faster.
Whether a customer is paying from their bank account or a credit card, valid authorization must be obtained prior to the first scheduled payment. There are a few ways to have your customer authorize a recurring payment schedule – physically sign a form, authorize electronically, or complete an overriding contract/agreement. Once you have a signed authorization from your customer, you can enter the schedule.
You can also obtain electronic authorization from your customers using an online form. Linking an online form to your website allows your customers the flexibility to enter their own payment information and schedule details, taking your business out as the middleman. This is an easy alternative to offer to those customers who don’t want to give out their credit card number over the phone or on a paper authorization form. Your customers can feel secure and in control of their payment information, and you’ve just taken the leg-work out of tracking down their information and getting an authorization form signed.
Once you’ve set up a schedule with your customer, it’s a good idea to send them a recap of when they’ll be seeing debits from your business. Whether it’s an email or a letter, you should make sure your customer has a copy of the terms they agreed to so they can reference at any time. This should also help cut back on any future disputes or claims that a payment wasn’t authorized, and your business will also want to keep a copy of the agreement on hand for reference.
What about future payments? You’ll want to send payment reminders a few days before the schedule runs to make sure your upcoming payment stays top of mind for your customers. If your customer needs to make any changes to the credit card on file or change their payment date, they can contact you before their payment runs. If there’s not an easy way for your business to take a quick look at what payments are expected to come, it might also be a good idea to set up an email alias for your business where these reminders can be copied – that way you can reference the same email that your customers would receive prior to their schedules. Some services offer automatic email reminders for scheduled payments so you can “set it and forget it,” but you could also personally send emails or call out to your customers. A little extra effort up front will go a long way in getting paid on time.
Flexibility is Key
One of the perks of using automatic payments is that you can project your deposits and know how much cash you will have available at different times. However, sometimes unexpected financial issues can hit someone right about the time their invoice to your business is due. Some consumers may be hesitant to sign up for automatic payments if they feel like the dates are set in stone and there is no flexibility with their options. Setting clear expectations with your customers, such as requesting any changes a week ahead of time, for example, and being willing to work with your customers on payment dates up front may ease any uncertainty about setting up automatic withdrawals. Keeping the lines of communication open with your customers is a sure-fire way to not only enhance the consumer-to-business relationship, but it could also mitigate payment disputes or failed transactions down the road. Consumers who feel like they can’t work with a business or make alternative arrangements may be more likely to let their payments get behind or cancel services altogether.
If you are looking for a service to manage your payment plans, check to see the features offered. Can you adjust the payment date for single or multiple payments? Pause a schedule and set it to resume automatically in the future? Or switch the credit card or bank account on a schedule? These simple solutions can go a long way in making your payment process more efficient and your customers happy with the service. We hear stories from our merchants all the time about how scheduling their customers’ payments has not only resulted in predictable and consistent income, but it’s also taken the stress out of keeping track of special requests and following up when payments are overdue. Most importantly, no business can be successful without their customers; why not help make the way they pay your business as hassle-free as possible? Check out some more tips about using recurring payments, and start taking the guesswork out of when you get paid!