Payment processing is an important part of running a business. How do you charge your customers? Which payment option is best for you and them? Which is safer?
These are all questions you need to ask as the end goal should be speed, efficiency, improved cash flow and better customer relationships.
In this blog, I’m going to discuss two payment options – invoicing and recurring payments – so you can decide which fits the bill – and why you may sometimes need to use both.
Invoicing is the process of sending an invoice to a customer for a product or service provided. No payment is collected until they initiate it.
This option is ideal if your customer makes a one-time purchase or avails your services on a fixed basis each month.
Think of recurring payment like your Netflix subscription. For instance, if you offer IT support or website maintenance services on a monthly basis, you can use this option to automatically charge your subscriber’s card on a pre-set schedule.
Which is better?
Both are equally solid options. The question is, what kind of service do you provide?
If it’s subscription-based, recurring payment makes the most sense. If you have billable hours for fixed services, invoicing is the top choice.
Then again, if you offer a mix of both, you’ll want to split them depending on the type of customer.
What’s the deal with automated payment?
Now that we’ve touched on these two payment processing options, I want to talk a little about automated payments.
I’ve been using it for a long time now and can’t stress how much easier it’s made my life. I don’t need to waste time chasing payments or having cash flow take a hit. My relationship with my customers has improved too.
Cash is king and one of the biggest benefits I’ve seen with automated payment processing is a fast cash conversion cycle. Payments are collected quickly, which means vendors can be paid early on.
This shorter time lag also turns a company’s working capital more times annually. The result? More sales and more profit.
How safe is it?
We’ve all heard news about data breaches so technology isn’t foolproof. But, with more businesses using automated payment processing and data security soaring in demand, vendors are providing increasingly reliable and secure payment experiences.
Of course, you should also implement your own safety measures like PCI (Payment Card Industry) and SSL (Secure Sockets Layer) compliance, data encryption, and periodic security assessments.
There are numerous payment processors today so which to choose should really depend on security, quick access to funds, great customer service and, of course, cost. You obviously want to keep overheads low so you need to determine the volume and value of your transactions.
Pro tip: Look for a low transaction fee with a set monthly fee if you have high-volume and high-value transactions.
Alongside all of these, consider a payment processor that provides multiple payment options to make your customers’ experience positive.
If you still need help deciding which payment processing to choose for your business, feel free to reach out to me.