10 Simple Tips for Getting Paid on Time

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Table of Contents

Introduction............................................................................................................................................................... 3

Tip #1:Easy Steps for More Efficient Receivables.............................................................................................. 4

Tip #2:Automate Time-Consuming Business Processes................................................................................... 6

Tip #3:Getting Started with Electronic Invoicing & Billing................................................................................. 8

How to Design an Electronic Invoice............................................................................................................. 9

Tip #4:Set Up Online Payment Forms................................................................................................................. 11

Tip #5:Set Up Recurring Billing........................................................................................................................... 14

Tip # 6:Accept Debit and Credit Card Payments............................................................................................... 15

Setting Up a Merchant Account................................................................................................................... 15

Merchant Account Underwriting.................................................................................................................. 18

Tip # 7:Accept Check Payments Electronically................................................................................................. 20

Tip #8:Adopt Mobile Payments............................................................................................................................ 22

What are Mobile Payments?....................................................................................................................... 22

Benefiting From Mobile Payments............................................................................................................... 23

Are Many Small Businesses Embracing Mobile Technology?.................................................................... 23

Tip #9:Prepare For and Manage Late Payments ................................................................................................ 25

Tip #10:Know What to Do When Customers Cant or Wont Pay Up.............................................................. 26

Conclusion.............................................................................................................................................................. 28

About PaySimple.................................................................................................................................................... 30


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Introduction

PaySimple has a periodic best late payments excuse contest, and the excuses that oursmall business customers have shared with us are hilarious. While my dog doesnt go forbills in his food dish, it always seems there are some breeds out there that thrive on them.

Unfortunately, late payments are increasingly becoming an issue for small businesses,which is no laughing matter.

Customers are the lifeblood of small business. Well, most customers I dare say thatevery small business owner has dealt with at least a few customers that actually cost their business money.

Say youve done work or produced a product for a customer, andnow the customer wants to keep their money (and most likely yourwork as well). Non-paying customers can be detrimental to cashflow, so how can you get your payment before it costs yourbusiness?

According toExperians recent Business Benchmark Report,severely delinquent debt is on the rise for very small businesses

(those with one to four employees). The shift in percentage of dollars considered severely delinquent went from 9.9

percent in June 2010 to 11.7 percent in June 2011. According to the report, all business sectors have shown anincrease in slow payment in a year-over-year comparison. The largest increases in slow payment came from theconstruction industry (17 percent) and insurance industry (15.7 percent) when compared with June 2010.

This eBook was written to help small businesses deal with this and related problems. We offer 10 ways to tackle theissue of late payments and look at the advantage of offering multiple payment options to customers. We alsodiscuss how leveraging the payment process to provide great customer experience can help to bring in and evengrow revenues.

While we proudly speak to the ways in which PaySimple can be of specific service, we also provide a huge range oftips and strategies that any small business can put to use immediately to help run a business with greater efficiencyand better bottom-line results.

In short: we encourage you to embrace and implement the 10 tips that follow to improve your cash flow andbusiness growth.

Non-paying customers can be detrimental

to cash flow, so how can you get your

payment before it costs your business?
http://paysimple.com/blog/2011/08/26/best-late-payment-excuse-contest/http://paysimple.com/blog/2011/08/26/best-late-payment-excuse-contest/http://paysimple.com/blog/2011/08/26/best-late-payment-excuse-contest/http://www.experian.com/assets/business-information/brochures/q2-2011-business-benchmark-report.pdfhttp://www.experian.com/assets/business-information/brochures/q2-2011-business-benchmark-report.pdfhttp://www.experian.com/assets/business-information/brochures/q2-2011-business-benchmark-report.pdfhttp://www.experian.com/assets/business-information/brochures/q2-2011-business-benchmark-report.pdfhttp://paysimple.com/blog/2011/08/26/best-late-payment-excuse-contest/


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Tip #1 :Easy Steps for More Efficient Receivables

Cash flow is crucial when managing a growing company. Those with optimal cash flow havemastered the balance between payments going out (payables) and payments coming in(receivables). They have tight processes that allow them to anticipate most cash flow threatsbefore they happen.

Managing your receivables is a huge part of dealing with those threats. If you have too muchmoney tied up in receivables, you dont have funds available to keep up with your payables,especially if those receivables are delayed. Luckily, staying on top of your receivables is areasonable goal to accomplish.

To help, heres a checklist for managing your receivables so they dont put pressure on your cash flow:

1. Make the process a policy.The first step in creating any process is to define it. After you come to terms with a customer, what arethe next steps for getting paid? Do you take payment in advance or after your side of the contract isexecuted? Lay out the process and develop it into a company policy. Having this policy in place willallow you to better predict your cash flow situation.

2. Communicate your payment policy to your customers.With the policy in place, you should make it readily available to your customers, ideally before you startdoing business with them. Clearly communicate the benefits of paying early (like by offering a discount)and the consequences of paying late, as well as any additional terms, such as up-front deposits. As asmall business owner, its sometimes hard to be a stickler with your customers when it comes to latepayment fees, so providing positive reinforcement for paying on time is a lot easier than negativereinforcement for being late.

3. Make it easier to know your cash flow.Keep your outstanding receivables number at your fingertips at all times. If you have to spend hours inExcel to get this number (and only for a single snapshot in time), its going to be difficult to have anaccurate picture. So, if you havent already, research some tools that can automate this process foryou. One of the benefits of switching to paperless electronic payments is the system can track yourpayments for you (see number 5). No paper means automated reporting, rather than stacks ofcustomer files and manual spreadsheet work. If youre always in-the-know on how much money is tiedup in receivables, you can act more precisely in other areas of your business.

4. Keep a collection agency in your back pocket.While its not ideal, customers tend to respond more quickly when third-party collection agencies areinvolved. It can be a stressor on the relationship with the customer, but sometimes its your onlychoice. Your receivables policy should determine when a third-party collection agency gets involved.

5. Use the tools available to you.In addition to third party collectors, there are a wide variety of tools and partners available specifically tohelp with your receivables. Software that helps you manage your customers, invoice electronically, andaccept payments online can go a long way in speeding up your receivables process and help you stayorganized. Solutions such as PaySimple also provide custom reporting and real-time dashboards soyou can always have your finger on the pulse.


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Receivables are just one piece of the cash flow pie, butone that can be improved with a little planning andexecution. By following these steps and maintaining achecklist for managing your receivables, you are sure tohave a better grasp on your cash flow situation. If yourenot following similar steps today, pick a few to start withand see for yourself how beneficial they can be for yourbusiness.

Solutions such as PaySimple provide custom

reporting and real-time dashboards so you

can always have your finger on the pulse.


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Tip #2 :Automate Time-Consuming Business Processes

In tough economic times, small businesses are always in search of ways to cut back costs tohelp improve their bottom line. While the basic expenses of running a business are obviousplaces to examine for cost-savings opportunities, many small business owners forget anothergreat place to look saving time.

For small businesses that provide services, time is literally money. But even for businesses thatprovide goods, spending time on basic operations instead of spending time growing your

customer base translates into real expense and lost opportunity as well. Its a good idea for a small business ownerto track how much time is spent on administrative and operational tasks as a real business cost.

For many small businesses, billing-related activities and chasingpayments is one of the largest time frustrations they face thatkeeps them away from revenue-generating activities. In fact, avery large percentage of small businesses still use somecombination of paper, Excel and word processing to createinvoices, track receivables and follow-up on payments. Somesmall business owners struggle to even get their invoices out on

time because they are so tired of filling up their days (and nights) with time that isnt growing their business.

There are many automated billing software solutions designed and priced for small businesses that can net apositive ROI very quickly based on time savings. These solutions cut back on time spent by providing benefits suchas:

Email invoices with click-to-pay optionsAutomated recurring invoicesAutomated late payment follow-upAccurate receivables tracking in a system that can be accessed anytime from anywhere

Beyond billing, small businesses can easily find automation software for other areas of their business that take uplarge percentages of time, including email marketing, customer management, expense management, accountingand online marketing.

To figure out if a solution will help your small business cut costs through time savings, you canuse the following steps:

1. Multiply the hours you spend on the activity today times your hourly salary. This will give you your currentcost of the activity.

2. Next, figure out how much time youll save by using the automated solution. Most automated billingsolutions will provide your business with a 10% to 25% decrease in time spent.

3. Multiply the new reduced number of hours youll spend by your hourly salary a nd then subtract this totalfrom your first calculation. This will provide you with the raw cost savings from automation.

For small businesses that provide services,

time is literally money.


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4. Next, subtract the fee of the automation solution from the cost savings you just calculated. This will helpyou see if there is an immediate ROI from the solution just based on time savings alone.

5. The final factor to consider is how will you use the extra time you will have? If you think the extra time will

generate additional revenue, you can add that into your ROI calculation to see the full benefit youll receivefrom automating.

Times are tough for small businesses, so its important to examine many different angles of cutting costs and not letthe time factor go overlooked.


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Tip #3 :Getting Started with Electronic Invoicing & Billing

Ten years ago, a dialogue began around electronic invoicing and billing. Some of the obstaclesinvolving its adoption included low household Web usage, online security concerns, and acustomer base that was reluctant to change their payment habits. Over the past decade, however,electronic invoicing, billing and payments have undergone a rapid transformation from a niche,nice to have option to a mainstream necessity.

According to Fiservs 2010 Billing Household Survey: Consumer Survey of Offline and OnlineBilling and Payment Practices, (fig. 1) consumers utilizing electronic invoicing jumped from 9

percent in 2009 to 33 percent in 2010.1

And this trend is not solely driven by the new generation of Web-savvy kids.The Pew Research Center found that while Generation Y-ers are online more often (social networking andentertainment drives this trend), the older generations have embraced the Web in increasing numbers for itspractical applications, such as research, shopping and banking.

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Now that your customer base is paying bills online, what are the advantages of using electronic payments for yourbusiness? Consider the following

The advantages of electronic invoicing and billing for consumers:

Convenience:Offering your customers a variety ofpayment types and the option of paying online givesthem the freedom to choose when, where and howthey pay.

Control of finances:Many consumers utilize theoption of online payments to pay all their bills in oneconvenient sitting or to get last minute bills paid ontime. With electronic invoicing, not only do they nothave to mail the check, but customers can digitallymonitor their banking activity.

Email reminders: Avoiding late payments and feesis easier when a reminder is sent out on or near thedue date of a payment. Offering a Pay Now linkstreamlines the billing process even more.

Payment choices: Cash, check or charge? As withbrick-and-mortar retail stores, customers want and

need options that best fit their financialneeds. Utilizing debit, credit and ACH paymentoptions makes paying bills online as easy as payingfor your morning coffee.

The advantages of electronic invoicing and billingfor business owners:

Instant and secure delivery of invoices:No more waiting around for invoices to go out in the mail,hoping for checks from the postman, or waiting in line at the bank to deposit the days checks. You cansecurely deliver electronic invoices directly to your customers email inbox with the click of a button.

Figure 1

Offline & Online Billing and Payment Practice


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Less time spent processing invoices:Electronic invoicing allows you to distribute multiple invoices ina fraction of the time it would take to create and send one paper invoice. That means less paper cuts.

Cost reduction:Postage rates can pile up and envelopes dont grow on trees. Free is better! Cuttingthese costs can be one of the biggest advantages of electronic invoicing.

Ease of storing soft vs. hard copies of invoices: Automatic reminders and electronic invoices leavea readily accessible paper trail that is easy for both you and your customers to reference. Much less mess

around the workplace and no filing needed. Think how organized youll be!

With more and more customers going online to find a payment solution that works for their needs, electronicinvoicing and billing is an efficient tool for your business, and can provide your customers a seamless and enjoyablebilling process.

How to Design an Electronic Invoice

Electronic invoices are a great option for any business that bills its customers through the mail. In addition to savingpaper and stamps, electronic invoicing software allows businesses to create invoice templates that can be usedover and over. All the business has to do is modify a few items, such as the due date and dollar amount.

But what additional components of an electronic invoice make it complete? There are a handful of elements, asidefrom just the payment amount, that businesses should include on electronic invoices to their customers.

Check out the image below and on the following page to learn more about the components of anelectronic invoice:

Invoice NumberTagging each invoice with a number o

other code helps both parties in the

transaction with their files. Its

important to have a uniquea unique

identifier for each invoice todifferentiate between multiple

customers, or multiple invoices to the

same customer. It helps the customer

stay organized so they can keep track

what theyve paid and what is

outstanding.

Invoice DateThe invoice date indicates the day in

which the initial invoice was created.

for instance, youre invoicing policy is

Net 30, your due date (detailed below

will reflect that.

Customer InformationLikewise, providing specific customer

information adds a custom feel to the

invoice, and is standard on electronic

and paper invoices alike. If the invoice

sent to a business, its encouraged to

include a specific contacts name with

the business name.

Company LogoSome invoicing software allows

you to upload your company logo

into the electronic invoice. This

feature adds a professional touch

to the invoice, and gives yourcustomers added confidence

when making payment.

Company InformationIts always good to further comfort the

customer by providing your company

address, phone number, email

address, and website, if applicable.

Providing this information right on theinvoice makes it easy for them to

contact you with any questions,

eliminating further slowdowns in the

payment process.


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Add all of the above components of an electronic invoice together, and businesses can save paper, stamps, and

time in billing their customers.

1. http://www.fiserv.com/RP_fiserv-2010-billing-household-survey%281%29.pdf2. http://pewresearch.org/pubs/1093/generations-online

Quantity, Price & AmountThis part of the electronic invoice is basi

math; Qty x Price = Amount. Add that up

for each item, and you get

Subtotal

Like most receipts you see in day-to-daytransactions, invoices subtotal out all

charges. In this particular invoice, youll

see an extra line for a discount on the

products described in the descriptionsection. This is also a common area to

include taxes, if applicable.

Total Due & Due DateThese are probably the two most

important components of an electronic

invoice in the eyes of the customer. How

much do I owe, and when is it due? The

two pieces of information should be eas

to find on the page (highlighting the

section helps). The customer often start

here, and then backtracks to review the

details of the charges.

Click-to-Pay ButtonAn electronic invoices click-to-pay

functionality gives it a leg up on its pape

counterpart. When a customer clicks to

pay, they are taken to a payment form

where they can choose their payment

method, key in their information, review

terms and conditions, and simply click

pay.

CommentsFinally, if you wish to include comments

specific to the invoice, such as late

payment fees, some invoicing software w

let you do so in the comments section.
http://www.fiserv.com/RP_fiserv-2010-billing-household-survey%281%29.pdfhttp://pewresearch.org/pubs/1093/generations-onlinehttp://pewresearch.org/pubs/1093/generations-onlinehttp://pewresearch.org/pubs/1093/generations-onlinehttp://www.fiserv.com/RP_fiserv-2010-billing-household-survey%281%29.pdf


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Tip #4 :Set Up Online Payment Forms

If you havent implemented this yet, start thinking about setting up an online paymentform for your business. You have several options to accomplish the taskeach with itsown pros, cons, and costs.

So lets examine how to set up an online payment form using anoutsourced solution versus in-house development, and point out theadvantages of each.

1. All-in-one, outsourced solution:

Advantages Using a third party software provider to facilitate your online payment forms isadvantageous in a lot of ways:

Simplicity. No major software development is required to implement online payment forms from anall-in-one solution into your business.

Security. By hosting the online payment form on a third party server, you can leave certificationand security concerns up to the software provider.

Guidance. If you choose third-party software that integrates with a merchant account, they will walkyou through the underwriting process and automatically integrate your merchant account with youronline payment solution.

No website required Most solutions can set you up with payment forms that are linkable from emails,so if you dont have a website, you can still get paid online.

Low upfront and ongoing costs Since there are no major development costs to start using anoutsourced solution, its fairly cheap to get started. And, while you may have to pay monthly service fees

for the outsourced platform, you wont have to pay your own secure hosting costs.

Easy set-up With just a few simple steps, most businesses can get an outsourced service set up prettyfast:

Research your options: There are a lot of payment acceptance solutions and software available,so it would be wise to do some research. Things you should keep in mind when weighing youroptions include setup fees, funding practices (direct to your bank account versus retrieving from theprovider), and monthly service fees. Many providers can also tack on additional per-transactionfees. And, of course, make sure to check that your processing provider will integrate with apayment form (not all do).

Set up your merchant account: Depending on which option you choose in step 1, you may or

may not have to go through merchant account underwriting. If you decide you want a merchantaccount because of faster funding, lower fees, etc., the software provider you choose will help youthrough the underwriting process.

Build the payment form: Using your new software, you can now start customizing your paymentforms. Determine the products, services, and payment types youd like to offer, then upload yourlogo and activate the form.

Integrate into your practice: Transitioning from past billing practices to online payment form willsave you a lot of hassle in the long-run. Initially, however, youll have to take the necessary steps


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of notifying your customers and getting used to the system yourself. Youll also have to decide ifyou want to link the form from your website or in emails.

2. Custom-built, in-house solution:

Advantages On the other hand, building your online payment forms in-house has its own appeal:

Control. The more control you have over the development, the more you can tailor the solution toyour business. In building your own online payment form solution, you can customize itsfunctionality to your liking.

Feel. While you are able to customize your online payment forms using certain third party solutions,you can design your in-house forms any way you like, ensuring they match the feel and flow of therest of your website.

Flexibility. If you eventually want to expand your online payment functionality into a shopping cart,you will already have a lot of the pieces in place from implementing the online paymentforms. Again, since its your code, you can revise as needed.

Set-up Creating something in-house has more complexity to it, so heres some important advice:

If youre not an expert, get one. Whensetting up a secure payment form, its criticalthat you get the security, coding, andconnections right.

Set up a secure hosting platform. Securehosting protects important data, in this casefinancial information, from being stolen byintruders. Apply for an SSL (Secure SocketLayer) certificate to acquire the dataencryption technology.

Register your site. With the SSL certificate in tow, you now must register the site from which you will

set up the online payment form with a digital authentication service. This service certifies that the site isthe correct one and that youre encrypting sensitive information.

Build the payment form. Next, youll need to either buy software or use a developer to integrateshopping functionality on your site. Online payment forms have less moving parts than fullshopping carts, but the page still needs a click to buy li nk that takes customers to your secureserver so they can input their payment information.

Find a processing solution with an applicable API. Merchant accounts give you the ability toprocess payments. If you want ACH payments in addition to credit cards, you may have to findseparate processing partners.

Integrate the processing platform with your payment form. Once your merchant account(s) is

acquired, youll need to get the API keys to link your secure form into their back -endprocessing. This is one very critical step. See Step 1 about getting an expert.

Test and launch.An obvious step, but youll definitely want to kick the tires on the form beforepublishing to the public. Test different combinations of payments with products and basically try tobreak your form. When everything is running smoothly and youve tested thoroughly, you canlaunch your form to the public.

When setting up a secure payment form,

its critical that you get the security,

coding, and connections right.


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Tip #5 :Set Up Recurring Billing

Dating back to the days when ivory was a common form of currency, payment collectionfor goods and services has presented its challenges. Granted, a lot of products are onlydelivered upon receipt of payment, but many industries rely heavily on invoicing andother accounts receivable methods to collect.

The progression in payments technology has introduced new options for collectingpayments, one of the most common of which being recurring payments. As consumers,most of us have come across recurring payments somewhere in our lives. Gyms, Netflix,property managers, and auto insurers are just a few examples.

But, as a business owner, have you thought about howrecurring payments could benefityou? Here are five ways recurring payments can help your business:

1. Minimize the leg work.When you use recurring payments, all you have to do is set up the initialpayment schedule, and then manage any changes in payment type or amount. You can then just watch thepayments land in your bank account on the pre-determined dates, much like an auto-deposited paycheck.

2. Decrease late payments.Late payments have a

significant negative impact on your businesss cashflow. Many organizations find them to be sodetrimental that they charge a fee to late-payers,which hurts the customer relationship. Setting upautomated payment schedules keeps incomingpayments on-time and allows you to take some of theguesswork out of your cash flow situation.

3. Improve customer relationships. In addition to avoiding those awkward late-payment conversations,recurring payments can help your relationship with your customers by saving both parties time andenergy. I dont know about you, but as a consumer, I leap a t the opportunity to set up automaticpayments. I can not only control when the payments are drafted from my account, but I can pretty mucheliminate the need for envelopes and stamps. Which brings us to

4. Cut costs and decrease waste. A recent survey of small businesses found that businesses usingelectronic billing methods are saving 40-50 cents per bill.

1Plus, if youre interested in decreasing

waste,check out this handy calculatorto see how many pounds of paper you can save by switching topaperless billing. As few as 20 bills sent and received each month equals nearly 7 pounds of paper ayear. Included in the production/transport of that paper is 171 pounds of greenhouse gas emitted, 63gallons of wastewater released, and 5 gallons of gasoline consumed.

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5. Keep payment information secure. Most recurring billing software allows businesses to set uprecurring payments in asecure online environment. Cutting out paper leads to a reduction in theduplication and circulation of sensitive information. Using recurring payments eliminates one of themiddlemen between you and your customer, and gives the consumer and business the power and flexibilityto pay and get paid.

If youre in one of those industries that can replace some of your manual processes with automated ones, giverecurring billing a shot. Your staff, cash flow, customers, environment, and security will all benefit from the switch.

1. Stats from NACHAs Council for Electronic Billing and Payment survey. February, 2011.2. Stats from electronicpayments.org .

Cutting out paper leads to a reduction

in the duplication and circulation of

sensitive information.
http://paysimple.com/recurring_billing.htmlhttp://paysimple.com/recurring_billing.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://paysimple.com/security.htmlhttp://paysimple.com/security.htmlhttp://paysimple.com/security.htmlhttp://electronicpayments.org/c/bus_ddep_benefts.cfm?hp=bus&AID=112http://electronicpayments.org/c/bus_ddep_benefts.cfm?hp=bus&AID=112http://electronicpayments.org/c/bus_ddep_benefts.cfm?hp=bus&AID=112http://electronicpayments.org/c/bus_ddep_benefts.cfm?hp=bus&AID=112http://paysimple.com/security.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://paysimple.com/recurring_billing.html


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Tip #6 :Accept Debit and Credit Card Payments

More and more small businesses obtain merchant accounts to accept credit cards, so it is essential toreview the essentials of accepting credit card payments. We also cover the steps required to set up amerchant account and the basics of merchant account underwriting.

When signing up for a merchant account, the associated agreement contains a complete explanation

of key procedures. Within the merchant agreement, there are card acceptance procedures, alsoknown as Operating Rules. Most of these rules are generally set in place to protect all parties in the process andkeep commerce flowing.

If you are a business owner, at first glance some of these conditions may not seem advantageous to your business.But it is important to keep in mind that aside from running a business, you are a consumer protected by these rules

just the same.

The following is a list of common merchant violations (most you have probably even witnessed):

1. Honor All Cards Policy: Merchants are required to honor all cards presentedby their customers if they have a merchant account set up to do so. They cannot turn away CorporateCards, Purchasing Cards, Rewards Cards or the like to prevent paying additional fees and potential

surcharges for accepting them. Although those card types may carry an additional expense, businesses areactually likely to experience a net benefit by taking these cards because the corporate and rewards cardtransactions are generally higher than normal consumer cards. In other words, the higher transactionamount offsets the additional card acceptance expense.

2. Transaction Surcharges: A fee or surcharge may not be added to the advertised price of goods orservices in an attempt to offset the cost of card acceptance. For example, a merchant cannot charge anextra percentage or flat fee on the payment if the customer pays with a credit card instead of cash. However,discounts may be offered off the advertised price for cash, check or other payment methods. There areminor exceptions to this rule, so be sure to check your merchant agreement to see if your business mayqualify for this sort of payment.

3. Floor Limits:Merchants may not set an artificial floor limit under which they would not agree to accept apayment card. If a business signs up to take credit cards, they must take the card presented regardless ofthe dollar amount. You will sometimes see merchants with a sign at the register that reads (Credit CardsNOT Accepted for Sales Less Than $15.00). This is a violation of the Operating Rules. If the cardholdercomplains to its issuing bank, the compliant would be sent from the issuing bank down the ladder, wherefines or termination of the merchant account could result.

Instead of attempting to avoid the cost of accepting cards under these scenarios, embrace card acceptance for alltransactions to yield higher net sales and improve your customers experience.

Setting up a Merchant Account

In order to obtain a merchant account, you will need to enter into an agreement with a member bank that has aprocessing relationship with Visa and MasterCard. You may also enter into an agreement with an authorized agentof the member bank, such as an independent sales organization or member service provider (ISO/MSP.) Theagreement means that your business agrees to abide by the operating regulations established by the card creditbrands.

Before you start the actual set up of a merchant account, its important to think about how you want credit cardpayments to work for your business. Some key questions to think through include:
http://paysimple.com/merchant_account.htmlhttp://paysimple.com/merchant_account.html


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What types of credit card brands do you want to accept? Visa and MasterCard are standard, butis it important for your business to also accept other card brands, such as American Express? Youll wantto be prepared with a list of credit card brands you want to accept.

How do you want to accept payments? Do you want your customers to make payments to you onyour website? Do you want to be able to process payments on your mobile phone? Do you want to use avirtual terminal, or is it easier for your business to use an API to integrate into your existing systems to runpayments? Do you have recurring billing needs? Youll want to be prepared with the primary way youll

accept payment, along with all the secondary methods.

How much sales volume do you anticipate will be through credit cards? Will you still acceptother payment methods, or will you be switching to solely accepting credit cards? Its important to havesome idea about volumes before you begin discussions with a merchant account provider.

Now that you have an idea of how you want the merchant account to work for your business, its time to start tocompare merchant account providers.

Some points youll want to consider when selecting a merchant account include:

Merchant Account Transaction Fees: Most merchant account providers will charge you two types offees for credit cards transactions. The first, per-item fee is a flat rate you will get charged for each creditcard payment that is processed. The other is a percentage fee based on the total amount of eachtransaction. For the percentage fee, many merchant account providers used a tiered pricing system basedon how qualified a transaction is for a particular rate. Most merchant account providers will classify thesepercentage fees into three tiers of rates, with variables including factors such as the way you accept thepayment (vs. the primary way your merchant account is set up to accept payment), if the card is a rewardscard, or if the card is present or not. Some merchant account providers also have different percentage feesbased on the volume that you process. Its important to gather all the details on these rates and do somerough calculations with ~50% of your transactions falling into the higher tiers to get a clear picture of whatyou will likely be paying in fees.

Other Merchant Account Fees: There can be lots of other fees associated with a merchant accountbeyond the transactional fees. Other fees to ask about include monthly minimum fees, setup fees,

cancellation fees, statement fees, customer service fees, chargeback fees, batch fees and annual fees. Itsimportant to understand all of the fine print pertaining to these fees up front so there are no surprise costsalong the way.

Evaluating Merchant Account Providers Beyond the Fees: Not all merchant accounts are createdequal, so getting a holistic view up front will be critical to your satisfaction and long-term success with yourmerchant account provider. Its important to consider the following factors:

o Does the merchant account provider provide you with all the software and payment acceptanceoptions you need, or will you have to supplement with other providers and incur additionalfees? For example, is a virtual terminal, invoicing, recurring billing, website payments and mobilepayments all included in an integrated solution with your merchant account provider, or do you haveto set these up separately? The more providers you need to go through, the more costly and

complicated your experience will be.

o How much control over your customers payment experience will you have? Many businessowners dont have the time or expertise to set up customized, on line solutions, so finding somethingthat is automated and hosted by your solution provider is critical. However, in order to provide agood experience to your customers, youll want to make sure you can easily customize any invoices,payment forms and payment communications.

o Is the complete solution tailored to your type of business and easy for you and any other employeesto use? Does the merchant account provider frequently work with your business industry and


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size? Finding a provider that is dedicated to your business type means that future developmentswill continue to align with your needs.

o Can your customers payment account data be securely stored in a manner where you will haveminimal PCI compliance issues? No business needs the headache of an in-depth PCI compliancereview, but yet you want to be able to provide your customers with the best possible paymentsexperience. Its important to find a solution that helps you meet the best of both those worlds.

o How is the customer support? Any sized business should be able to demand account management

and live support to help ensure success.

o Is the merchant account provider willing to provide you with references?Talking to otherbusinesses about their experiences with the merchant account provider can be very insightfulduring your selection process.

Once you have chosen a provider, heres what to expect in the merchant account set up process:

Since the member bank is taking on risk by enabling your company to process credit cards, you shouldexpect a pretty comprehensive review process before you can be approved for a merchant account.

The merchant account provider will require you to complete an in-depth application and provide lots ofinformation pertaining to your business model and finances.

If you are a smaller business, you will also be required to provide personal information, undergo a creditcheck and provide a personal guarantee on the account.

This process can feel cumbersome, so its great to have a merchant account provid er that will hold yourhand through underwriting to ensure the fastest, least onerous approval process.

Once your merchant account is set up, you will be ready to start accepting credit card payments. If youve gonewith a great merchant account provider, this can be as simple as logging into a software product, entering your

customers payment information, and clicking the collect payment button to have the transaction processed andfunds deposited into your bank account.

Step 2The underwriter will process the information and may

return with additional requests based on its analysis (such

as tax returns, balance sheets, bank statements, etc.).

Step 4Integrate or activate your account with your

software or terminal. (This is done for you by

certain merchant account providers).

Step 5

Start accepting debit and

credit cards!

Step 1Provide in-depth information about your

business (similar to providing information

about yourself in a mortgage application).

Step 3Once approved, youll receive

information to enable your

merchant processing account.

APPROV

PROCES


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Merchant Account Underwriting

If youre ready to set up a merchant account for your business, you should be aware that the process requiresunderwriting. But what do underwriters look at when reviewing your application?

Well, it depends on the payment processor youre working with, but in short, theyre assessing the risk associated

with the business.

Here are some specific items that most processors will consider during merchant accountunderwriting:

Business type: Processors and underwriters have come to believe that some business types carry morerisk than others. Industries with ambiguous products or services are more highly scrutinized than those withconcrete offerings. Certain applicants may be rejected during the process based on the business typealone, regardless of other factors on the application.

Years in business: Long tenures go a long way inmerchant account underwriting. Businesses that havebeen around for 5+ years often have better cash flow

and can respond accordingly in the event of achargeback. It also speaks to the legitimacy of thebusiness if theyre able to keep their doors open forextended periods of time.

Charge-back history: If youve had a merchant account in the past,underwriters may want to look at your chargeback history. Charge-backs are issued by cardholders whenthey feel that a charge was made either without their consent, or without the product or service beingrendered as agreed. Businesses with extensive charge-back histories have higher hurdles to jump duringmerchant account underwriting.

Billing policy: Does your business bill in advance or after products or services are rendered? In theeyes of the underwriter, businesses that bill too far in advance are a greater risk for chargeback, because

situations can change. Say youre selling tickets for an event thats six months away and something comesup and you must cancel the event. If you dont have the funds to reimburse your customers, the processorand its partnering bank may be on the hook for funds when chargebacks are initiated.

Owner / signer credit score: The signers credit score plays a big role during merchant accountunderwriting. However, in the cases of poor credit, some processors will review financial statementsinstead. Businesses with multiple partners can also try the application with a different signer if the originalcredit score is insufficient.

Requested volumes: Most of the above factors, aside from prohibited business types, are weighedagainst the processing volumes requested on the application. Sometimes new businesses have to startwith smaller volumes and build a trustworthy relationship with the processor before increasing their

processing volumes.

Applications that are on the fence can sometimes still be approved with special amendments,such as:

Upfront reserves: In this situation, the processor holds an upfront, designated amount of money duringthe early stages of the merchant account to mitigate some of its risk

Merchant account underwriting may

be stringent, but its not as restricted

as it seems.


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Holds: Here, the processor holds a percentage of processed funds until a history is built with the merchant

Daily processing fee withdrawal: Processors usually debit their fees monthly, but in the case of newaccounts they may request to debit accounts more often to assure they receive their funds

Merchant account underwriting may be stringent, but its not as restricted as it seems. Most businesses have noproblem getting approved, and others can usually find a way to prove themselves to the processors over time andeventually get the processing volumes their business requires. The whole process can oftentimes be completed in

just a few hours.


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Tip #7 :Accept Check Payments Electronically

If youre like most small businesses, you probably take payment via cash, and possiblypersonal or business checks. You may also be accepting credit cards, or at the veryleast youve already considered whether it makes sense to accept credit card paymentsfrom your customers.

Sure, credit cards are convenient and your customers love them because they can deferpayment, earn rewards or even cash backwhich makes doing business with you evenmore attractive. Credit cards have advantages for businesses too, because if properly

authorized you have a big bank promising that youll get paid. But, they have their downside as well, most notably ahigh transaction charge of up to 4 percent (or sometimes more) and the possibility of customer chargebacks.

If youve decided against credit cards, wish you had an equivalentalternative, or simply want to add another payment form to the mix,consider ACH payments. ACH is, very simply, an electronictransfer from your customers bank account to your bankaccountessentially a paperless check, but supercharged.

The following are seven reasons why your business

should accept ACH payments:

1. Lower Cost: ACH payments are typically the lowest cost option for accepting electronic payments. MostACH transactions are billed using a flat fee of between 25 and 75 cents per transaction. So, lets compare atypical ACH fee (lets use a median 50 cents) with a typical credit card charge (lets use a representative 25cent authorization fee + 2.5% of the total amount) for the same $500 transaction.

ACH Cost = $0.50 (one transaction x $0.50 per transaction charge)

CC Cost = $12.75 (one authorization @ $0.25 + $500 x 0.025)

ACH Savings = $12.25 per transaction

To calculate your exact savings use thePaySimple ACH Over Credit Card TransactionsSavings Calculator.

2. Convenience: Electronic ACH transactions are just as easy as credit card transactions. Your customersimply provides you with their bank account number and bank routing number (read right off their papercheck or found on any bank statement) and you can initiate a transaction for the amount theyauthorize. You can get authorization in writing or online, or your customer can just give you a call. The ACHProcessing Rules have been revised to permit your customers to authorize automated recurring paymentsover the telephonemaking them even more convenient!

3. Automation: Not only can you use ACH payments for one-time transactions, you can set up automatedrecurring billing and payment plans using it as well. For example, automated billing is perfect for service

businesses such as cleaning or child care, or for allowing customers to make installment payments on alarge purchase. You simply get your customer to authorize a billing schedule in writing or online and thenuse a payment processing program such as PaySimple to automatically charge your customer on theschedule you configure. We call it set-it and forget it, and its the best example we know of getting paidon-time every time, effortlessly.

4. Preferred Funding: If you think all checking account transactions are the same, then think again. Bankstypically treat paper check transactions and electronic ACH transactions differently. While each bank hasits own policy, in general when applying debits against a bank account the bank will process the electronic

But, [credit cards] have their downside as

well, most notablya high transaction

charge of up to 4 percent (or sometimes

more) and the possibility of customer

chargebacks.
http://www.paysimple.com/small_business_resource/tools/credit_card_vs_ach.htmlhttp://www.paysimple.com/small_business_resource/tools/credit_card_vs_ach.htmlhttp://www.paysimple.com/small_business_resource/tools/credit_card_vs_ach.htmlhttp://www.paysimple.com/small_business_resource/tools/credit_card_vs_ach.htmlhttp://www.paysimple.com/small_business_resource/tools/credit_card_vs_ach.html


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payments first. This means that if your customer has $1,000 in the account and youve processed a $600ACH charge against the account on the same day someone else has submitted a $600 paper check, youllget your money and the other person will get a bounced check.

5. Limited Dispute Mechanisms:Unlike credit card transactions where a customer can initiate achargeback because they simply dont like the product or service provided, there are only three reasonsan ACH transaction can be disputed: It was not for the exact amount authorized; it was processed earlierthan the authorized date; or, it was not authorized at all. Thats it.

6. Security: Many people have a gut reaction against giving a merchant their bank account number. But thisfear is completely unfounded. In fact, it truly is much safer to provide a bank account and routing number toa merchant who enters it into a secure system than it is to send them a paper check. Why? Because thenumbers printed on the bottom of a paper check are the EXACT SAME NUMBERS used to process anelectronic ACH transaction. Thus, by using a paper check you run the risk that it will be copied, left lyingaround in a public area, and that it will be seen by dozens of people during processing. With an ACHpayment, the account numbers are entered into a secure system and then encrypted. Only computersaccess this data during transaction processingno prying eyes!

7. Environment: Going paperless is going green. Using electronic ACH transactions instead of paperchecks not only saves trees but also natural resources used in paper production and transportation. If youalso use electronic invoicing instead of paper bills, or if you use automated recurring billing in conjunction

with electronic receipts, you save the paper, postage, and transportation costs involved with printing andmailing paper bills and statements. How much will it save? Check out these greenness calculators:HowMuch Gas Can I Save?andHow Much Paper Can I Save?

If youd like to learn more about ACH, try the following resources:

TheACH Sectionon PaySimple.comElectronicPayments.orgA NACHA sponsored educational website about electronic paymentsprocessed through the ACH Network, including Direct Deposit, Direct Payment, and check conversionapplications.PayitGreen.orgA NACHA sponsored organization dedicated to paperless payments, bills, andstatements.
http://www.paysimple.com/small_business_resource/tools/gas_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/gas_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/gas_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/gas_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://paysimple.com/about_ach.htmlhttp://paysimple.com/about_ach.htmlhttp://paysimple.com/about_ach.htmlhttp://www.electronicpayments.org/http://payitgreen.org/http://payitgreen.org/http://www.electronicpayments.org/http://paysimple.com/about_ach.htmlhttp://www.paysimple.com/small_business_resource/tools/paper_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/gas_savings.htmlhttp://www.paysimple.com/small_business_resource/tools/gas_savings.html


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Tip #8 :Adopt Mobile Payments

Mobile payments are getting big, and the predictions are even bigger.

Its been reported that over 70 percent of the worlds population now owns a mobile phone. Thatsover 5 billion mobile subscribers, and in places like the United States, its nine in 10 people.

All of which means mobile payments are now taking off. The ability to accept mobile paymentscame to fruition 10 years ago, but remained stagnant until 2010, when it reached its tipping pointwith the massive adoption of smartphones.

According to a recent Gartner report, the number of mobile payment users will hit 141.1 million this year, a 38.2percent increase from 2010. The research firm reported the 2011 global mobile payment volume at $86.1 billion, up75.9 percent from the 2010 volume of $48.9 billion. And if thats not enough, a recent study by Juniper researchsays the total value of mobile payments will triple by 2015, to an estimated $650 billion (fig.2).

Given these statistics its reasonable to assume that as morebusinesses start to accept mobile payments, customers will beginto expect it more and more.

What are Mobile Payments?

Before we go too far, lets quickly define what we mean by mobilepayments.

Mobile payment is an all-encompassing term covering any form ofpayment for a good or service or any transfer of money betweentwo parties, executed through a mobile phone.

Lets focus on one portion of the mobile paymentsspace: small business credit card processing on amobile phone.

Should Small Businesses Care About Mobile Payments?Small businesses need to place their bets carefully when embracing new technologies. Not all hot trendsare smart investments for a small business. Lets analyze mobile payments from the perspective of a smallbusiness:

o Are your customers ready? Yes, your customers are ready for a portion of mobilepayments. With the proliferation of mobile banking apps, consumers are now comfortableconducting financial transactions on a mobile device.

o What about NFC?Customer acceptance has not yet been proven, however, for NFC (near fieldcommunications) technology. With NFC, the actual payment is made through a paymentmechanism embedded in the customers mobile phone rather than with their credit card. Since

NFC will require a change in customer behavior, its best for small businesses to sit back andmonitor how NFC evolves over the next couple of years before making any investments.

o Is your small business ready? In a recent AT&T small business survey, 72 percent reportedusing mobile apps in their business. So yes, if you have a mobile smartphone, your business isready to accept mobile payments on the go.

The other lovely thing about mobile apps is that they are easy. We all know how to find them, how todownload them, and most have a refreshingly easy interface. No additional hardware, complicated

Figure 2
http://www.digitalbuzzblog.com/mobile-statistics-2011-growth-of-mobile/http://juniperresearch.com/viewpressrelease.php?pr=250http://www.att.com/gen/press-room?pid=19326&cdvn=news&newsarticleid=31689&mapcode=enterprisehttp://www.att.com/gen/press-room?pid=19326&cdvn=news&newsarticleid=31689&mapcode=enterprisehttp://juniperresearch.com/viewpressrelease.php?pr=250http://www.digitalbuzzblog.com/mobile-statistics-2011-growth-of-mobile/


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solutions, or technical expertise is usually required. Its the easiest payment processing has ever been for asmall business.

Benefiting From Mobile Payments

So both parties are ready, but whats in it for you?

Small businesses do a lot of their work remotely. Conducting work away from the office is on therise. According to the previously-mentioned AT&T survey, ownership ofwireless devices for the purpose of remote work is on the rise. Fortypercent of small businesses report all their employees use wirelessdevices or wireless technologies to work away from the officea 66percent jump over the past two years. So yes, small businesses areaccustomed to, if not fully reliant on, doing business on the go.

Mobile credit card acceptance means getting paid faster. In these economic times, cash flow ismore critical than ever. However, it continues to plague small businesses. In a recent Wells Fargosurvey of small businesses, only 38 percent reported currently having favorable cash flow. In the DiscoverSmall Business Watch survey, 46 percent of small businesses reported experiencing a cash flow issue inthe last 90 days. When a small business decides to accept mobile payments, they are able to collect at thetime of product or service delivery. Small business owners no longer have to wait until they get back to theoffice to mail an invoice or wait for a check.

Accepting credit cards from anywhere means more sales. With mobile payment acceptance asan option, you no longer have to turn away customers who dont have cash or a check. Its been reportedthat 80 percent of consumers have credit cards, yet according to a recent NFIB small business survey, 51percent of small businesses dont accept credit cards. What a huge advantage for small businesses overtheir competitors that cannot accept mobile payments on the go.

Payment convenience delights customers. Eliminating all friction in the payments process and theability to say yes to any way a customer wants to pay you will help you keep your customers

happy. Mobile credit card acceptance makes payments so incredibly simple and convenient that yourcustomers will be delighted to do more business with you.

Mobile credit card acceptance decreases the time spent on billing. When payment iscollected at the time of service, that translates into less time spent sending bills and tracking downpayments. Small business owners can spend less time conducting administrative billing tasks and moretime growing their businesses.

Are Many Small Businesses Embracing Mobile Technology?

While the above reasoning sounds quite convincing, many small businesses dont like to be the first to dip their toesinto the water. Rest assured that lots of small businesses are making active investments in mobile technologiesnow and increasing those investments over the next year.

In a recent survey by CompTIA, seven out of 10 small businesses surveyed said they would spend more on tech inan effort to improve customer interactions, mobility options and operational efficiencies. Among small businesses(10-99 employees), 25 percent currently use mobile solutions and 43 percent expect to start in the next 12 months(fig.3). Even the smallest of businesses surveyed (one to nine employees) expect to significantly increase usage ofmobile technology, with current usage at 12 percent and planned usage at 22 percent.

72%of small

business owners

use mobile apps.
http://smallbiztrends.com/2011/07/small-business-cash-flow.htmlhttp://smallbiztrends.com/2011/07/small-business-cash-flow.htmlhttp://www.abcn-news.com/?p=453http://www.abcn-news.com/?p=453http://www.channelpartnersonline.com/news/2011/07/smbs-to-spend-more-on-technology.aspxhttp://www.channelpartnersonline.com/news/2011/07/smbs-to-spend-more-on-technology.aspxhttp://www.abcn-news.com/?p=453http://www.abcn-news.com/?p=453http://smallbiztrends.com/2011/07/small-business-cash-flow.htmlhttp://smallbiztrends.com/2011/07/small-business-cash-flow.html


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For small businesses, mobile payment acceptance represents a greatopportunity to increase cash flow while being more efficient and providing bettercustomer service. Small businesses should research their options and startaccepting mobile payments today.

68%of small businesses have

or plan to start a mobile

solution

Figure 3


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Tip #9 :Prepare For and Manage Late Payments

Now that youve set up a full range of convenient ways for your customers to pa y youefficiently and on time, what can you do if late payments still cause your small business tosuffer?

First, get your contact information together. The more contact points you can secure up-front, when the relationship is new, the better off youll be in the long run.

Its also helpful to get as many related contacts as possible. For example, contacting the spouse in a household orcontacting other colleagues in a business. The more people that are involved, the more your payment is likely toincrease in importance. The squeaky wheel definitely applies when it comes to prioritizing who gets paid first.

Next, its important to organize your receivables to figure out which ones to tackle right away. Ranking outstandingpayments by factors such as the amount due and your likelihood to collect is a quick way to build a priority list tofocus your attention.

Once this is done, create and implement your follow-upstrategy. Its best to use a combination of methods for contactingyour late payors phone, email, text and mail for the main andalternative contacts. Figure out how often you want to follow-upand the message you want to send, and then get your

communications going.

When you do speak with your late payor, its important not to g etemotional. Many late payors are facing toughcircumstances. However, unless you want to end up with tough

circumstances yourself, you need to be compassionate, but not emotional. Its good to ask probing questions soyou can get a complete understanding of their situation. Why havent they paid? When will money be comingin? How do they prioritize what will get paid?

Figure out a plan to get some money in your pocket. Setting up a payment plan or even accepting one-time partialpayments are great steps in the right direction. Base the payment dates and amounts on their situation so the planis likely to be successful. Its also helpful to be able to offer as many payment types as possible. While they mightnot have cash, they might be able to set up a payment plan using a credit card.

When all else fails, its time to explore taking legal action. Sometimes a threatening letter on some officialletterhead is enough. Otherwise youll need to weigh the cost and benefit of writing off the debt versus hiring someprofessional collections assistance.

Setting up a payment plan or even

accepting one-time partial payments are

great steps in the right direction.


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Tip #10 :Know What to Do When Customers Cant or Wont Pay Up

Say youve done work or produced a product for a customer, and now the customer wants to keeptheir money (and most likely your work as well). Non-paying customers can be detrimental to cashflow, so how can you get your payment before it costs your business?

1. Set clear policies and payment dates (and stick with them).As weve said already, always have these policy terms and dates in writing. These written policiesshould include what work you intend to do, how often you intend to get paid, and whether the paymentsare based on specific date. Perhaps most importantly, the policy should include steps the customershould follow if theyre not happy with the product or service (rather than just decide not to pay).

2. Monitor customer dissatisfactionoften. Get written confirmation throughout theproject that the work completed is what thecustomer wants. Builders, both of the brick and

mortar and the website variety, often havecustomers that wont pay up because they areunhappy. Getting written confirmation can betedious, but it can be an invaluable tool when itcomes time for the customer to write the check.

3. Think about having a graduated paymentplan, such as 30/30/40.A 30 percent deposit, 30 percent paymentmidway (either a set date or at the completion ofa set piece of the work) and a 40 percent finalfee (fig. 4). This way, if the customer has doubtsabout paying part way through, you can find and correct these areas before the work is complete. Dontcomplete the next work order until the first one has been paid up.

4. Invoice quickly and track overdue payments promptly. If your customers have you in theforefront of their bill pile, youre the first in line to get paid. Past -due amounts should immediately be re-invoiced.

5. Send invoices as many ways as possible. Emailing and sending paper invoices will aid inrecovering payments. Also, offer online payments. Payments made online, both through credit cardsand through e-checks can give real-time information about the actual availability of funds. Nothinghurts worse than not getting paid AND having to pay the bounced check fees.

6. Follow up with the appropriate amount of directness. The first overdue letter should definitelybe helpful; the second, concerned, and the third, politely punitive. Also, follow up with any stated meansfor payment, whether its a final invoice, small claims court, or, in dire situat ions, seeking the help of aprofessional debt collector. If you dont follow the guidelines you set, what reasons do your customershave to follow them?

7. Keep all correspondence, phone calls and means of redress absolutelyprofessional. The guidelines set forth by the FDCPA protect the rights of the customer to be treatedfairly in debt collection. It might seem very cathartic to post a sign with the non-payers picture and

30/30/40

Payment

Program

Figure 4
http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htmhttp://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm


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writing DEADBEAT across the face, but its not productive and it makes other customers think twiceabout working with your business. Plus, you could get sued for harassment or defamation.

8. Know when to let it go. If youve gone through small claims court, hired a debt collection firm andstill havent received payment, you need to see if its costing you more to continue pursuing this debtthan the actual amount youre owed. Some debtors turn out to be too expensive to pursue. At thispoint, its best to learn what you can from the experience and then walk away. There will always be thatone person who gets away with not paying and, as enraging as that can feel, its usually best to just letit go.

Generally, there are three types of non-paying customers: cash-strapped, who want to pay but cant; purposefullylate, who want to extend paying as long as possible; and those who never intend to pay and will make up anyexcuse not to pay.

In most situations, the customer is willing to make good on their debts to you. Keeping a positive attitude andtreating the customer with respect is key in collecting this payment and, hopefully, all future payments from thecustomer. When in doubt, talk to a professional debt collector or a business attorney to find the appropriate nextsteps in debt collections.


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Conclusion

If you are like a majority of other small business owners out there, cash flow concerns areat an all-time high. According to the Amex Open Small Business Survey, 66 percent ofsmall business owners are concerned about cash flow (fig. 5).

We all know the basics of how to bill our customers bill in a timely manner, communicate

how much is due, when its due and how to pay you. But for many small business owners,it still feels like customers arent paying in a timely manner and frequently falling way pastdue.

We hope this little eBook and its 10 Simple Tips for getting paid on time will help stoppayment delays, give your customers a better payments experience, and help your invoices float to the top of thepile when you customers money is scarce. In summary, remember:

1. Ask your customer How would you like to payfor that? Its a question we commonly hear at theretail counter of a large store, but many small businessesnever ask this question. In most cases small businesseshave their set billing process and thats it, regardless of

whether or not its a preferred payment method for theircustomers. However, the more options you can offeryour customer to pay you, the better chance you have ofgetting paid fast.

This includes anything from:

The type of payment you accept (cash, check, credit card, bank transfer, etc.)

To the timing of the payment (pay at the point of service, pay over the phone, via invoice, etc.)

If you give your customer a choice and provide them with some control in the payments process sothey can pay you in the way that works best for them, youll be surprised by the speed in which you

get paid.

2. Reduce all points of friction in the payments process.Any step of making a payment that requires extra effort on the customers part is a likely source of paymentdelay.

Lets examine the many points of friction involved in mailing and receiving payment for apaper invoice:

You need to take the time to type up the invoice, print it, put it into an envelope, put a stamp on itand get it to the mailbox.

The postal mail service needs a few days to deliver the paper invoice to your customer.

Your customer needs to go to their mailbox to retrieve the invoice.

The person responsible for paying the bills needs to read the invoice. Often times its not theperson who retrieves the mail that is the actual bill payer. So there is frequently another delay herewith the envelope or invoice moving around a few different piles in a household or business beforeit gets to the right person.

66%of small busines

owners are concerned

about cash flow.

Figure 5
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Your customer needs to find their checkbook and pen to write out a check to you. Often customersonly sit down to do this task once per month.

Your customer must find a return envelope and a stamp to send the check back to you. People arecontinually running out of envelopes and stamps so it might require waiting for an extra trip to thestore.

Your customer needs to make it to the mailbox to get the invoice back in the mail to you.

You now need to wait the extra days for the postal service to deliver your check.

Its exhausting just from writing that process down! A much faster alternative is to use electronic invoicingso you can enter an invoice online, have it emailed to your customer who can then make a payment to youonline. Using an electronic process that eliminates the points of friction can speed up payments by 20percent.

3. Collect payment at the time of service. Find ways to always collect payment at the actual time ofservice, rather than sending a bill to your customer after the service has been provided. Its funny to thinkabout purchasing something at a retail store, leaving with your purchase and then receiving an invoice inthe mail a few days later. With all the options available to small businesses to collect payment, no business even service related businesses should have to send an invoice unless the customer explicitly requestsit. If you are at a location with a customer, use your mobile phone to collect the payment. If you are taking

an order over the phone, take your customers credit card number and process the transactionimmediately. If you are selling online, collect payment from there.

4. Use payment plans. Sometimes customers just cant pay up the full amount at the time of service, orwhen a payment is due. Rather than continually battling for the full payment offer them a payment plan towork down the balance. Its best to automate a payment plan to charge a customers credit card or bankaccount so that each payment isnt a battle.

5. Automate, automate, automate. Some simple automation steps can not only make payments speedy,but save you and your customer a ton of time as well.

Some of the most impactful automation tactics include:

Storing your customers card on file so that you can recharge them with the click of a button.

Setting up recurring billing schedules to automatically charge any recurring fees.

Enabling online invoice processing so that your customer can pay you anytime using a paymentmethod that works best for them.

6. The carrot and the stick. No matter how flexible and instant the payments process is, there will alwaysbe some customers who simply do not have the funds to pay their bills. In this case, its best to have astrategy to make sure your bill floats to the top of the pile to get paid first whenever the customer does havefunds available. Using a combination of carrots and sticks is very effective. For the carrot, offer yourcustomer a reward (usually a percentage discount) if they pay you early before the due date. For the stick,

utilize late payment penalties if a payment is not received by the due date (can be done in the form of a flatfee or percentage penalty). Make sure your late penalty continues to increase over time so motivation toget you paid stays strong.

Utilizing the tips in this eBook is sure to help your small business stop worrying about cash flow and start focusingmore on growth.


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About PaySimple

PaySimple helps small businesses save time and get paid faster with a complete cloud-basedreceivables automation solution, including electronic payments, automated billing and customer management.

More than 19 million small businesses in the U.S. with fewer than 20 employees are in service-relatedindustries. Seventy percent of these businesses dont accept credit cards or ACH payments, and 66 percent use

manual billing processes. With the economic downturn,these businesses are suffering from serious cash flowissues, with over 53 percent of small businesses ratingcash flow as their top business challenge. Given thesefactors, these businesses are actively searchingfor solutions that offer helpwith many small businessesturning to their financial institutions or other known smallbusiness solution providers. In the past, most smallbusiness payment solutions have focused on retail sectorsand, as a result, do not meet the needs of service-basedbusinesses. Large financial institutions and small businesssolution providers are facing pressure from their smallbusiness customers to provide more value-added solutionsin this area, and to-date they have not been able to delivera solution that meets the needs of the services sector dueto lack of resources, products and expertise.

PaySimple is here to help because we love smallbusiness! To learn more about PaySimple or itspartnership opportunities, call 800-466-0992 or visithttp://www.PaySimple.com. Follow PaySimple onTwitter atTwitter.com/PaySimple.

Special Offer

Are you ready to take the next step to help your business get paid on time every time?

Enter promo code 3FREE to try out PaySimplesInvoiceSimply product absolutely free for 3 months.

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10 Simple Tips for Getting Paid on Time

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